Why Bernie Brookes is “alert but not alarmed” and staying put in the Myer top job

“We’ll acquire more brands”

Myer’s exclusive brands now represent 20.3% of Myer’s total sales, and Brookes says Myer has three exclusive brands turning over more than $50 million annually.

“Why Myer exclusive brands are important to us is that they are a product that no one else has, so it gives a uniqueness to us,” says Brookes.

“The second reason is that they are profitable because we own them, control them, source them ourselves and develop them ourselves, so therefore they have higher margins.”

Brookes plans to grow the exclusive brand component of Myer around 1% each year by acquiring new brands and developing others.

“To do that you’ve probably got to grow them about 5-6% every year and that gives us the opportunity for us to bring the customer along the journey,” he says.

“You can’t just take a whole lot of generic products from another country and just plonk them in a space.”

International competition “helps us lift our game”

Brookes believes there was a certain “inevitability” international retail giants such as H&M, Zara and Topshop would come to Australian shores, but he says Myer has actually seen its sales increase in locations where the international competitors have set up shop.

“They fight in a different space to us …. They actually work in complement to us,” he says.

And while Brookes says the presence of international retailers has driven up the price of CBD real estate, he believes the newcomers are “living in false hope” if they think they will be able to make good on their ambitious expansion plans.

“They forget Australia is only 20 million people and so they come and say we’re going to build 40 stores but in the end they build one in each CBD location, they might go to Chadstone, they might go to Pacific Fair, but after that it doesn’t become viable,” says Brookes.

“So I think we’re going to see them all come but I think we’re going to see them scale back their elaborate expansion plans because they just won’t be able to get the real estate and they will find out the cost of labour is very high, they will find out the cost of rents are very high.”

Closer to home, Brookes says he believes it will take “a long time” for Woolworths South Africa to make changes to David Jones following its acquisition, and says this presents Myer with a window of opportunity.

“We’re alert but we’re not alarmed,” says Brookes. “They are one of many competitors … we’re preparing a fight against Sephora, and we’re preparing a fight making sure we’re good online.”

“If we strengthen our own business rather than worrying too much about what they’re doing , we’ll find we not only strengthen against David Jones but against Sephora and against every other business as well.”