It will be interesting to observe the events around the proposed demerger of Myer. In this Age piece, Karen Kissane runs through the history of Myer and Melbourne. The Oz has gone a little less historical and a bit more fluffy.

Melbourne
owns Myer. Not the shareholders, not the CML board, Melbourne. The
shareholders are the custodians. Myer is as important in Melbourne as The Age, the ABC and AFL, and any threat to it will cause some grief to the city.

But
department stores have struggled worldwide. A couple of generations
ago, if you asked Australian shoppers where they would go to make a
purchase, a department store (probably Myer) would have been named in
the top three destinations in almost every product category –
furniture, electrical, hardware, clothing, accessories, stationery,
luggage, and many others. Not any more. I struggle to think of a
category that department stores own. There has been a steady drift away.

There
will be plenty written about Myer and its difficulties. However, in all
the analysis, I doubt whether much of it will examine the cultural and
leadership issues that have troubled Myer. The leadership issues have
been central to the company’s shortcomings.

A full analysis is on the site here.

Coles Myer’s big missed opportunity

In
the early nineties, there was one huge opportunity available to Coles
Myer – big box hardware. CML had a team working on the project (largely
the same team that worked up the Officeworks concept). Plans were very
well advanced. The first site was to be where Megamart, Kmart and
Officeworks now sit in suburban Chadstone. But CML got cold feet amid
the troubled W4K and some other mischief known as Yannon. What a lost
opportunity.

Bunnings now occupies that space so well that it
would be difficult for any new entrant. Last week Bunnings reported an
EBIT of around $400 million on sales of $4 billion. CML will shortly
announce an EBIT of $700 million on sales of $33 billion. The maths
should be simple. This has to go down as one of the greatest missed
opportunities.

The current CML board can rightly claim that it
was not them. What the market must ask is whether the corporate culture
of CML entrenches similar decision making. In my role interviewing
senior CML people, I get the impression that some serious cultural and
attitudinal shifts are still needed. There is little evidence of change.

Rob Lake’s wife owns 762 Coles Myer shares and Bunnings is a major client of his company, Orex.