Myer is the largest store group in Australia that has been in operation since 1900. Its history dates back to 1900 when Sidney and Elcon Myer opened the first store in Bendigo, Victoria. This was a small humble beginning that has today grown into a leading retailer. They have been working together with Coles Group but they separated in 2006. After this separation, they have spent over $400 million to transform their operations. Since that initiative was undertaken, their competitive advantage has been expanded such that today there is a world-class supply chain, performance based culture that has a vibrant focus on customer service and an improved execution on retailing. It has been offering a range of fashion and style for a period of more than 100 years. In Australia alone, they have over 65 retail stores all in prime locations. In their 2009 financial year they had sales volume exceeding $3.2 billion (Corporate-ir.net, 2009). It’s a departmental store group that has a very strong connection with its customers and is the leader in Australian retailing.

Its company structure consists of several divisions, i.e. it is organized in several strategic business units (SBUs) such as supermarkets, discount stores, specialty stores, Myer stores, Grace Bros and food and liquor stores. They have also adopted the use of group managers who report to the managing director. There is also a board of directors. The overall experienced management team reports to a chief executive officer, Bernie Brooks. Myers has several target markets since it provides service of selling foodstuffs, personal domestic and household products. Everyone can be their target market but the manner in which they plan their promotional activities; they target old and young people. But children are not the real target markets for Myers.

In its approach to 4P’s of marketing, Myers aims to provide its customers with a broad range of product categories. There is also a wide selection of global and domestic products which are at multiple price locations. There are more than 600,000 product lines. Moreover, Myers has 2,400 brands in its 11 brand categories. Every brand offering and store product range is tailored in such a way it suits the size of the respective store. They also reflect local conditions of selling like competition, customer tastes/preferences and customer demographics. This is a company with special product knowledge. In its pricing concept, Myer has a breadth and depth in product offering to its customers with varied price points. This pricing strategy differentiates it from other competitor retailers coupled by excellent customer service. They are targeting to use new point of sale system in 2010. This is a system that will allow real-time promotional adjustments in product prices and this in turn will allow for dynamic promotional offers. Moreover, point of sale system will allow them to have a reduction in markdowns through proper timing of sales periods. Pricing in this system will be centralized to increase accuracy and then eliminate store-specific delays impacts. To beat its competitors, Myers has been the leading Australian retailing industry advertiser utilizing numerous media channels and advertising catalogues. Due to this, they were awarded “Catalogue of the Year” for two consecutive years by Australian Catalogue Association. Marketing programs since 2006 have been changed after change of ownership in order to increase relevance to their target consumers. Their focus is events-based marketing that can enable them to create a strong association with customers in particular occasions such as Fathers and Mothers day and Christmas. To further strengthen their bond with the Australian community, Myers also uses local community marketing programs. This is a strategy that has assisted Myers to fight competition.

Myers has used the past three years to transform its IT systems and supply chain. Warehouses and distribution centers are consolidated; they have established an integrated distribution and procurement network together with upgraded IT systems in support office, supply chain and merchandising. Their supply chain uses metrics that are world class that is so efficient due to the combination with an excellent IT platform. This supply chain strategy has given them several benefits such as improvement in safety, better service to consumers, claims management, lower costs, enhanced flexibility in stock allocation and lower lead times for their products.

As aforementioned, in Australia alone, they have 65 retail stores. In total, the number of stores in both Australia and New Zealand is more than 1,900. Myers are large retailers who are increasingly dealing directly with both overseas and local manufacturers and thus they have bypassed traditional wholesaling business mostly in their clothing stock. To perform these wholesaling activities, they establish subsidiary companies to handle wholesaling activities of a retailer (Munn, 2005).

