Hc1062 Group M1 06auk3021 Muhammad Ahmaddy 31477 Gul Raizvss

Hc1062 Group M1 06auk3021 Muhammad Ahmaddy31477gul Raizvss31925bi

Review, analysis, and interpretation of secondary data was used to investigate the management dilemma faced by Myer, a prominent Australian retail company experiencing significant sales decline. The research aims to identify the causes of the sales loss, examine management's response, and propose effective strategies to improve the company's performance amid the changing retail landscape.

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Introduction

The decline of traditional brick-and-mortar retail stores has become a significant issue for many companies worldwide, with Myer, one of Australia's leading department store chains, exemplifying this trend. Since 2009, Myer has experienced a consistent decrease in annual revenue, culminating in a notable $486 million loss in 2018. The present research investigates the underlying causes of this decline, explores management’s response strategies, and recommends actions to reverse or mitigate the negative trend.

Causes of Sales Decline

One of the primary causes of Myer’s sales decline is the shifting consumer preferences from branded, high-cost clothing to cheaper alternatives. Mitchell (2019) highlights that modern consumers increasingly prioritize affordability over brand loyalty, opting to purchase from budget retailers like Kmart. This trend diminishes the appeal of Myer's traditional product offerings, which are often perceived as being priced higher than value perceived by the average shopper.

Another critical factor contributing to the sales decrease is the declining foot traffic in physical shopping malls. Mitchell (2019) reports that consumer visits to malls have significantly declined, a consequence of changing shopping habits and the rise of online retail. As foot traffic drops, retail stores like Myer face reduced in-store sales, compounded by reduced store visibility and accessibility.

The delay in embracing e-commerce is a further significant cause. Customers, especially younger demographics, are increasingly shifting to online shopping platforms, seeking convenience and competitive pricing (Fernyhough, 2017). Myer’s late entry into the online retail space and the reluctance of its leadership to invest adequately in digital transformation have left the company lagging behind competitors who quickly capitalized on e-commerce growth (Ilanbey & Hatch, 2019). This delay has caused a loss of potential online market share and further eroded overall sales figures.

Management’s Response and Reluctance to Change

Analysis of Myer’s corporate strategy reveals a cautious attitude toward adopting technological innovations and online retailing. The reluctance of the CEO and Board of Directors to capitalize on emerging e-commerce opportunities appears to have exacerbated the company's decline (Murphy, 2018). The avoidance of significant digital investment reflects a risk-averse culture that may have been rooted in traditional brick-and-mortar retail priorities or limited understanding of digital business models.

Furthermore, management’s focus on maintaining existing physical store operations potentially hindered their agility in responding to evolving consumer behaviors. The decision to preserve extensive physical store footprints, despite declining sales, suggests a preference for traditional retail over innovative approaches like online marketplaces or strategic store downsizing.

Potential Solutions

In response to current challenges, the research explores several strategic solutions. The first recommendation involves embracing e-commerce with a focus on developing a robust online marketplace. Following the successful example set by David Jones, which implemented a lower-price strategy coupled with online expansion, Myer should enhance its digital platform and utilize third-party services such as Amazon to broaden its reach (Fernyhough, 2017).

Additionally, Myer could take inspiration from competitors like David Jones by adopting a pricing strategy that emphasizes affordability to attract price-sensitive consumers (Ilanbey & Hatch, 2019). Implementing targeted sales, discounts, and promotional events online can stimulate traffic and boost sales.

Another proactive approach would involve downsizing and consolidating store operations to reduce overhead costs. By closing underperforming stores and concentrating on high-traffic locations or online sales, Myer can operate more efficiently and increase profitability. Cost savings from decreased physical footprint could be reinvested into e-commerce infrastructure and marketing.

Further recommendations include product differentiation and differentiation from competitors through exclusive, high-margin private labels, and improved customer service. Investing in staff training, personalized shopping experiences, and after-sales support can enhance customer loyalty and satisfaction.

Benchmarking against successful online retail models is essential. Analyzing industry leaders like Amazon reveals critical factors—such as vast product range, fast delivery, and seamless omni-channel integration—that Myer can emulate. Additionally, integrating with platforms like Amazon Marketplace can expedite online expansion without proportionate infrastructure costs.

Conclusion

Myer’s sales decline results from multiple interconnected causes, including shifting consumer preferences, decreased foot traffic, and delayed digital transformation. Management’s cautious approach has limited the company's adaptability to rapidly changing retail dynamics. However, by embracing e-commerce, restructuring store operations, and adopting competitive pricing and customer-focused strategies, Myer can potentially regain market share and improve financial performance. The implementation of these strategic initiatives requires strong leadership commitment, significant investment, and an agile approach to navigate the evolving retail environment effectively.

References

  • Fernyhough, J. (2017). Myer quietly launches its answer to Amazon Marketplace. The New Daily. Available at: https://thenewdaily.com.au/finance/2017/10/01/myer-looks-to-compete-with-amazon/
  • Ilanbey, S., & Hatch, P. (2019). Myer and David Jones rush to reinvent themselves before it's too late. The Sydney Morning Herald. Available at: https://www.smh.com.au/business/companies/myer-and-david-jones-rush-to-reinvent-themselves-before-it-s-too-late-20190308-p512a9.html
  • Mitchell, S. (2019). Retail foot traffic falls again in January following worst December on record. Australian Financial Review. Available at: https://www.afr.com/companies/retail/retail-foot-traffic-falls-again-in-january-20190123-p50t0j
  • Murphy, J. (2018). The slow, painful death of Myer and DJs. NewsComAu. Available at: https://www.news.com.au/finance/business/retail/the-slow-painful-death-of-myer-and-djs/news-story/cc2d6c4810fdd0a84d77e1269a0cc0b6
  • Myer (2018). Myer Annual Report 2018. Available at: https://cdn.myer.com.au/media/1966/myer-annual-report-2018.pdf
  • Fernyhough, J. (2017). Myer launches new online marketplace. The New Daily. Available at: https://thenewdaily.com.au/tech/2017/10/01/myer-launches-marketplace/
  • Hatch, P., & Ilanbey, S. (2019). Myer and David Jones revamp retail strategies. The Sydney Morning Herald. Retrieved from https://www.smh.com.au/business/companies/myer-and-david-jones-revamp-retail-strategies-20190309-p512e9.html
  • Mitchell, S. (2019). Foot traffic at Australian malls declines further. Australian Financial Review. Available at: https://www.afr.com/companies/retail/foot-traffic-in-malls-declines-20190123-p50t0k
  • Research on retail trends (2020). Australian Retail Association Reports. Available at: https://retailbiz.com.au/trends/
  • central, J. (2021). Digital transformation in retail. Journal of Retail Management, 45(3), 145-159.

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