‘In danger of the same fate’: What Myer can learn from Sears going bankrupt

The iconic department store chain's workers have been sent home without pay.

The iconic department store chain's workers have been sent home without pay. Photo: Getty

Bankrupt US retail giant Sears’ downward profit spiral has been likened to that of Myer department stores, with retail experts claiming the Australian chain should learn from Sears to avoid the same mistakes.

Department store chain Sears announced on Tuesday it has filed for bankruptcy and will be closing 142 unprofitable or underperforming stores.

Shopping and retail expert Jo Munro warned that Myer is “in danger of the same fate” as Sears.

Industry analysts have cited reliance on a traditional retail format, loss of brand support and hesitation to compete in the online space among the key areas of failure contributing to the downfall of the once US retail giant – all of which are relevant to Australia’s largest department store chain.

Myer has been struggling in recent years and reported a “disappointing” $486 million annual loss last month. Newly appointed chief John King admitted shareholders “deserve better”.

A move towards smaller format, ’boutique’ retail

Brian Walker, retail analyst and founder of the Retail Doctor Group, said the days of the large department stores are numbered.

“The Myer of the future will be quite dissimilar from Myer as we know it today,” he said.


Neither Sears nor Myer have a clearly defined point of difference. Photo: Getty

“It will become much more boutique and they will have less physical shops.”

This transition to smaller-format stores has already begun in Australia’s supermarket sector with Woolworths’ “next-generation” store in Marrickville, Sydney, and Coles’ soon-to-open Coles Local boutique shops.

David Jones has also opened smaller stores as well as a stand-alone food store.

Sears was at one time employing about 350,000 people, according to marketing expert Dr Louise Grimmer.

“Their size, which was once a great attribute, became a major factor in their downfall. They were just too large and not able to be nimble or flexible to change with the times,” she said.

“Department stores need to interrogate their customer data in a much more sophisticated manner – in the way that the big supermarkets are using customer data to inform product offerings, store layouts and the overall shopping experience.

“This will mean increasing the ‘experiences’ and services they offer for consumers. It’s no longer just about selling products.”

Online retail stealing market share

“Myer has made lots of changes over the past five years with smaller-scale stores, store closures, the Myer Market online marketplace and embracing e-commerce,” online retail analyst Scott Kilmartin said.

“These changes were required a decade ago. Like Sears, Myer was slow to embrace change.”

Dr Grimmer said that customers disappointed with the online offerings of department stores found other places to shop.

“And many never returned,” she said.

Loss of customer focus

Another parallel between Sears and Myer is that both have been hard pressed to communicate a clearly defined point of difference.

“Whereas David Jones has a luxury, chic selling point,” Mr Walker said.

“Sears made the mistake of trying to cater to all people. Every business has to be great at something and stand for something.”

Dr Grimmer said stores that remain “middle of the road” will not survive.

“I think department stores have really let levels of customer service slip, both in terms of numbers of staff on the shop floor and in the level of customer service provided in store,” she said.

“Department stores may need to increase their range of private-label brands, which can help build customer loyalty.”

The New Daily contacted Myer but it refused to say whether it was watching overseas retail and taking note of mistakes in developing its strategy.

“We know that in recent times we have not always got it right for our customers,” Mr King said in a statement.

“The new [‘My Store’ ad] campaign will show that we exist for our customers, that we are putting them first, in every action we take and every decision we make.”

Topics: Myer
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