Situation analysis

Demographics

They have adopted the MYER one data warehouse to segment their market in terms of age, gender and other demographic features ion their customers. This warehouse has vital information about the consumers on what they buy, where (specific store) and when. Because of the varied customer base they have, they are also utilizing store profiling where they are analyzing the type goods which sell in particular locations and in what patterns. They use this in order to know which age, gender, family buys what and in what patterns. This is a mechanism that has enabled Myers to adjust its merchandising plans in store-to-sore level. This exercise of using MYER one data started with only 500,000 consumers but today they have more than two million. There is also third party data in its system that helps it to know the likely household composition and affluence of a family member. This gives them a clear understanding of the potential of a market in a given store. They use MYER one program to segment their customers by brands and products purchased and their response to certain marketing messages. They use customer intelligence to find out what are the customers likes, dislikes and attitudes at their brand levels. At a macro level, Myer understands the feeling of customers on Myer shopping experience and the comparison with Myer’s competitors.

Economic

Despite the challenging economic environment, Australia weathered this storm in an admirable manner. U.S. and Europe decoupled the Australian economy but this was forgotten at the apex of this financial crisis. Australia domestic economic situation has stabilized where its gross domestic product stabilized for the year 2009. Moreover, there has been a strong sentiment and unemployment rates have been falling. These are consistent factors that have resulted in improved household disposable income and a strong consumer sentiment. This is promising for retailers like Myer. In this situation, despite the financial crisis, Myer shrugged off the recent weakening retail environment only to post an increment of 40% in profits in 2007-2008 financial years. In fiscal year 2008, they posted a net profit of $93.579 million which was up from 2007 value $73.432 million. Its total sales grew from $3.29 billion to $3.32 billion. At the same time, they cut costs by 2.8% which is equivalent to $1.057 billion. Sales stores went up by 2%. Both profitability and cash flow has improved and this gives them a good platform for capital investment. Moreover, they managed to reduce their debt during the same tough economic period since the next debt repayment counts four years away.

Political and legal

One major fuss in political arena involving Myers was on superannuation and pension fund managers. This involved selling of shares to Yannon Pty Limited under Coles Myer indemnity. The loss suffered had not been disclosed in the public statements and Coles Myers accounts. The deal to sell these shares is claimed to have been under political pressure in order to favor Lew (Solomon Lew premier investments). This is an indication of how politics have once interfered with the operations of Myers since the pressure to favor Lew is claimed to have come from federal labor government. There are currently no safety standards in Australia that Myers has been in conflict with. Their brands are aimed at being compliant with the Australian Standard for Compliance Programs. They also focus on compliance with Trade Practices Act.

Social and cultural

Coles Myer archive has business and company records and other artifacts dating back to 1840s. This archive also holds retail culture like audiotapes, films, clothing, advertisements, Cole’s cafeteria staff uniforms and photography from early 60s. This archive also holds records of other companies ever absorbed into it such as Boans, penneys, farmers and Grace Brothers. Due to its diversity and scale, it provides social cultural and economic history of Australia for a period of 160 years. They are committed to provide corporate social responsibility through use of practices that ensure a safer environment. They work together with the community and support indigenous communities through provision of Coles indigenous Food Fund. There are grants that are provided for Indigenous Australian Foods and individual aboriginal enterprises for bush food industry.

Competition

The current major competitor is Safeway Supermarket. This is a supermarket that is under Woolworths Group. In terms of national food share, Safeway has a 20% spending compared to 17% for Myers. Myers has a low sales value but its EBIT is a bit higher. This means that in allocation of expenses, Myers is more effective and efficient. Woolworth’s products are in liquor, consumer electronics, food and general merchandise. This is performed through chain store operations, entertainment and gaming operations and hotels. This company has a very extensive network of distribution, processing and manufacturing activities. They operate in a pricing strategy aimed at having a narrow profit margin and to give customers value. They regularly brand re-position themselves so that they can differentiate themselves as high-quality stores compared to competitors. They decided to re-name Queensland and NSW stores but they stuck with the same name in Victoria. It is suggested that they have to change their slogan “The fresh Food People” and scrap the logo. By trying to minimize impacts of re-naming the businesses, they are exposing their brands to Victorians (sas.com, 2009). The cost of this decision is high as the promotional activities and sign alterations are going to be used to inform customers of the change. This is a strategy that will allow Safeway to streamline the marketing activities as they reduce costs also. This helps to build a competitive edge.

