The news of the latest round of job cuts at Myer may be symptomatic of the broader economic downturn wreaking havoc in the retail economy — but the roots of the current crisis have a long history in the soulless managerialism that has infested this once proud family firm.
It wasn’t always this way. When Sidney Myer purchased a drapery store in Melbourne’s Bourke Street in 1911, he could hardly have foreseen the stellar future ahead for his fledgling emporium. In 30 quick years, Myer evolved into a dominant force on the national retail landscape, with flagship properties anchoring shopping centres across the nation. If it wasn’t Myer, it was Grace Bros and if it couldn’t be bought there, something was wrong with you, not the store.
The service sometimes resembled an outing to grandma’s place rather than an actual retail experience. At suburban outlets, the homely ethos was built around the idea of floor staff exercising autonomy over their own departments. Management often bowed to the superior product knowledge of committed full-timers. Some experienced staff would later strike out on their own, building successful businesses with the knowledge gleaned from their time at the store.
Some old timers remain, especially in city stores, having somehow managed to weather the aggressive HR assault launched in the wake of Myer’s 2006 buyout by private equity henchmen TPG.
Last week, Myer announced that while first-half sales had tumbled 3.8%, EBIT was expected to increase between 1% and 6% in the six months to July, which, if you read between the lines, means that profit rates have been maintained through cost-cutting — that is, by reducing part-time hours and shedding “non-essential” staff. Rival David Jones announced similar measures.
“We expect difficult trading conditions to continue, especially in the third quarter,” chief executive Bernie Brookes told Bloomberg.
Under Brookes, individual managers have been told to cut part-time hours by 20%, and back-of-shop logistics staff — once crucial to the efficient running of massive stores with multiple stock holding areas — have been all-but abolished with frail staff members expected to lug heavy boxes from receiving bays to replenish the floor. Christmas casuals — those employed to assist full-timers over the break — have been dumped from rosters.
Crikey understands Brookes’ management team are expecting big bonuses in February for their staff-shedding efforts. And as registers stop ringing, the behind-the-scenes tales of HR woe continue.
One of the worst examples of staffing madness occurred early this year, when the so-called “face of Myer”, a particularly knowledgeable greeter with 25 years experience in a city store, had her regular part-time shifts removed overnight. The white-haired icon had been the first port of call for city shoppers trying to locate the sock department for decades. While junior management claimed to be only responding to senior directives, it took weeks of wrangling, and customer complaints, to reinstate her hours.
The assault on Myer’s grand old dames has been gathering pace for years. Starting around Coles’ takeover of Myer in 1985, then escalating under the reigns of failed CEOs Denis Eck and Dawn Robertson, middle management, often barely out of their teens, started to exercise increasing influence with little or no corporate history.
Retail analyst Rob Lake says Myer’s malaise may reflect a lack of communication rather than a deliberate strategy to end the careers of long-serving, experienced staff.
“All retailers suffer a shortage of good labour and they will still want to retain good ones.”
Lake says many suburban shopping centres still feature ‘Help Wanted’ signs in windows, indicating opportunities remain for enthusiastic self-starters.
But Myer’s problems may extend beyond a dubious approach to human resources.
Crikey’s inbox has been filled with anecdotes about slumping service levels in the aftermath of the Boxing Day sales, with customers seeking assistance routinely denied the opportunity to part with their cash.
In these heady days of market fragmentation, it would seem nigh-on-impossible for Brookes to reinstate the glory days of a full-service department store with a legion of friendly faces eager to assist genuine customers. But by declaring a war on costs, he would be wise to remember that Myer’s old guard is almost solely responsible for the goodwill that endeared the store to millions of Australian shoppers.