Australia’s largest department store chain, Myer, expects its Middle East expansion to provide growth and opportunities back home as it seeks to sell a Melbourne icon to the world.
Myer’s announcement today that it will open five stores in Dubai and Abu Dhabi over the next five years reflects a very different business to the one Sidney Myer opened in 1900.
Since the buy-out from private equity group Texas Pacific Group in June 2006, Myer has drawn on the expertise from the US investment group’s investments in US chain Neiman Marcus and British department store operator Debenhams.
Myer chief executive Bernie Brookes said the business was ready to be taken overseas and that the Middle East experiment would “help us learn an enormous amount about being better retailers”.
“There will be reverse synergies from this. There will be products in the United Arab Emirates which we will be able to bring back to Australia. If you take the Asian market, we will be able to buy more and buy it cheaper, so it will help us. Then there’s the overall learning which will give us a competitive edge over our competitors here in Australia.”
With 65 Australian stores and plans to take that number to 80 over the next few years, international expansion was inevitable, Mr Brookes said. “There aren’t many new sites where we can build Myer stores so we are forced to look overseas,” he said.
Mr Brookes said details surrounding forecast volumes and expected earnings would be announced in conjunction with Myer’s financial results in September.
While the venture – which has a solid foundation through its joint-venture structure with Nakheel Fashion, owned by Dubai’s ruling Maktoum family – has received board approval, it has still yet to receive final sign-off. “(Nakheel) will bring their property and HR expertise, local, social and economic structure, and we will bring our brands, our product and our retail knowledge,” Mr Brookes said.
He said Myer’s research indicated a gap in the Middle East that could be filled by Myer’s Australian designers.
Myer’s first international store will be its flagship, to be housed within Dubai’s new IBN Battuta Mall late next year.
“There are no Australian department stores there,” he said. “There’s very few of the European department stores and not many American offers. Bloomingdales is setting up there and Barneys is setting up there but they are super premium stores so we think we can fill the gap.
“We will be approaching over 40 of our major Australian suppliers and fashion designers to venture over with us … We see great opportunities for their product.” Mr Brookes said Myer would look at expanding into other United Arab Emirates states and eastern Europe once the five stores were established.