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Top line sales or retail basics?

Myer Warringah

If you look back in history of the women who are most memorable and most stylish, they were never the followers of fashion. They were the ones who were unique in their style, breakers of the rules. They were authentic, genuine, original. They were not following the trends.

Nina Garcia

The spate of retail failures in the period just before Christmas highlights the risky strategy of chasing growth over productivity. One casualty, being Howards Storage World cited its rapid expansion as the major contributing factor to their demise.

Howards is not the only failed retailer recently that has indicated that their growth strategy contributed to their financial woes.

It highlights that there is inherent risk in focusing on top lines sales growth before optimising the current business model. We live, like never before in the world of sharply defined and precise differentiation models,

Differentiation effectively means “hard to copy” and candidly Howards, Pumpkin Patch and others of this ilk where over extended and easy to copy.

Location and product are clearly characteristics of a differentiated offer, however equally so are branded community, faster fulfilment and format diversity and experience.

Coverage means the retail ecosystem in its entirety rather than just scale and location per se.

Today’s retail landscape has greater competition, with more choices available to the consumer than ever before.  We also have the looming spectre of the Amazon juggernaut expanding here in Australia (I resist saying ‘arriving’ as many have been quoted, as Amazon has already arrived!)

Rather than chasing a part of a diminishing slice of the available pie there are companies out there that are getting back to the basics of retail to drive bottom line profitability growth.  They are focusing on creating a smarter business model rather than replicating one that is not evolving with the current environment.

We were fortunate to host Richard Umbers CEO at our annual CEO breakfast event in Melbourne in November.  Richard’s vision for a Myer turnaround is very much based on redirecting the company focus away from a relentless pursuit of top line sales based on diminishing returns to one of increasing return on investment through uniqueness and relevance – interesting to see their giftorium concept work so well for them this Christmas past.

While the job he has taken on is a huge one and will be highly complex, the basis of his plans go back to the basics of great retailing. Understand your customer, create a product range and shopping environment that is relevant to them, innovate processes to create efficiencies and focus on staff training to underpin the company vision.

Much of the new strategy in underpinned by customer insights. Myer has spent a great deal of time researching their customer base to better understand not just who their customers are, but also the drivers behind their purchasing decisions.  Using this information, Myer are in the process of resetting their offering to better suit these findings.  Their new impressive store in Warringah near Manly in Sydney reflects this new direction.

Myer are also focusing on the nuts and bolts of the business to drive productivity and assist with customer experience. It is early days however the reasoning behind Richard’s strategy makes sense and the early results from Myer are encouraging.

With this in mind, I question the decision of solely focusing on top line sales. Does it not make more sense to focus on generating the highest possible return on investment with the current working capital?

While the basics of retail are not necessarily sexy, they are more and more relevant in boosting returns for retailers. No point having a great looking customer experience if out of stocks aren’t managed properly.

By establishing the customer as the central focus of the business with a high level of understanding in the relevancy of a retail offer we can create far greater efficiencies in the business.

We as retailers have a wide range of tools available to us now to assist in understanding not just simple demographics but insights into why consumers buy. The costs associated with such studies are well within the capabilities of most multi-site retailers.

From these insights, retailers can redefine their business based on greater customer centricity.  Product offerings can have greater focus with an impact on sales as well as reducing unproductive inventory.  Promotional messaging can be tailored to appeal to different consumers to create a higher return on investment.  Focusing on relationship based communications to generate personalised offers to increase loyalty will create long term returns.

This year is about being unique, having coverage throughout the retail ecosystem and a timeless focus on the essentials of being a “fit” retailer.

Brian Walker is founder and CEO of Retail Doctor Group and can be contacted on (02) 9460 2882 or Eastmead, co-author of this column, is one of Retail Doctor Group’s retail implementation specialists and can be contacted via email at

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