Myer's online waiting game

Myer's chief Bernie Brookes may be right that multi-channel retailers will one day be among online best-sellers. But with little know-how at present, it's hard to see them dominating in three years.

SmartCompany

You’ve got to admire the way Myer’s chief executive Bernie Brookes continues to talk the talk.

In an environment that has been incredibly testing for any retail boss, Brookes has stayed what I would call "realistically optimistic”, describing the market as it is (very tough) while not failing to talk up Myer as a business moving to meet the challenges of structural change.

On Friday he received good coverage for a speech where he declared that online pioneers such as Catch of the Day had "had their moment in the sun” and that within three years, Australia’s list of the top online retailers would be dominated by the big names with big chains of stores – like Myer, of course.

"They’ve been there when there has been no effective competition," Brookes said of the online-only retailers who lead our online pack.

"If we produce a list in three years’ time of the top internet sellers in Australia, it will be dominated by the Myers, the David Joneses, the Kmarts... the existing bricks and mortar retailers. That’s exactly what’s happened in the US and UK.’’

It’s a theme that he’s been talking about for a year. You might remember I wrote last year about Brookes' declaration that so-called "onmi-channelled” retailers would come to dominate the lists of the biggest online sellers, because online-only retailers simply couldn’t match the convenience of an offline/online model.

Brookes’ big piece of evidence to support his argument was a list of the top 20 retailers in the US – only two were pure online retailers, being Amazon and 1800 Flowers.

The latest list from the website Internet Retailer tells a similar story – only four of its top 20 online retailers are pure internet players, and an additional retailer, QVC, is basically a television shopping network that also sells online.

Big retailers with big physical chains of stores still dominate online sales in the US – in the top 10 are names like Walmart, Staples, Apple and even Sears, a department store not a million miles from Myer.

So Brookes’ theory is there. But what Australian retailers lack – and Myer is prime example – is any sort of history in online retail.

The likes of Walmart, Staples and Sears have been seriously selling online for more than a decade. This is certainly not the case in Australia.

Myer only started seriously ramping up its website last year and the process of expanding its online product range continues. Its great competitor, David Jones, only re-opened its online store in 2010 after shutting it completely when the dot.com bubble burst.

Brookes’ theory about multi-channel retailers coming to dominate online sales might be right, but I struggle to believe his three-year time frame – the big names will be on the list, but I really doubt they will dominate.

This is not the US or the UK. Our big retailers have no experience, no heritage and very little know-how of selling online. They are still at the point of bringing their sites up to what many would see as minimum standards required for a big brand.

Brookes would do well to look at the latest results of electronics retailer JB Hi-Fi, which has been selling online for far longer than Myer or David Jones, and has only managed to get online sales to $50.8 million or 1.62 per cent of sales. That is still well, well behind the likes of Catch of the Day, which has $250 million in revenue, or Deals Direct, which has about $100 million.

Bernie and his brothers in bricks and mortar retailing still face a real online waiting game.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.

This article first appeared on SmartCompany on August 20. Republished with permission.