Richard Umbers

Alan Kohler: But right now, let's welcome the CEO of Myer, Richer Umbers. G'day, Richard, thanks for joining us.

Richard Umbers: Hi. Thank you very much for having me on.

AK: You took over Myer at a very interesting time, obviously. Two big changes that occur to me that are going on in retail. One is obviously online retailing, but also the rise, or the apparent rise, of specialty stores. So, can you tell us what the future for department stores is in that context?

RU: Yeah, you've mentioned some significant changes that are happening in the retail environment. I would, in particular, call out the globalisation that one you've just mentioned in terms of lots of new entrants into the market. Lots of new retailers are hitting our shores. Secondly, digitisation in all its forms, technology in all its manifestations. And the third one, which I wouldn't want to underplay either, is the large scale societal and demographic change that's also happening in Australia at the moment. New millennials coming into the workforce, part of our workforce, but also part of the shopper base as well. And the new attitudes of shoppers at the moment. They are very much looking with a multitude of different choices. They've very much looking to be engaged and entertained and, sure, they're also looking to by stuff, but it's about a lot more than that these days.

AK: I suppose for someone like you and Myer, all of those three influences you mention come together into one where you're trying to get people to come to a department store as opposed to shopping online, and as opposed to going to a specialty individual store. And you're trying to get people to come to stores full stop.

RU: Sure, the customers gets up in the morning and they've got all sorts of choices. I mean, you're right, they can shop online, but don't forget that we've got a very significant online business as well that's been growing quite spectacularly over the course of the last eighteen months or so. So, we feel very much a part of that retail environment. And if customers do choose to shop online, then we're thrilled with that too, provided, obviously, that they put Myer into the shops that they're considering shopping at. But when a customer gets up in the morning they have so many choices about where they can go. They can... to buy in what in many cases are similar things from different kinds of retailer. Why is it they choose Myer? Why is it that they would come through our door? There's something about the nature of our offer, the experiential nature of our retail proposition. We're a premium department store. We're offering something that's going beyond just simply buying the product.

AK: One of those stores I just recently visited was Uniqlo and I couldn't believe it, to be honest. It was incredible, the Japanese store. It just seemed to go on forever. The range they had was incredible. I mean, so, stores like that must be causing you some really some... food for thought.

RU: There's some very exciting things happening in retail and with many of these new entrants, they're bringing in with them a worldly expertise, a whole new dimension to retail that is highly experiential. They're selling not just products, they're selling brands, they're also selling experiences. In our case, we are shaping our business from, if you like, historically we've been a store full of departments. Departments that sell shirts, departments that sell skirts, departments that sell electronic appliances, and so on, and moving much more towards a store that is much more geared around retail experience, a department of stories if you like. We're telling brand and lifestyle stories now to our customers and engaging them not because they want to come in and buy a new suit, but because they're going out for the evening and they want something that is a whole look, a whole feel. And these days people are defining themselves by the nature of products that they wear and the brands that they wear are saying something about them. And people are using brands and using things they buy in our stores to express themselves. And we have to place at that theme and move our stores from being just simply stores full of departments to departments of stories. And a large part of the changes that we've been introducing are about introducing new experiential stories into our offer.

AK: Richard, the last time that we met over a mineral water in your office, you talked about how you've identified the typical Myer shopper, and I think you called her Eva. Tell us about that process and what that's meant to you and the business.

RU: The starting point for the whole journey was to identify who it is that we're really there for, who it is that we're actually serving out there as the customer. And we got a lot of data from Roy Morgan who have whole of catchment data, so this is not just looking at our own internal royalty card data, of which we also have a lot of it. This is looking at the whole of the catchment and we identified out there a customer cohort that would actually have a much better affinity for our brand and the nature of a full serviced department store offer. And we hypothesised at that stage that if we re-positioned our business to focus on a narrow but more valuable shopped then we could get a better commercial outcome for all of our different stakeholders. And when we ran that through all of the stores that are in our portfolio, we believe that a re-positioning of the business combined with an element of localisation that allows us to respond in local markets to different local forces, will allow us to re-position the business and get a better outcome. That stage was a hypothesis, but we built a whole plan around it. It involved getting the right products in the stores to cater for that different customer. It forced us to rethink our service proposition and lift customer service in the stores. It forced us to re-look at Omnichannel and be investing very heavily in new technology and it also forced us to look at the very nature of our physical assets that we had in our business; our supply chain, our physical stores. And ask whether or not they were optimised for that new customer cohort as well. And across those streams, we've built a transformation program that we've been executing on for the last seven or eight months now. And recently we put out our first half year and we believe that there are some very encouraging signs there that suggest we're on the right path.

AK: Perhaps you can talk a little more about the service, that you mention how you had to change and improve your service offering but you also previously mentioned how the fact that millennials are joining your staff. And the other thing occurring of course is that customer shopping times, the times that people want to shop, is changing which means that you have to respond in ways that are quite, sometimes, quite difficult, I think, given the nature of unions and the workforce and so on. So how difficult was it to respond to what customers want in terms of the service?

RU: Retail is all about people, it is all about human interaction. It is an experience, and experience comes from human interactions, particularly at the premium department store end. There are lots of people out there that sell products, but not many that can bolt onto that an experience. And as a premium department store, that's one of the things that we can use to differentiate us. And service in all its forms, it’s service in terms of the person that stands opposite you and serves you at the point of sale, but it's also the technology that they employ. It's also how our website works. It's also how we look after your shopping bags while you go and do the rest of your shopping. Services like that are all part of the customer service experience. And we had to really nail what it was that was going to be a differentiating factor for us and realise that people sat at the very heart of that. And so we went through a process of building capability within our business at all levels, from.... if you like... my senior team has also had a number of new members with very specialist skill sets coming in to reflect the direction we've been going in. And as you look through the structure itself, right down to the people that we've got down on the shop floor serving the customers, bringing in 3000 recruits at Christmas time, recruited for their attitude and the way that they engage with customers. It included just under a thousand Gifticians, for example, specially trained in understanding the gifting market, what it was people were looking for, being able to help people through thinking up ideas for things they wanted to give to their friends and family and so on. And it meant that we had to rethink the nature of the people we have engaging with customers which then meant once you've recruited them, we then need to be able to train them and we've put in place significant new addition training facilities that now cater for, for example, intimate fitting school, which is a very specialist skill set, Gifticians that I previously mentioned working with technology and in particular, our new iPad ordering service on the shop floor, a very important part of our service proposition. And then the third component, if you like, which is a very important part of our cultural journey, because this isn't just about the things we're doing physically, but it's also the cultural journey we're on, is a journey of empowering the store managers, asking store managers and store teams to take ownership for what's going on in their part of the business. And with that, make decisions in the favour of the customer, live and on the shop floor, has then driven significant change at store level as well which has significantly lifted the service that we're providing to our customers. That means re-rostering as well, and that's particularly important given the changing nature of retail where shoppers are now shopping in the evenings and weekends where a couple of generations ago it was very much weekday activity.

AK: We're out of time, but great to talk to you, Richard. Thanks very much.

RU: Thank you so much.

AK:  I’ve been talking to Richard Umbers who is the Managing Director and CEO of Myer.