Technology

Myers has been using the recent technological advancements in IT to transform its supply chain. Capital investment on IT since 2006 is estimated to be $200 million. By January 21 2010, they reported that this investment has started to pay off. This investment has managed to cut their operational costs by 1.5% (smartcompany.com.au, 2008). They have a new merchandising system MyMerch that replaced former 44 systems. This is a system that has allowed their distribution center to order goods from suppliers on daily basis as opposed to previous weekly. There is more selling space now as the system has reduced required inventory storage space.

Suppliers

Myers has its merchandising coming from more than 800 suppliers worldwide in order to give customers a broad product range. For the last three years, they have improved flexibility and efficiency in their buying practices through enhanced supplier collaboration and partnering, tighter inventory management, MyMerch merchandising platform implementation and development of international sourcing channels.

Customers

They have a customer loyalty program Myer one which has more than 3 million members. It is the leading customer loyalty program in Australia. This program has contributed to over 60% sales of Myers. These customers are also spending 15% more than non-members. Myer one has provided insights into customer preferences and needs. It is also the cornerstone of Myer’s marketing activity. It’s possible to target specific needs of the consumers through Myer one. Today it has grown with over 180% membership (dreamessays.com, 1999).

Intermediaries: intermediaries include financial institutions, private galleries, online and agent auctions and auction houses and other salesrooms.

Other publics (community)

The founder of Myer, Sidney Myer made community engagement as part of organization fabric. This enhances its corporate philosophy in driving customer loyalty and reinforcing of their brand. Their strong community connection was evidenced through their immediate response to tragic Black Saturday bushfires in Victoria in February. Their philanthropic program donated $400,000 million to nominated charities in the years 2009. They also have a local marketing program that is designed to have connection with the local community.

SWOT analysis

Strengths

Myers has a dedicated and an experienced management team with over 300 years of combined experience. This is what has been instrumental in Myers transformation for the last three years. It’s committed to be an employer of choice with over 14,000 team members. Its marketing strategy puts it ahead of the competitors. They have a wide range of products with differentiated prices that allow their customers to have variety. It has that ability to attract and retain customers.

Weaknesses

They have been lagging behind in terms of transformation of the supply chain. Their sales growth has not been convincing. Their shares have also been falling and their competition is even fiercer than before. Compared to Woolworths they have not been able to promote their liquor and food division from within.

Opportunities

There are several opportunities for takeovers to build strong partnerships with strong franchise and management. These will help Myers to have sustainable competitive advantage, attractive growth opportunities and a defensible market position. Acquisitions will provide the company with important assets in its key locations.

Threats

The major threat is its competitors especially Safeway from Woolworths group. They have been competing with Myers and have several products. They have a large market share and their profit margins have been so competitive.

Myer’s brand positioning

Since they want a broader customer appeal, and they have to pay regards to each store’s demographic profile, they have a brand architecture that covers an extensive range of brands. This is from entry level to luxury points and the focus has been placed on fashionable and modern products. They have five key brand categories in their positioning. These are youth brands, [email protected] Myer brands, Myer exclusive brands, International/national brands and designer brands. In this brand architecture customers are offered a range from permanent to premium luxury value choices.

Myer’s brand personality

Myers normally uses sport to market its products. A good example is the Melbourne Spring Racing Carnival which is a fashion event. They have fashions on the field like the Myer Marquee and this makes them to have a huge presence in such a period. Like in 2009, themes used were those of fun, creativity and fun. This is thus a campaign that is building on Myer brand personality and the playful style from season launch of TVC. Hand-drawn illustrations merge with carefree pastel watercolors. Execution is a color by numbers inspired one that is used to reinforce excitement and fashion in the carnival.