Myer gears up to handle $1 billion in online sales with new automated distribution centre

Department store retailer Myer Holdings (ASX: MYR) is gearing up to handle more than $1 billion in online sales after taking possession of the newly completed site of its fully automated robotic national distribution centre (NDC) in Melbourne.

The new facility is central to Myer’s ‘factory to customer’ initiative being implemented by CEO John King and underscores the group’s rapidly growing digital customer base which saw online sales surge 47.5 per cent to $424.1 million in the latest half-year.

Myer is currently fitting out the NDC, a 40,000sqm facility located at Dexus Property Group’s (ASX: DXS) Horizon 3023 industrial estate in Ravenhall, after recently being handed the keys to the property on which it has secured a 10-year lease.

When fully operational in the first half of next year, the NDC will feature more than 200 autonomous mobile robots to ensure faster order processing and delivery timeframes to Myer stores and customers. It will also be the largest implementation to date of the high-tech Geek+ RoboShuttle system in the southern hemisphere.

“Our NDC will fundamentally change our supply chain operations, delivering a faster, more efficient and profitable way to meet the demands of our online business and ensure we maximise the inventory flow to our stores,” says King.

“This is an important deliverable of our Customer First Plan and importantly, will deliver a better outcome for both our customers and shareholders.”

The state-of-the-art NDC is expected to be operating by the end of March next year to service Myer’s in-store and online sales activities across the country with capacity for more than 100,000 SKUs (stock keeping units). The NDC is also designed to an uncertified 5-star Greenstar level with plans to deliver 20 per cent of the facility’s energy needs through solar power.

Myer’s executive general manager of supply chain, Tony Carr, says the NDC is key to adapting the business to its rapidly growing e-commerce sales.

“There are widespread customer benefits and efficiencies anticipated for both the stores and online businesses,” says Carr.

“It will allow us to be more data led in stocking our stores – to allow stores to draw from the NDC as they meet demand, not the push model of old, ensuring we continue to fulfil the stores more efficiently to meet customer demand.

“This will provide huge benefits to our business. It will ensure, through automation, that online purchases are serviced in an even faster and streamlined way.”

Apart from improving the online fulfilment process, Myer is expecting the new NDC to deliver improved profitability while providing scalable capacity to meet the needs of expected sales growth through online channels.

Myer’s online business has grown nearly fourfold in the past four years to become one of the largest online retail businesses in Australia.

When announcing a sharp improvement in Myer’s underlying net profit in the first half of FY22, King revealed that Myer’s online sales were outpacing both multichannel retailers and pure online plays.

Online sales currently represent almost 28 per cent of total sales for Myer, with growth over the latest half year and into the current half bringing the group closer to meeting its target of $1 billion in online sales a year.