The different results for Coles and Myer announced yesterday and today are the products of two very different cultures. Parts of Coles cannot keep up with inflation. It is in decline and on the auction block. Myer is well on the way back to its former position as a force in Australian retail, having turned a profit of $51.6m, and with plans to open 12 new stores. They are heading for sales of $4b.
Yet not too long ago, Myer was also a troubled retailer.
I once believed it was impossible to change the wheels on a moving car, but Myer has shown how to whack on a new set of mags and rubber just as the car slowed down enough while going round a corner. That corner was the change of ownership last spring.
When the new owners got the keys, they found an overstocked shambles with poor morale and without clear direction.
The first change was at the top with a new chiefs and full set of direct reports. They spent the first hundred days listening, watching and identifying what needed to be done. They had a fire sale, clearing $400m of stock, taking a $150m loss, but turning slow and dead stock back into cash. Private companies can afford this luxury. Taking a similar hit in a listed company would almost certainly damage the share price.
New ownership was the circuit breaker that quickly turned poor morale into an atmosphere of excitement, anticipation and optimism.
Bill Wavish and Bernie Brookes are quite unlike the previous few leaders at Myer. They have built a clearer company-wide understanding of what is to be achieved. People now have explicit accountabilities and an understanding that they will be backed up and supported with the right tools and training.
There have been several comparisons between Myer and David Jones. While there are many adjacencies, there are now fewer overlaps. The differences are subtle, perhaps best epitomised by the Myer signing of the pretty girl next door rather a super model. Myer is more Hawkins than Gale, and happy to be that way.
There is a renewed closeness between the buying office (indeed all the support office teams) and the stores – and this means the company is hearing from its customers.
Risk taking is allowed, even expected, in the pursuit of the goals. At Coles, the fear of punishment for a “mistake” mires managers in safe politics and the security of decision by committees.
Speaking with Myer people, there is a clear understanding that a lot needs to be done, accompanied by a “no excuses” mentality. The air of excitement remains, coupled with a feeling that this will be a fun journey. Twelve months ago, barely a week would go by without my company Orex receiving a call from a disaffected Myer exec wanting out. This has almost completely dried up.
Myer is like the ABC, AFL and The Age. We see the management of these noble institutions as custodians pro tem on our behalf. We want them to do well and we are very unforgiving of those who muck it up.
The implicit message in all this is that if Myer can do it, so can new leaders in other Coles businesses. And whatever the outcome of the Coles sale process, it must not continue under the current failed leadership.
There was huge potential in Myer, as there is in Coles, Kmart Target et al. It’s not hard. It’s really just management and retailing 101 stuff.