Many people argue that TPG Capital were the only investors to have profited from Myer in over twenty years. Two years ago the Myer board agreed to back a five-year turnaround strategy that would punt a capital investment greater equal to its market capitalisation.
Less than two years into the five-year turnaround, investors, analysts and media starting agitating for change based on a perceived lack of results and a loss of confidence in the vision that had been backed by the board.
Solomon Lew’s claims about the lack of real retail experience on the board are clearly accurate. The idea that a chairman with no retail track record would sack a CEO and create an experience vacuum by installing himself in a complex restructuring exercise would be laughable if it didn’t have such a disastrous potential outcome.
But what is clearly apparent here is that this is a prime example of no-one on either the investment side or the leadership side who really comprehends what is needed to bring Myer back to good health.
Australian retail needs Myer fit and healthy. We need Myer ‘right-sized’ and productive because our department store chains historically drive a great deal of market behaviour and product lifecycle – either positively or negatively depending on their level of desperation.
We need investors in a business like Myer who understand retail and the complexity of the turnaround, not ruthless exploiters looking to agitate for a selfish and cynical short-term gain from a category they have no affinity with.
We need leaders who are actually merchants with an incredibly strong feel for what the customer wants to buy and how they want to buy it.
But most of all, we need people involved in this process who understand the real role of department stores in the 21st century retail landscape and how to design a transition process that is realistic and can be operationalised. As of today, Myer’s prospects are poor because it has none of those things in place. It suffers from a power grab on the share registry, an inappropriate board of directors and a lack of talent to drive it forward. It has too many stores, a lack of talent, an over-inflated balance sheet and massive latent liabilities – notably in lease withdrawal provisions to landlords.
Myer is a deeply troubled problem child that will take a decade to fix properly and will need clever stewardship by a charismatic leader who is not a slave to process but a visionary merchant capable of reclaiming its role as the premier comparative and complementary shopping destination for Australian shoppers.
Not unlike the task performed by Vittorio Radice for Selfridges more than a decade ago. Myer can have a very bright future. But two things will need to happen to allow that. The wrong people need to get out of the way or be pushed and the right talent needs to be found, empowered and funded for the length of time that is needed to fix it. It won’t be quick, it won’t be cheap and it carries high risk. Anyone up for the challenge?
Peter James Ryan is chief executive navigator at Red Communication Australia, and has 25 years of marketing and business experience.