Australian retailer Coles Myer mounts Web defense

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MELBOURE--Australia's largest retailing group, Coles Myer, has embarked on an aggressive Internet strategy aimed at destroying online upstarts in Australia such as dstore.com before they expand out of cyberspace and into the real world.

The Coles Myer move involves launching most of its store brands and several new ones on a new portal. It's also placing its Internet divisions into a new subsidiary, e.colesmyer.

Coles Myer's new Internet subsidiary will be led by Jon Wood, who until recently ran the retailer's direct marketing businesses. He will oversee online activities expected to generate revenue of more than $152 million this financial year. The subsidiary is unlikely to break even for two years.

Australia's Internet start-ups have benefited from major retailers' reticence at joining the so-called e-tailing revolution. Traditional retailers cite uncertainties about customer acceptance rates, delivery risk and a possible loss of sales from established stores.

In the meantime, online stores such as Wishlist have established healthy businesses and some, such as dstore and ChaosMusic, are now swapping their dot-com equity for old fashioned bricks-and-mortar stores.

Copyright March 2000, Crain Communications Inc.

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