Strategic Plan For David Jones Pty Ltd In The Upmarket Retail Sector, Essay.

What you are required to do:

You will be supplied on Moodle with initial industry research on either of three nominated industries and some information on the company assigned to you by the lead lecturer, for which you are to develop a strategic plan. The format of the situation analysis will be outlined to you during the lectures. You are to use the techniques which will be covered in the first 4 lectures as the basis of your analysis. Simply restating research data without your critical analysis will not be acceptable. You must identify the major issues with which the company must cope in your analysis You will need to supplement this research with your own research.

Students are required to undertake a detailed analysis of the nominated market in Australia and the external factors affecting that industry. The analysis should cover market structure, segmentation, distribution channels, competitors and trends for the total market. In addition, you will also be required to undertake an internal analysis of your chosen company in order to identify their core capabilities and competencies and any competitive advantage they may possess. From this analysis you will highlight the key issues facing the industry and the company and put forward an initial range of potential future strategies which the company may consider.

Preparation for and participation in an online discussion forum in which you are required to demonstrate significant progress towards the finalisation of the Final Strategic Recommendations Report.

What you are required to do:

Based on the feedback received on your Situation Analysis Report you will now proceed to a Final Strategic Recommendation for your chosen company in which you will be required to detail not only what your strategic recommendations are but also what specific steps at the business and corporate level are necessary to implement those strategies as well as how you will monitor and control the performance of the company as it goes forward.

• You will incorporate in your report those parts of your Situation Analysis as are appropriate to produce a full strategic report. This will mean that you may cut and paste from your initial report and Turnitin Similarity levels will be adjusted to accommodate this.
• Strategic Options
• Final Recommended Strategy
• Implementation of Final Strategy
• Monitoring and Control of Future Performance

Market and Competitor Analysis

David Jones Pty. Ltd or David Jones is an Australian organization that operates in the upmarket sector of the retail based sector. David Jones had been acquired by the South Africa based retail organization named Woolworths Holdings Limited. David Jones was established in the year 1838 by David Jones who is a Welsh merchant and a future politician as well. David Jones the operates more than 40 stores in different Australian territories and states. The major competitor of David Jones in the upmarket based sector is Myer. The organization further opened its first store in New Zealand in the year 2016 (Davidjones.com., 2019).

The report will be based on the analysis of the market in which David Jones operates and the corporate and financial performance of the organization as well. The SWOT analysis framework will be used for the analysis of internal environment of David Jones. The strategic options which can be considered by David Jones for the analysis will also be discussed in the report.

David Jones belongs to upmarket or luxury retail sector of Australia. The luxury retail based sector of Australia has shown high levels of growth in spite of the decline which has been experienced by the other retail based sectors. The research by IBIS world luxury retail market is rising on a continuous basis although the other retail sectors have suffered due to rise in levels of competition. The rise of online retailers has also been able to affect the retail sectors in a huge manner. However, the luxury retailers are insulated from weak retail based environment in the country (Barros, Hernangómez & Martin-Cruz, 2016).

The expenditure of tourists on the luxury goods is considered to be a major reason behind the growth of luxury retail market. The increase in income levels is considered to be a major reason behind the growth of luxury retail sector. The financial instabilities have not been able to affect luxury retailers in Australia. The polarisation in the market has been able to increase the demands for luxury goods in the Australian market. The revenues of Australian upmarket retail industry have amounted to 2 Billion Dollars in the year 2018. The industry has grown at a rate of 9.1% in the last five years of the operations of different organizations (Daspit et al., 2017). The major organizations which are a part of the upmarket retail sector of Australia along with David Jones are Myer and Harvey Norman.

Financial and Corporate Performance

Financial performance – David Jones had to face disruptive situations in the upmarket retail sector of Australia. There has been a 58.3 percent drop in the operating profits that have been gained by the department store. The operating profits of the organization were 108 Million Dollars in the year 2017 that had dropped to 45 Million Dollars in the year 2018. David Jones has achieved a gross profit of 820 Million Dollars in the recent years. However, the expenses have increased due to the store openings and new food based formats (Ibisworld.com.au., 2019).

