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08 February 2006

What's the real value of the Myer in Coles Myer?


With a mooted $1b sale price likely for mid-tier Australian department store chain Myer, parent company Coles Myer has obviously taken its eye off the game. Its latest “All that I want” campaign launched this week, takes the embattled store (see blog No one will save Myer now) down to an all new low. Competitor David Jones' boss Mark McInnes has described Myer's heavy advertising and discounting campaigns as "irrational"”… but at DIFFUSION we think he’s being polite. With retail turnover continuing to fall in Australia (according to a Australian Retailers Association report in the Sydney Morning Herald 8 February 2006), Myer has obviously decided to continue its “irrational” approach by launching an expensive and brand damaging campaign. The full colour catalogue DIFFUSION found in its weekend paper seemed highly reminiscent of another ‘low budget’ Coles Myer brand, Kmart (see image above). According to Coles Myer, Kmart’s brand position is “low cost, discount department store” while Myer’s is “pleasurable shopping experience/service, great brands”. However, we're struggling to tell them apart. The new owners, whether CVC, Newbridge or Edgars, will not only have their work cut out for them in working out how much of the $1b is brand valuation, but will also have a long and expensive climb back up the slippery slope of re-asserting that value to investors, employees and customers alike, as Coles Myer has done a pretty good job destroying it.

P.S. The Kmart catalogue is on the left.

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