If, like me, you've seen a few more revolutions around the sun than you'd like to admit, you'll probably remember what a big deal it used to be to go to 'town', as a kid.
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It was usually a Saturday, and Mum would dress you in your 'good' clothes, and pack you in the car or the train, as the excitement built. And the destination, as often as not, was one of the big department stores - those multilevel behemoths like David Jones, Grace Bros. or Myer that seemed to have one of everything. You'd usually take a packed lunch, but sometimes - if you were lucky - you might get to eat at the food court.
That was then.
These days, the department store has been largely replaced by the shopping centre. Instead of a single store, we have a single centre. Instead of different departments, you have different shops. Everything is larger - the car park, the number of brands, the different foods. And competition is immensely tougher.
The poor old department store is struggling to find its place.
Shrink to survive
Myer CEO Richard Umbers admitted as such yesterday when he recommitted to store closures. The company has cancelled expansion plans, and is going to reduce its retail space footprint by 6 per cent. Overall, it expects to reduce its store network by one-fifth.
Of course Myer and its competitors are putting the best possible spin on the decisions, but there's no escaping the reality - there are simply fewer customers who want to shop in a department store these days, when you can get a better range, cheaper prices and often better service by heading to your local Westfield, and deciding there which stores you want to patronise.
It should be noted that much of those stores' woes are not of their own doing. Sure, people complain about service levels falling, but it's very hard to run a large, multi-floor department store with sufficient staff when sales are dropping. And no, putting those staff back won't arrest the decline - the falling sales preceded and prompted the cuts to staffing levels.
So Umbers and his compatriots are doing the right thing in - to use a political metaphor - 'saving the furniture'. They're executing a strategic retreat, back to the locations in which they can secure sufficient customer numbers to support profitable growth. But make no mistake, that means a smaller business now, and in future.
Whether those changes will be sufficient to provide Myer a permanent reprieve is the long-term question, though. With online retail continuing to grow, shopping centres getting larger (and moving upmarket) and international retailers like the UK's Debenhams putting out their shingle in Australia, Myer still has a question to answer: Can it become, and remain, relevant to Australian shoppers?
Just don't call it 'home brand'
Interestingly, the company trying to do so by using a strategy that it shares with the successful German discounter Aldi and our own Bunnings - not that you'll ever hear Myer admit it.
That strategy is, of course, home brands. Not that they'll call it that, of course - the more palatable version used by those retailers is 'private label'. And it's a good one for Bunnings and Aldi, and Myer (and David Jones, it should be said) is dead right to copy it.
Here's how it works: a retailer will either create its own brand (for example Aldi's 'Bakehouse' bread brand) or will sign a deal with a manufacturer or brand owner to be the exclusive distributor of that brand in Australia.
In the case of a brand owned by the retailer, it can usually sell the product for a lower price than a major-brand equivalent or make more money selling it at the same price as the competition. And in the case of a 'controlled brand', the retailer doesn't have to worry about being undercut by other retailers, and can often use the brand as a way to draw customers into its stores.
Both are smart business, and any retailer worth their salt should be doing it. The challenge, of course, is to make sure those brands are actually what the consumer wants - there's little point being 'different' unless you're also better.
Foolish takeaway
Like airline bosses, department store CEOs are on a hiding to nothing. Do a great job and the business does okay. Take your eye of the ball, and you're 12 months away from disaster. There's every sign Richard Umbers has the right strategy to get the best out of a structurally challenged business. Of course, that doesn't mean you should buy the company's shares.
There are no points for 'degree of difficulty' in investing -- so this is one piece of merchandise that should be left on the shelf.
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Scott Phillips is the Motley Fool's director of research. He owns shares in Westfield. You can follow Scott on Twitter @TMFScottP. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).
