Retail is not a one-trick pony, says Bernie Brookes, CEO of Myer Holdings, and therefore he bets on a strategic five-point plan aimed at delighting and inspiring customers and gaining their loyalty. Sharon Tian learns more from the world-class retailer.
He has been described as a leader with an amazing work ethic. More recently, at his re-appointment announcement, his boss, Myer chairman Paul McClintock said the company is delighted to secure the continued services of a “world-class retailer”. Bernie Brookes, CEO and managing director of Myer Holdings, is well-deserving of all these accolades.
Brookes has worked at retail for 35 years, 27 of whichere in Woolworths, the largest supermarket/grocery store chain in Australia. The most recent eight years were spent at Myer, Australia’s largest department store chain, where Brookes continued to build a solid track record of performance and results.
When he joined Myer in 2006, the company was hemorrhaging with a loss of A$66 million (US$62 million). With a single-minded focus on fixing the business, Brookes established a major recovery plan that not only returned the business to profit, but also laid the foundation for repositioning the Myer business to meet new challenges and to be ready for investing in the future.
“We turned the business around and accelerated profit from minus $66 million to a positive of more than $200 million and kept at that profitability level for four years. We had a business that was broken and focused on implementing three phases to recovery,” Brookes shares candidly.
“Phase One was to get the infrastructure right. We made heavy investments in technology and new distribution systems. From 2006 to 2011, we invested A$600 million in new technology, new systems, new supply chain and warehouses. Then in Phase Two, we refurbished the stores. From 2011 to 2014, we made over 24 Myer stores.
“We are now about to enter the third phase of our rebuilding, moving to the omnichannel/digital stage and building on customer loyalty. This is where we can gather the fruits of our first two phases of investments.”
Brookes is matter-of-fact about what it takes to succeed in the tough retail environment. “Retail today is not a one-trick pony. At times you have to have a cost-focus, then an infrastructure focus, and now, a digital customer interface.”
To him, the cost focus is critical, the store transformation is strategic, and infrastructure building is paramount.
Along the way there may have been detractors, questioning Myer’s slow uptake of online sales. That drew a steady response from the experienced CEO at the Australian Retailers Association awards breakfast in Melbourne last year. Brookes said his first priority was to improve the company’s overall performance. “I focussed on fixing the fundamentals of the business, the supply chain, getting the product to the customer, the IT, the visual merchandise in store and didn’t focus enough on what would be the 2011-13 and 2011-14 future,” he said. “So the criticism should firmly start and stop with me by making the decision to get the basics right in [the] store.”
Myer five-point plan
Now that the basics are in place, Brookes is continuing to deliver on the Myer five-point plan, an operational strategy that comprises five key elements that Brookes considers critical for the success of Myer. The five-point plan includes improving customer service, enhancing the merchandise offer, optimising the store network, strengthening the loyalty offer, and building a leading omnichannel offer.
Going forward, a key focus area for accelerated growth is the omnichannel business. “We are looking at increasing online sales which is currently at about 2% of the business, but this piece of the business is doubling each year,” says Brookes.
The aim, he says, is to build “a leading omnichannel offer that is inspiring, compelling and available to our customers wherever and whenever they choose to engage with us.” Brookes is confident of achieving this because “Myer has spent a lot of money on customer research and has streamlined its supply chain so consumers can get their goods faster.”
Myer’s recent research reveals important information about consumer trends. “People are using online as an information gathering environment. 81% of decisions in electronics are made by looking online first … 77% of appliances, 70% on books, 47 % on music, 69% on clothing, 68% of cars, 60% of hair care.”
Furthermore, Myer’s previous investments in a merchandise management system, a point-of-sale system, and a world-class supply chain have set the foundations for effective inventory management, and this provides the retailer with a significant competitive advantage in the development of its omnichannel offer.
For Brookes, Myer’s push to increase online sales is not a ‘me-too’ initiative. Instead, the impetus is consistent with a strategy to meet changing customer preferences and embrace retail innovation.
Despite a challenging retail environment in Australia, Brookes is confident there is plenty of growth potential. “The World Wide Web gives you the opportunity to service new areas and new customers. We view that it is important to develop the e-commerce business and digital marketing because it gives us the opportunity to keep talking to customers.”
Brookes explains that with digital marketing, there is more space to educate, inform and entertain the customer. “We can take the product to them on their iPads, and with digital marketing, we can raise the entertainment factor, for example, by providing click-through’s to event videos, animated advertisements, etc.”
With online sales currently growing at a healthy clip, Brookes expects Myer’s e-commerce business to be in the region of 10% in the next five years.
Concurrently, Myer is investing heavily in the development of its physical stores. “We recognise that our customers want to be able to touch and feel products in store, as well as engage with knowledgeable and helpful staff. Our store network gives us a competitive advantage in our omnichannel offer and is integral to delivering a seamless customer experience across all digital and retail touch points.”
Optimising stores and merchandise
Myer has a network of 66 stores across Australia and one of Brookes’ priorities is optimisation of the store network and strategies to maximise returns per square metre in every store while creating an inspiring shopping environment for customers.
Such strategies have included “the closing of non-performing stores, opening new stores in high catchment, productive locations, refurbishing stores, with increased space optimisation within stores and store rationalisation. The result is sales per square metre has increased.”
Enhancing the merchandise offer is something that Brookes and his team have worked hard at as well. Brookes is proud of the fact that in addition to well-known national brands, Australian and international designers, the Myer merchandise offering includes 66 brands which are owned or licensed and distributed exclusively by Myer, known as ‘Myer Exclusive Brands’. Such brands, include Bauhaus, Jack & Milly and Trent Nathan, and currently make up 20% of Myer’s business.
Brookes shares that the vertically-integrated Myer Exclusive Brand model of managing the design, development and sourcing of wanted brands provides the retailer with significant control and flexibility.
Another significant success is the MYER one customer loyalty programme. This is one of Australia’s six leading loyalty programmes, and MYER one has over five million members and six million cards in circulation. Members receive two shopping credits for every dollar spent in Myer stores, with a $20 MYER one rewards gift card for every 2,000 shopping credits.
The MYER one card is hugely popular among Myer customers, the majority of whom are females and 35-40 years old. Sales using the MYER one card represent approximately 70% of total sales.
The MYER one loyalty card is a keystone programme as far as Brookes is concerned. “It gives us a rich vein of data; allows us to invite customer to events like VIP Nights, Preview Nights; and as the reward is based on spend, it’s a very strong loyalty programme that has worked exceptionally well.”
Strong customer service focus
Four years ago, customer service at Myer was average; today Myer is the proud winner of many awards for customer service. Brookes says he has spent the last four years raising the quality of customer service at Myer stores. He has encouraged several service initiatives, including staff training and coaching, the introduction of personal shopping service, the launch of a new feedback programme which delivers customer voice feedback directly to team members, and the implementation of a customer engagement programme for premium Myer One card members.
Last year, the Customer Service Centre saw an upgrade of technology which enabled full integration of the online service and delivered a significantly improved customer service model for online customers.
As with most areas of business performance targeted for improvement, Brookes has the results to show. “Four years ago, the ratio of compliments to complaints was 1 compliment for every 4.5 complaints; today for every complaint received, we get 7 compliments.”