Myer discounting strategy intensifies as pressure grows on Australian department stores

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Myer discounting intensifies

Highlights

Myer increased sales mainly through acquisitions like Just Jeans and Jay Jays, while intensified discounting weighed on profitability as per its latest annual report.
Myer reduced its brand valuation by over $200 million in one year and ended the financial year with a $100 million net cash buffer, avoiding the liquidity crisis seen at David Jones.
Department stores like Myer face relevance erosion from online and specialist retailers, forcing deeper discounts and increased loyalty efforts amid persistent cost-of-living pressures and changing consumer habits.

Profit pressure and store strategy

As reported by The Guardian, Myer is posting sales growth largely because of its acquisition of apparel chains including Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E, rather than from a broad-based lift in customer demand. Its latest annual report says higher than planned promotional activity is being used to stimulate demand, a strategy that is weighing on profitability even as sales volumes hold up.

The retailer has also cut the stated value of its brands by more than $200 million in a year, signalling that management sees those labels as materially less valuable than before. In stores, deep discounting has become a visible feature of trading as Myer tries to keep stock moving and maintain customer traffic.

Myer’s position nevertheless differs from David Jones in one important respect, which is liquidity. While David Jones entered administration under rising debt pressure, Myer ended the last financial year with a net cash buffer of $100 million and has already reduced its store count to 56 from 60 before the pandemic, helping lower lease liabilities across its network.

Sector shifts reshape the department store market

IBISWorld says department stores have faced a sustained erosion of relevance over the past five years as online platforms attract price-conscious consumers and specialist retailers such as Mecca respond faster to changing tastes. Long property leases tied to weaker stores have added further strain for operators with large physical footprints.

Cost of living pressure is also reinforcing deal-hunting behaviour, changing how and when consumers shop in the category. That dynamic leaves department stores balancing the need to protect margins against the need to move large volumes of seasonal stock and keep cash flowing.

Richard Hemming, editor at Under The Radar Report, says volume remains critical in retail because a larger customer base can later support improved pricing and margins. Myer is also trying to use discounting to build loyalty through programs such as Myer One while revamping the business to push online sales more aggressively, though analysts remain divided on whether permanent promotions are a workable recovery tactic or a slower route to further financial stress.

As noted in our earlier article, retailers are ramping up experiential retail to win attention as shopping habits shift.

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