The year of retail reckoning: Dear Myer, we've lost the love. Sorry, love the Australian Middle Class
A poor Christmas, lacklustre clearance sales, and a cocktail of falling dollar, low wage growth and the end of ‘house as ATM’ are foreshadowing a year of reckoning for our local retail giants. With reporting season in full swing the results make for uncomfortable times in the C-suite. Digging through the numbers it’s clear that it’s not just the festive season that got away from them, but that their customers fled long ago. Falling sales per transaction and swinging sales patterns highlight a much bigger problem. Retail giants are one thing when they need to be two. Eaten on one side by abundance and on the other by austerity. Let me explain.
Good, ok and great different
Aldi is good different. Small, shoppable and stocked full of guilt-free treasure. It speaks to your need to save but also gives us reasons to spend. Germanic genius. Kmart, ok different. Cheaper quality essentials for family life, easy to shop with kids, and with two in our house it certainly works. A $3 dinosaur bike bell? Yes…thank you very much.
Amazon, great different. I mean they have everything. The world’s biggest store named after our biggest river. I get all the choice I could ever desire and I can get it delivered to me for less than the cost of fuel to drive to the shops. Plus it’s brought to me on someone else’s time, not my dime.
Bad different
Myer and DJs are bad different. They have just enough stock that you have to hunt for what you need, before (usually) realising they actually have nothing you need. The whole experience feels compromised. It irritates, annoys and rather than feeling savvy you feel suckered…every time…never again…you say…never again.
So are they going the way of Sears? I reckon they are. I grew up in deepest rural Canada where plaid comes as standard issue. The Sears catalogue was the closest thing we had to shopping nirvana dropped on the doorstep. So striving, so very lower middle class. We loved it because it was in the middle, just like us. Not rich, not poor. Kinda average and that’s the thing. The truth is the middle class (that’s most of us if you’re keeping score) is shrinking and it shows. The share of GDP going to wages and salaries declined to 47 per cent last year, the lowest level since the ABS began gathering this data in the 1950s, and down from about 58 per cent in the 1970s. You might feel or actually be asset rich but to be typically Aussie means you are most likely cash poor. It’s the new Australian reality that is killing components of the Australian dream like equality, connection, respect, mateship and its killing our department and specialty stores too.
What to do?
So, here we are, and the strategic question is what to do. Maybe think two, not one. Could they help us pursue two of our most basic desires? To both save resources and find more unique treasures? As two, they might survive, as one, well the facts say no. If you look globally at the department and specialty stores running somewhere close to the land of possible salvation they accepted their fate that the middle is gone. They sell unique treasures (think Nordstrom) and they sell saved resources (Think Nordstrom Rack).
The end of the age of Aussie oligopoly is here, the race to the bottom is on but this time will be no prizes for second place.
Be better to each other.
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Picture courtesy by Herald Sun
