Market Failure of Myer: Analysis and Recommendations

This presentation analyzes the financial loss of Myer in 2017-18 and provides recommendations to avoid such issues in the future. It discusses the environmental factors, management strategies, and unsuccessful responses leading to failure.

Business Environment:
Market Failure of Myer

Introduction
• This presentation makes an in depth analysis of the financial
loss accounted by Myers supermarket chain in the financial
year 2017-18.
• In the initial slides of the presentation, the case background of
the financial loss registered by the organisation has been
discussed.
• In the later slides, in depth analysis of the business issues that
led to the financial disaster encountered by the organisation
have been done by a descriptive environmental analysis.
• The business strategies of the organisation that went against
them in their business projects have also been discussed here.

Introduction Continued…
• Lastly, alternative strategies have also been
recommended in the last section of the
presentation in order to highlight what could have
been done differently in this case which would have
helped the organisation to avoid the business issue.
• In fact the recommendation section also includes
strategies that Myers can undertake in order to
avoid the recurrence of such issues in the future
have been highlighted.

Case Background
• The departmental store chain Myer has been struggling
because of the annual loss of USD $486 that have been
accounted by the organisation for the financial year 2017-
18.
• Since the company has been listed in the Australian share
market, it is their first loss.
• In the previous financial year of 2016-17, the company had
registered profit of USD $12 million profit.
• As an outcome of the financial issue, the organisation’s
brand name as well as goodwill has been written down by
USD $515.3 million (Sands & Beverlands, 2018).

Identification and analysis of environmental
factors
PESTEL Analysis
• The recent analysis of the allowances of the government towards the fashion and retail
industry shows that the high brand preference of the Australian customers has been
welcomed by the government, whereby they have given license to more than 30 global
brands to open up stores in the most strategic business locations of the Australia cities.
• That is why; the budget shopping departmental stores have been suffering.
• The government of Australia is also favoring the polarization of the retail business.
• As analyzed by Mitchell (2018), the target is to understand the consumption trends
clearly.
• This will help in the development of the annual budget of the next year.
• As an outcome of that, the consumption in the clothing and retail as well as the utility
goods industry is concentrated around the flagship budget centered product lines as
well as the branded product lines.
• The mid market range products and the organisation dealing with products under such
price ranges are bound to suffer.

Economic Factors
• Embattled Myer posted the statutory loss of
USD $486 million over the financial year of
2018, in contrast to a net profit of $1.9 million
one year ago.
• The net profit of the organisation reduced to
half (about $32.5 million year over another);
however $518.5 million in the implementation
costs as well as the individually significant
items plunged in to the red (Chau, 2018).
• The financial and corporal management
strategies that have been adopted by the
organisation in order to implement efficient
management went against the organisation.
• In the last year, after the occurrence, of the
financial loss, the company cut down roles of
the 30 senior executives from their business.

Environmental Factors
• The biggest impact on the outcomes of the
company, in context to this business issue have
been the write down of their goodwill as well as
brand name in the order of USD $500 million.
• As an impact, it is evident that the organisation will
not be able to pay their shareholders the interim
dividend citing the disappointing result that have
been attained as well as keeping in view the
challenging environment for the mid price ranged
retail outlets like Myers.
• Since, demand of ecommerce had been on the rise,
the online sales of the brand hiked by 49%.

Cultural Factors
• A big part of the cultural deficit of the organisation is that they have tried
to meet all requirements of all segments of customers.
• The intension of the organisation was to supply high fashion product
brands, thereby exposing the retail shoppers to bands that were rarely
present in other shopping destinations of Australia.
• As an outcome of that the brand equity of the company was initially high.
• However, when specific retail outlets pertaining to the individual brands
began to operate in Australia, the craze among customers of this brand
began to reduce.
• The high end customers began to prefer shopping from the brand specific
stores and the pocket friendly customers began to shop from the budget
friendly shopping malls that valued the brands projecting low cost fashion
and lifestyle products (Mitchell, 2018).

Unsuccessful responses leading to failure
Management strategies accountable for chipping away of brand
identity:
• For any organisation, the unique brand identity regarding the
organisation that is borne in the mind of the customers is of
essential value. It develops a unique selling proposition.
• Historically, Myers like any other brand including the Macy’s in
US or the M&S in UK was idealized a middle ranged brand,
which had stores at desirable locations as well as stood as an
emblem of standard quality in the high street fashion.
• In the past, Myers had few competitors because of which they
capitalized on the strategy of having a large range of well
regarded brands and targeted the emerging middle class. The
shopping retail brand was famous for their quality standards as
well as fashion forwardness.

Unsuccessful responses leading to failure Continued…
The company also failed to incorporate any
other major French, American or UK based
brands in to their product offerings:
• The brands did not show interest in teaming
up with Myers since they did not have any
specific brand identity or projection over any
definite product categories
• The major international brands were
facilitated by the government to open their
specific store outlets

Recommendations and Conclusions
• The particular business facing strategies that Myer
should be undertaking now is to implement
activities that will drive maximum traffic in to their
stores.
• The initial strategy that will help the organization is
the reduction of their board prices. Followed by
that, they have to launch a new marketing campaign
that will be promoting the exclusive products.
• Thirdly the company needs to emphasize the focus
of their business towards promoting the private
label brands of the organisation.

Recommendations and Conclusions Continued…
• In order to make the shopping experience
easier, Myer need to de-clutter shop floors,
reduce stock, remove their clearance zone
through 2019-20 financial years well as focus
on ‘buying better’ to improve full-price sales.
• Another major plan is to re-launch the Myer
website.

References
• Chalmers, S. (2018). Myer posts $476 million loss, after pricey write-down of its
brand name. (Abc.net.au). Retrieved on 13th May 2018. Retrieved from
https://www.abc.net.au/news/2018-03-21/myer-sales-plunge-and-no-dividend-for-sha
reholders/9571138
• Chau, D. (2018). Myer posts 'disappointing' $486 million loss, as CEO admits
'shareholders deserve better'. (Abc.net.au). Retrieved on 13th May 2018. Retrieved
from https://www.abc.net.au/news/2018-09-12/myer-full-year-results-2018/10236074
• Mitchell, S. (2018). Myer plunges to $476m loss, suspends dividend after $515m
write-downs. (Afr.com). Retrieved on 13th May 2018. Retrieved from
https://www.afr.com/business/retail/myer-plunges-to-476m-loss-suspends-dividend-a
fter-515m-writedowns-20180320-h0xqnt
• Mitchell, V. (2018). Myer announces half-billion dollar loss. (Cmo.com.au).
Retrieved on 13th May 2018. Retrieved from
https://www.cmo.com.au/article/646600/myer-announces-half-billion-dollar-loss/
• Sands, S. & Beverlands, M. (2018). Myer once stood for the aspirational middle class but
now it’s lost sight of who its customers are. TheConversation.com. Retrieved on 13th May
2018. Retrieved from
http://theconversation.com/myer-once-stood-for-the-aspirational-middle-class-but-n
ow-its-lost-sight-of-who-its-customers-are-91832