Business Bloopers
The Big Retail Failure of Australia: Study on Myer’s $486 Million Collapse
Myer was once one of Australia’s most trusted retail brands, operating massive department stores across the country. But behind the familiar name, the business was slowly falling behind changing customer behaviour and the rapid growth of online shopping. Oversized stores, weak digital expansion, endless discounting and poor inventory management eventually pushed the company into a staggering $486 million loss in 2018. This business failure case study explores how Myer missed major retail shifts, lost investor confidence and became one of Australia’s clearest examples of what happens when legacy retailers fail to adapt fast enough.
Myer was one of those businesses that was part of everyday life for Aussies. The department store chain had been a fixture of Australian life for decades. Myer stores welcomed families with their Christmas sales, shoppers sauntered through the beauty and fashion sections on weekends, while large Myer stores became symbols of shopping centres in communities all over Australia.
The company also took comfort from its long history. Investor enthusiasm about Myer was high upon its return to the Australian Securities Exchange in 2009. In one of Australia’s largest retail IPOs, the retailer raised about AUD$2.3 billion and its shares started at $4.10. Despite intense pressures on the retail industry, many thought there remained a long-term future for the company.
However, while Myer continued to appear as a successful business, the environment in which it operated was already undergoing rapid transformation. Customers were getting more accustomed to buying online market. The decline of the company did not occur because there was one bad fiscal year or a product launch that didn’t work. But over a series of cascading business blunders. When the keys were returned to creditors in 2018, those issues had turned into a crisis that sank Myer into one of Australia’s greatest retail business failure stories.
About Myer
Myer was founded in the Victorian town of Bendigo by Sidney Myer in 1900. The business grew into one of Australia’s largest department store chains, offering fashion, beauty, furniture, electronics, and homewares under the same roof over time.
For decades that business model worked better than the dream. Department stores used to be one-stop shopping because shoppers liked getting all their needs met in one location. Shopping centres also relied on stores such as Myer heavily because big anchor stores attracted traffic.
Peaking at over 60 stores across Australia, Myer is now down to its last few people. The company became a part of the Australian retail culture. All that success was built upon a business model that depended on customers coming into stores. Dependence on that started to slowly become one of Myer’s biggest weaknesses once shopping habits began changing in the 2010s.
The Retail Industry Started Changing
Until the mid-2010s, the pace of change in the retail industry began to accelerate much more quickly than many traditional department stores had anticipated. Customers started making online purchases, comparing the prices on their mobile phones and purchasing from home.
International retailers, including Zara and H&M, expanded into Australia with more frequent inventory cycles and trend-oriented fashion collections as well. But it also transformed how consumers expect convenience and speed of delivery with online platforms. Shoppers had the advantage of browsing hundreds of items online in minutes rather than trekking through department stores for hours.
People were aware that the industry was evolving, but Myers acted too late. Management did not proactively restructure its business model early; it remained heavily dependent on conventional department stores gradually making changes to the margins. Customer behaviour changed before this company had sped up its digital strategy.
The Problem With Massive Stores
Myer's most significant operational challenge was its store footprint. In its last years of decline, the business managed approximately one million square metres of retail space nationwide.
Those locations were built for a very different time in retail, a time when department stores still ruled the shopping culture and drew major crowds every single day. However, once customer traffic began to decline many areas inside Myer stores continued to struggle.
Whether those areas were selling well or not, the company still had to pay rent, electricity and staffing and maintenance costs. Retail analysts called this the problem of dead space as Myer was paying for more retail space than modern shopping demand could handle.
In the interim, competitors were getting thinner and more efficient. Online-first retailers were able to avoid the costs of physical locations, while fast-fashion brands profited from operating smaller stores with quicker product turnover. Myer was stuck with a corporate structure set up for an era of retail that had passed.
Falling Behind in E-Commerce
Among other reasons for Myer’s downfall was a failure to react quickly enough to online shopping. E-commerce had already begun to revolutionise retail around the world by the late 2010s but Myer was still firmly focused on foot traffic through physical stores.
Online sales made up less than 7.7% of the company’s total sales in 2018. That number shows how far the company has fallen behind while rivals have poured money into digital systems, online fulfilment and customer experience.
It was not just technology. Myer leadership still thought department stores would be the centre of shopping for far longer than they were. Rather than quickly investing in digital retail, the company wasted many years attempting to blend traditional retail operations with slow sluggish online growth.
By the time management had finally come to grips with just how aggressively and quickly customers were gravitating online, it was too late, the company lost substantial market share to competitors that moved earlier.
The Discounting Trap
The declining sales in Myer have given them no choice but to turn more and more to discounting and promotional events. Clearance sales became a staple in all stores, as unsold stock began to pile up.
Initially, this strategy worked to boost short-term sales. But that resulted in an even bigger issue as time went on. Customers began holding out for discounts because they learned another sale was just around the corner.
That mangled profit margins throughout the business. Despite appearances, though, the company was making less money from each transaction. It depreciated the image of the brand and subsequently made Myer appear less premium to rival retailers.
Inventory Problems and Slow Operations
A further area of real concern related to Myer’s failure was inventory management. Products stayed on shelves for too long, creating clutter in stores and competing poorly against faster-turnaround retail competitors.
Retail was being increasingly defined by the need for speed, agility and rapid product cycles. It meant that Myer found it difficult to shift stock quickly, with many of its systems still fashioned around the slower retail rhythms of a previous age.
This has created a vicious cycle within the business. More discounting ensued, further cutting into the bottom line as inventories stayed slow-moving. Meanwhile, the company was still burdened with huge operating costs from far too large stores and expensive retail sites.
Retail experts later called the company a victim of “legacy retail bloat,” where old systems, overweight operations and outdated retail strategies were simply too expensive and unworkable to support in 21st-century retail.
Leadership Pressure and Financial Collapse
The financial damage was materialised in 2018 and could not be hidden. Myer posted a statutory net loss of AUD$486 million and an impairment of goodwill worth AUD$515.3 million. Total sales of the company went down to AUD$3.1 billion, whereas EBITDA decreased by almost 25 per cent to AUD$149.4 million.
| Metric | Result |
| 2018 Statutory Net Loss | AUD$486 million |
| Goodwill Write-down | AUD$515.3 million |
| Share Price Decline | $4.10 to under $0.40 |
| Total Sales (2018) | AUD$3.1 billion |
| EBITDA (2018) | AUD$149.4 million |
| Online Sales Contribution | Around 7.7% |
| Retail Space Burden | Around one million sqm |
The accompanying profitability results destroyed the confidence of investors. From its original IPO, Myer’s share price fell by more than 90%, ending up below $0.40. As confidence in the market fell, the company was eventually ousted from the ASX 200 index.
At this point, the pressure was building on leadership as well. The former chief executive Richard Umbers left the company in early 2018 after he struggled to turn the business around. Management was openly criticised by investors and analysts alike for being slow to respond to changes in the retail environment.
The Failure That Forced Change
The failure of Myer itself became one of Australia’s great case studies in retail failures. In contrast, customer behaviour evolved much more quickly than the company, which kept it tied to large stores and old-fashioned retail thinking disentangled.
There was no single mistake that led to the decline. It stemmed from years of pushing off digital investments, high store operation costs, poor inventory management and deep discounts that gradually eroded the profitability throughout the company.
Myer eventually announced it would scale back its stores after losing so many customers and launched an extensive restructuring plan for the company that revolved around more digital retailing, improvement of operations, and removing underperforming retail space. The company recovered gradually with its Customer First strategy. Read full story on Myer’s recovery and retail come back here.
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