Gen Y and beyond will never shop at Myer

ABS retail figures for November were released showing a stark drop in sales for that month – whilst not unusual, it is concerning the month before the biggest trading month, Christmas, that retail figures are not only low, they have in fact decreased dramatically. What makes this more concerning is that online sales figures via NAB show a whopping 27% increase YOY. Many will make mention of an online sales increase in November as consumers buy in time to ensure delivery before Christmas – not to mention the successful Click Frenzy event in November that played a part.

These figures alone aren’t unusual – they occurred almost every month in 2012, traditional retail lagged, whilst online prospered; and combining these statistics with a recent Morgan Stanley retail report makes for some worrying reading for major department stores future in Australia.

In store buying will never go away – but the style of stores has to change – otherwise it risks running into huge overheads, combined with a shrinking consumer base. Why shrinking?

There are several factors that make overseas purchases attractive – but the main two are price and range. Price is no doubt assisted majorly by the high AUD, and to a lesser degree by the GST Threshold, but why is this impact so minor? Even if you add GST to overseas goods the price is still cheaper in a large percentage of the goods. What is perhaps of most significance is that these two factors for overseas buying are the main purchase influencers for younger generations – and here in lies the problem.

As younger generations are shopping in a different manner to older ones, they go in store less, and have lower brand recognition. They also engage media differently – the major ads in newspapers are wasted on Gen Y, as are many TV ads – this generation downloads movies, TV shows before they are shown here. So the ongoing brand recognition is not occurring for the major department stores and younger generations. Whilst not seeing the ad for Myer or David Jones doesn’t mean that these department stores are necessarily missing out on the “race out the door sale” upon reading an advertisement – they are missing the intrinsic value of placement when the need arrives. ‘I need some shorts’ one might think – a brand that is fresh in a consumers mind is more than likely to get the sale; so for department stores who are not as prominent, their sales will decrease.

Returning to the factors of price and range – these two factors returned as the highest responses as to why shopping online was attractive, and are of particular relevance to consumers under 30- the next generation of shoppers. Price – generally speaking, the younger the purchaser, the less available disposable income they have so if you can find a cheaper item – you go for it as a younger person.  Online prices locally by pureplay retailers represent businesses efficiencies in their lower price, overseas retailers use economies of scale, better sourcing, superior logistics and lower wages to represent lower prices.  Regardless of the price reasons – the more likely younger generations are to buy online now – the less likely they are to buy from the traditional retailers who are underrepresented online – the David Jones, Myer et al of the country.

Range is the other important factor; again younger generations are more in tune with popular styles, trends, fads and particularly with fashion will want the latest and greatest. So range being the second highest factor as to why consumers look online – it again further distances themselves as consumers from the traditional retail players here in Australia.

According to recent data released by Morgan Stanley and the ABS – 31% of online sales go offshore, 41% to pureplay Australian based retailers, 3% to the top 15 bricks and mortar online presence and 25% to the rest of the online multichannel Australian based operations. This is such an alarming statistic and combined with the price and range influences that will continue to influence younger generations – it means local department stores may be in for a tough 2013 and beyond.

DJ’s launched a site in 2000, not long after Nordstroms. By 2003 DJs site was closed, not re-launching until 2010 – Nordstroms didn’t close theirs – they battled through the issues that are presented by having numerous department stores across the country, being fed by copious suppliers and are now a benchmark for success for multichannel integration.

So what can be done to potentially turn this around for the major retailers – how do Myer and David Jones; Australia’s two biggest retailer engage younger generations?

More and more people are starting their shopping process online – so the majors will need to improve their presence there – in the ultra competitive world of online retail – a business cannot simply rely on previous business history and recognition. Given high retail prices in Australia appear set to remain – changes need to be made where possible, increasing range, changing styles over more rapidly and even reducing inventory quantities on hand. Service such as same day shipping would go along way to cement a value proposition that appeals to Gen Y and Myer and David Jones are well placed to deliver goods from their local stores to a generation that appears to have a reduced understanding of patience.

Older generations grew up with Myer and David Jones as the staples of retail – however this doesn’t ensure a long-term future. Myer and David Jones do have websites; and have both come to the playground kicking and screaming, reluctantly, and somewhat disappointingly. Due to their poor presence and functionality online – it further distances their store offerings from younger consumers when combined with price and range considerations that are so important to Gen Y; and with mobile and tablet commerce rising rapidly – this is further distancing the retailers from the younger generations. If traditional retailers can’t engage younger generations early then it makes it a very real possibility that Gen Y will never shop at Myer.

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  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
  • wp socializer sprite mask 32px Gen Y and beyond will never shop at Myer
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