Ex-Myer boss Bernie Brookes: ‘Tyranny of distance’ slowed Aussie etail adoption
Former Myer chief executive Bernie Brookes has told retailers their businesses challenges are “enormous” as he suggested Australian retailers have been slow to react to move into the online arena.
Brookes told a conference this morning that retailers are operating in a disrupted marketplace but said the smart ones, who are adopting an omni-channel approach, will emerge stronger.
An increasingly knowledgeable customer, online sales and emergence in Australia of overseas brands were some of the key issues impacting the retail market.
A more careful and cautious customer who is reluctant to overspend their budget or rack up credit card debts, has also impacted the industry, Brookes told the Optus Vision conference in Sydney.
Brookes, who left Myer in March after a tough period for the department store, said the ever increasing desire of consumers to research and purchase online was impacting bricks and mortar sales.
“The customer is in control and they are very savvy,” he said. “And they are at the forefront of fashion. Years ago Australian retailers used to be able to bring the Paris and London or New York fashion the following season, but not now. It has to come the same season.
“Interestingly too, they are shopping by category. No longer are they coming in and saying I want this brand. They are coming in and saying I need this and then they say what are the resumes of brands they you have.”
He said consumers now love the idea of gifts and to be rewarded, and see retail “as an opportunity to enrich their lives”.
“So the challenges facing retailers are enormous. Firstly omni channel, there are a large number of competitors around with the ability to shop something out of the UK or US at a moment’s notice.
“In Sydney with the number of international competitors you could be anywhere in the world now.”
Brookes said 15 of the top 20 retailers in the US have bricks and mortar locations, meaning the “pure play” model is not as significant as it sounds.
“The ability to integrate bricks and mortar combined with online is very significant,” he said. “The other interesting part us that everyone says the internet is about price, and whoever has got the cheapest prices is going to win.
“Yes it is one common denominator for success but range is also important, as is the ability to get the product when you want it, and the ability to get it delivered in good order.
“So we are now seeing a move away from the price orientation of online towards a similarity of what occurs when you go into any supermarket or department store.”
He said it will see the continued decline of the traditional bricks and mortar sales around the world. But he added that companies are now investing more in social and e-commerce than there retail networks and that will “eventually” compensate for that decline.
“But there will be a transition period that we are in at the moment where people have got the infrastructure and stores that they may not need going forward.”
But he said retailers in Australia are playing catch up and have been slow to get into the retail space.
Brookes blamed the “tyranny of distance” and said it took Australia a long time to become confident about online transactions with fraud “always top of mind”.
But he added there was now “big investment” which could give Australian an opportunity to “piggy back off the learnings of the past and perhaps ever overtake those learnings”.
Brookes also produced figures which predicted online sales in Australia would represent just 2.9 per cent of overall retail sales by 2017 compared with the global figure of more than 10 per cent.
Steve Jones
Really:
More like Australia’s current crop of CEOs distrust a new business model.
And Australians are waking up to the fact about how they are gouged in current retail stores and voting with their wallets.
User ID not verified.
He’s right that it’s not all about price but he’s failed to mention that perhaps the most important trait of a good retailer (online or offline) is the experience.
Bugger that up and people will never come back.
User ID not verified.
Isn’t asking this guy about digital a bit like asking Michael Jackson to mind your kids?
User ID not verified.
How does a guy who never developed Myer’s online offer now know so much about online retailing? Must have spent some time studying it since he left!
User ID not verified.
When a customer goes into a store they want someon there to help them pick out a product who knows about the product AND they want to take it home with them that day, if they don’t want the customer service then they will buy online
User ID not verified.
By ‘tyranny of distance’ I think he means how distant he was from understanding that etailing was not a fad and that he should invest in developing a great online experience for Myer’s customers and ideally years ago. Yeah I’m taking notes from this guy….
User ID not verified.
Really?? Bernie Brookes talking online retail??
Are memories really so short that the Great Myer Christmas online disaster of 2013 is forgotten?
I think at the time the consensus was Myer had taken #fail to a whole new dimension of abominable.
Why in 2015 anyone would give this guy even a nano second of their attention confounds me.
User ID not verified.
Out of the top 30 US retailers 29 are ‘traditional’ bricks and mortar. Their online revenues continue to grow because they continue to invest in online and delver brilliant customer service. Bottomline it comes down to servicing customers regardless of the channel they engage in – something both Myer & DJS have failed to deliver on amongst the tidal wave of structural change in retail. If they’d spent as much time and money on their ‘traditional bricks’ instead of gouging the most margin they could and under-investing in online they may actually have a business worth believing in.
User ID not verified.
The picture with this story – Bernie Brooks under a huge sign “Leadership in a digital world ” – that’s a joke, right?
User ID not verified.
It takes a certain level of chutzpah for Mr Brooks to present a topic called ‘Leadership in a digital world”.
Omni-channel has been dreamed up by execs who have too many costly stores with long term contracts – in essence a strategy dreamed up to explain the previous strategy which didn’t work.
Most omni-channel retailers take days to ship products, no quick and easy return process (buy online, return in-store) have a poor website with terrible descriptions, categories, product ranges etc.
User ID not verified.
Myer online – Bernie could never deliver it.
Myer bottomline – same thing.
User ID not verified.
Myer and DJ’s are oil tankers; worth a shed load, however so slow to turnaround, that they are still trying to turn around. I think they have both taken the customer for granted. The experience in their stores is hopeless. Their online experience has been awful, it is getting better. Both ‘incumbents’ I would also liken to traditional third party content distributors, like Foxtel. Customers want it NOW. If it is on the shelf in NYC or London, then it needs to be available here in Sydney.
Successful businesses nowadays put the customer first, get it right and the dollars will come.
User ID not verified.
Was this an elaborate prank by Optus in booking a dinosaur who thought online shopping was a fad to do a presentation on the topic?! It was absolute insanity that both Myer and DJs took so incredibly long to adopt etailing and their websites are STILL pretty rubbish. They both want to continue to charge premium prices for a lousy online and instore experience. The ‘tyranny of distance’? Was he waiting for a telegram to tell him about etailing? And claiming Australia was slow to take up etailing, Aus consumers adopted it very quickly which is why Gerry Harvey and co had a big cry about us not paying GST on O/S items. It was the Aus retailers who refused to jump on the online shopping train. So obviously the solution was to lobby the government, not to immediately develop their own sites to compete. Early adopters such as Peters of Kensington should be applauded for being forward thinking and having had a great online shopping presence for years.
User ID not verified.