Retail death compounds Myer’s woes
There are a variety of challenges facing incoming Myer chief executive John King but it appears as though one of the first things he’ll have to contend with is the impact retail death and market consolidation is having on the department store’s supplier list.
Compounding the problems, one of Myer’s more prominent wholesale clients, PVH Brands Australia, has just unveiled a major retail expansion in a bid to lower its exposure to department stores like Myer.
The move will see bread-and-butter Myer staples such as Calvin Klein, Tommy Hilfiger and Van Heusen look increasingly to their own retail stores for revenue, as Gazal explained on Wednesday:
“Since 2012 Myer have closed 10 stores and there is a risk of more store closures in the coming years … To minimise this risk, PVHBA has a plan to significantly grow the size and number of its own retail stores,” it said.
Calvin Klein and Tommy Hilfiger will also launch local online stores by the end of the year, further extending their online presence in the wake of deals with marketplaces like Amazon Australia and Catch.com.au.
It all means that customers will have more options than ever to shop the prominent brands at a time when Myer is struggling to maintain its position in the market and department stores more generally are under pressure.
ABS figures released earlier this week found that Department Store turnover declined 0.5 per cent in March and is up by just 0.3 per cent year-on-year.
In a statement on Wednesday a Myer spokesperson said the business will have announcements to make in the coming months about new suppliers to fill the voids left by departed brands.
“We are constantly in discussions with new brands to add to the Myer fashion offer and will make some exciting brand announcements over the coming months,” the spokesperson said.
But Metalicus and Esprit weren’t the first Myer concessions to collapse in recent years, and likely won’t be the last.
Queensland University of Technology associate professor Gary Mortimer said retail death in the middle tier of fashion retail will have a compounding impact on the likes of Myer.
“As these middle tier retailers exit the market, or potentially move into a pure-play channel, more vacant floor space starts to open up in department stores,” Mortimer said.
When Marcs and David Lawrence collapsed last year Myer moved in to scoop up the businesses, but given the financial pressure the business is currently under its unlikely that’s a blanket solution.
Instead King and Myer’s merchandising team will have to find new partners willing to do business with a department store sector that’s in its weakest position in decades.
Myer’s house brands could provide respite, King has form in this area having used own-label products to boost sales at House of Fraser during its turnaround.
He oversaw the acquisition of fashion brand Biba in 2009, which quickly became one of company’s best-selling brands by 2010.
Myer’s owned brands have a bit of a tumultuous history, with sass & bide struggling last year and former chief Richard Umber’s decision to take a stake in Topshop Australia (which collapsed but is now re-opened under UK parent Arcadia Group) failing spectacularly.
Other brands like Basque and Piper appear to be performing better recently though, with sales up 15 and 10 per cent respectively in the first-half.
A progressive think tank is worried the government will look to offset its recent spending on the response to Covid… https://t.co/8Tf744DbcD1 day ago
To stimulate Australia's economic recovery, one group is recommending an increase in GST, another is calling for a… https://t.co/GoZmLBpAaJ2 days ago