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  • Writer's pictureKuba Tymula

Myer’s digital play: will it defy the skeptics?

The original of this article appeared in Business Spectator

When Richard Umbers unveiled his $600 million strategy to turn Myer around in the next five years, he gave it a human face. “Eva” is a fictional character, a data-generated ideal customer. She is between 20 and 50 years old, and she likes to indulge in mini shopping sprees and celebrate with a glass of bubbles. Eva is a construct built out of the richest customer loyalty databases available to a non-grocery retailer in Australia.

The strategy and Eva got the nod from shareholders, who eagerly bought up the shares offered in Myer’s $221 million equity raising. Eva will do a splendid job informing the retailer’s big budget, mass campaigns. But let’s be honest, she’s a little superficial. The key to Myer’s turn-around lies in the advanced data analytics, which Umbers has indicated will be a key to his strategy.

Skeptical analysts have described Myer’s strategy as “evolutionary rather than revolutionary” . They may be right, but the kind of evolution that implementing analytics correctly will represent can deliver sales growth that will take shareholders breath away.

US department stores Macy’s and Nordstrom conduct rolling experiments on customer micro-segments, which test whether customer engagement is affected by time of day, communication wording, colour – you name it, they’ll test it. Best-in-class organisations test until 70% of their experiments fail. They expect another twenty per cent of tests to do nothing more than retain the status quo ROI on marketing. But they know that a golden ten per cent of them will have a major impact on profits.

The Myer shareholders who are aware of the potential will be champing at the bit to get going. But it is not quite that simple. There are two big challenges, which the company will face in going beyond Eva.

The first is the lack of world-class analytics capability in the Australian labour market. We simply don’t attract enough of the necessary talent, meaning an active global recruitment strategy is essential.

The other is the sad truth that the biggest obstacle to successfully implementing best practice comes from within companies themselves. Siloed organisational structures are inherently sluggish. The core functions of IT, marketing and operations need to be aligned both at a strategic “big picture” level and tactically – passing information between them hourly, even minutely, to respond to the insights generated by analytical experiments. This is not possible where the departments are seated in different parts of the same office, let alone in different states. In order to enable meaningful testing you need to be able to communicate, fail and regroup fast.

Finally, there is the attitude to trial and failure within an organisation. Despite startups making the cult of failing trendy in the media, many companies still struggle with the idea that a very high percentage of your hypotheses have to be proven wrong in the quest for success. They are either unable to generate hypotheses which are audacious enough or frightened at the volume of negative results.

Richard Umber will need to navigate all of these hurdles to prove the growth skeptics wrong. Eva must be more than the technology-enabled construct of a 20th-century marketing mindset. Investors should be looking for changes in organisational structure, big overseas hires and a dramatic increase in the number of personalized and targeted customer communications if they’re contemplating buying Myer for value. Eva is a lovely vision, but vision without execution is just hallucination.



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