Humiliating blow for Aussie retail giant Myer as Nike cuts ties with the department store

Myer has been dealt another blow. Photo / 123RF

Myer has been dealt a fresh blow with reports Nike is planning to close most of its concessional stores within the struggling department store.

The global sportswear brand is believed to be moving seven of its 10 stores off the department store's flagship floors following the continued decline of foot traffic and to create a more vibrant customer experience in stand-alone stores.

Nine's masthead The Age reported Nike's local franchisee Retail Prodigy Group has told Myer it intends to close the concessions.

A store within a store is an ageing concept which had traditionally benefited major brands because it provided a presence in high foot traffic zones, according to Queensland University of Technology retail expert Gary Mortimer.

And the decline in Myer's performance meant it was no longer a viable strategy.

He said the major department store adopting a discount environment aimed at attracting value-seeking customers was also not suitable to Nike.

"If Nike focuses on their own stand-alone stores then they will then create a positive and relevant customer experience that's very much aligned to their brand and their core customer," he told news.com.au.

"Some of the Nike flagship stores are very good around the world and they attract a particular demographic of customer."

DGC Advisory retail analyst Geoff Dart agreed the brand and the department store's strategies didn't align.

"It's what we call cognitive dissonance," he said. "It disconnects between the person who buys Nike and the person who goes into Myer."

"From a demographic perspective it makes perfect sense for Nike, when you're lifestyle (and) vibrant you don't want to be seen in a store that represents a different demographic."

A Myer spokeperson didn't confirm the closures, instead saying in a statement to news.com.au it was "in discussions with our Nike supplier about their range and offer at Myer stores, including ensuring we are placing their products where it is most popular and relevant to our customers."

Shoppers in the past relied on iconic department stores to access luxurious brands but those items were now readily available in dedicated stores across the country, Mortimer said.

Concession stores remain profitable to Myer, however, accounting for A$654 million ($685.8m) in sales last year.

"The department stores rest a great deal on concessions because without those cosmetics houses and fashion brands within the department store, there's not much else there that would attract a shopper," Mortimer said.

"What we may see is exclusive concessions enter into these stores that simply don't exist in a stand-alone store, which means to access them you have to go to the department stores."

Both David Jones and Myer recorded significant profit losses in 2018 and Mortimer said the days of the iconic chains are numbered.

"The big traditional department store will continue to go through a challenging period," he told news.com.au.

"We may find the iconic stores in the CBD areas or in very large shopping complexes like Bondi Junction, but in the outer-lying suburbs and regional areas, I think those days are numbered."

After a torrent of retail companies closed their doors in 2018, Ed Harry menswear have entered voluntary administration and sportswear manufacturer Skins applied for bankruptcy already this year.