Myer won’t take part in Westfield’s online mall

Bernie Brookes, boss of Australia’s largest department store Myer (ASX: MYR), has stated that his company will not sign up to take part in Westfield Group’s (ASX: WDC) new ‘online mall’, stating that the shopping centre giant’s venture is simply a way for it to pocket commissions from its retail tenants.

Westfield unveiled its new website on Tuesday, which gives customers access to more than 100,000 products online from various stores. Country Road (ASX: CTY), David Jones (ASX: DJS) and Cotton On are amongst the stores that have already signed up to have the site link to their products.

John Batistich, Westfield’s marketing director, had stated that Myer would follow suite early next year. He told investors that Myer was working with the group and would continue to do so in the New Year.

However, speaking at his company’s AGM on Wednesday, Brookes stated that the website would weaken earnings for tenants and could potentially push up prices for tenants, as Westfield would be entitled to a 10% commission for any product sold through its website.

Brookes said, “No, we have no plans to participate in the website and I think Westfield have launched their site on the basis of retailers paying a fee to actually go on to their website. That therefore takes away the ability to sell products at a cheaper price if someone else is clipping the ticket.”

Whilst that might be the case, the website is also arguably an excellent way to promote the retailers and their products, which could aid them in growing their own online presence. David Jones’ CEO Paul Zahra said “We are very focused on increasing our foot traffic both in-store and online. Our decision to be on board with Westfield’s new online site is a reflection of this objective.”

Foolish takeaway

Myer’s decision to not partake in Westfield’s searchable mall will save it from having to pay commission on products sold through the site, but it could also mean that the company’s products will not gain the same level of exposure as its competitors should the site prove successful.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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