Myer Case Study

Summary
With the recovery of Australia’s economy, Myer has accomplished a five-year plan with the goal of improve it’s sales and profits. Myer decided to increase investment in new brands, store facilities, online retailing and customer services which lead to same-store sales growth. While with the job cuts last year, the cost of sales has decreased. Myer’s profitability seems to be well ahead.
Application of concepts
Mitchell (2016) has discussed economic growth and purchasing power in the article.
Firstly, economic growth, generally it describes as an increase in output (Commonwealth Treasury Canberra 1964, p.5) while Neo-classical theory explained that as aggregation of the factors of production and the external technology change. (Wennekers
and Thurik 1999, p.27). Retailing market has a close relationship to nation’s economic growth since according to ‘Productivity Commission Inquiry Report’ (2011) about ‘Economic Structure and Performance of the Australian Retail Industry’ that around 140000 retail companies in Australia counting about 4.1% of the GDP and 10.7% of employment. For Myer, with the recovery of Australia’s economy and according to RBA’s Australia economy snapshot which release in 6th April that there are a 3% economic growth, Myer seems to be beneficial from this condition since sales has improve in a great extent.
Purchasing power refers to when goods and services are purchased or performed the amount money spent. (Investopedia) Customers’ purchasing power could be a very important indicator in retailing market. While customers are being more circumspect about clothing, competition between peers are more intense and the cost of doing business trend to be higher, it might be challenging for clothing retail industry. (IBISWorld 2016) For Myer, it might not suffer from this situation since Myer has offer a discount, customized Nutella and other sales promotion to foster sales.(Mitchell 2016)
Analysis
To begin with, due to recovery of Australia’s economy and customers’ increasing purchasing power, the outlook for Myer is positive.
As Myer accomplished five-year plan, sales and profits has improved significantly. The profit guidance for Myer previously was $64-$72 million but for now, the guidance has improved to $66-$72 million (Thomson 2016). In addition, Myer has developed online retailing with objective to offer experience of online shopping seamlessly. (IBISWorld) Currently, online shopping trend to be the most popular and convenient way for customers to obtain wanted commodities. Many businesses will use unique ability of shopping online to providing personalized, customized experience to attract more customers. (Wolfinbarger and Gilly 2001,
p.34)
However, someone may concerns that presently customers are spending money cautiously with intense competition and increasing operating cost may not contribute to Myer’s profitability. (IBISWorld) Moreover, others also concern that nowadays the competition between online shopping website are intensive and online retailing may not be the suitable channel for same products to sale. (Ward 2001, p.104)
Nevertheless, even though the competition between online shopping websites are intensive but Myer has it’s own advantages.
Firstly, Myer has it’s own brand reputation; brand loyalty is very important since it can be classify into customer preferences. (Dixon and Marston 2005, p.100) Expect from brand loyalty, Myer also has other positive aspect, click-and-collect delivery option. It offer a option for those who prefer look-up items online but do not willing to wait the products delivered, customers could order online and pick up the product in person at store. This strategy could also lower the cost of delivery and it could let customers back to store and additional consumption may exists.(IBISWorld) In conclusion, it is obvious that enter and adopting the online retailing would provide retailers great advantages.(Damesick 2001, p.18) Also, the outlook for Myer seems to be positive with the help of economic growth and online retailing boots the purchasing
power.