The transformational initiatives which have been implemented by the organization have led to reduction of profit levels of David Jones in the market. The re-platforming of online activities by David Jones have paid off and online sales of the organization have grown by 21.4 percent. David Jones further aims at 10 percent of the total online sales the by the year 2020 with the help of different the omni-channel fulfilment centres and the expertise of regional supply chain as well. The management of David Jones has started providing maximum levels of focus to the reduction of production based costs of the organization (Insideretail.com.au., 2019).

Corporate performance – The online sales of David Jones have played a major role in improving the corporate performance of the organization. 2018 has however proved to be quite difficult for David Jones as the organization has been struggling to operate due to the challenges which are provided by the trading conditions in Australia and South Africa. The implementation of new technologies related to online operations and new inventory in the organization is considered to be an important factor that is able to affect the corporate performance which has been depicted by David Jones (Insideretail.com.au., 2019).

Strengths – The domestic presence of David Jones is strong as the organization has its operations in different sectors that include, fashion, food products and electricity. The variety of products which are offered by David Jones can be considered to be a major reason behind the growth of the organization. The upmarket retail industry of Australia has few players and has been captured by David Jones in an effective manner. The stores of the organization are developed and operated in the areas that are based on low risks and are able to provide high value to the customers (Demir, Wennberg & McKelvie, 2017).

Weaknesses – David Jones however faces aggressive competition from a major player in the upmarket retail based industry, Myer. The global presence of the organization is not up to the mark and this has been able to reduce the levels of profitability in the upmarket retail based industry. The market segment that has been targeted by the organization is narrow as the operations of the organization are only based on the premium market segment. The products which are thereby offered are only based on demands of the premium customers (Durand, Grant & Madsen, 2017).

SWOT Analysis

Opportunities – Major opportunities are provided to David Jones based on effective and profitable acquisitions of organizations with the aim of expanding its operations in the market. The implementation of private label strategy is also able to provide a chance of growth to the organization. The structure of the management of David Jones can be changed to some extent for the purpose of increasing the levels of profitability in an effective manner (Dyer et al., 2015).

Threats – The competition which is faced by David Jones in the domestic market can have an immense effect on its future operations. Although the market consists of few players, the increase in demands of the upmarket products can also increase the number of organizations that plan to enter the market. The loyalty based levels of the customers in upmarket retail industry is also quite low and it is considered to be a major threat towards the operations of David Jones in the future (Engert, Rauter & Baumgartner, 2016).

Competitive advantage – The competitive advantage based strategy that has been implemented by David Jones is related to the concentration that is provided by the organization to the core business operations including, credit card based operations and the departmental stores. The organization is also able to return excess levels of cash flows to the shareholders in order to avoid the need of excess working capital (Insideretail.com.au., 2019). The dividends which are paid by the organization are higher as compared to its competitors in the industry like, Myer and Target. The analysis of competitors is considered to be an important part of the operations of David Jones in the retail industry. The private label brands which are offered by David Jones in the industry are able to provide major levels of advantages to the organization based on its growth based needs (Hill, Jones & Schilling, 2014).

David Jones currently offers its products to the upmarket based retail customers of Australia. The organization has been able to build a customer base in this particular segment with the help of different products that are offered by David Jones under its private label. The organization has not invested its resources in diverse portfolios and products. A major strategic option that can be implemented by the organization is related to increasing the exclusivity of the brand (Ethiraj, Gambardella & Helfat, 2018). The organization needs to make effective strategic alliances in order to increase the brand equity in an effective manner. The different organizations which can act as efficient strategic partners of David Jones include, Disney, Naturica, Scotch & Soda, Kenzo, Burberry Beauty. The future strategic partners of the organization will be able to provide a level of exclusivity to David Jones in the upmarket retail sector (Frynas & Mellahi, 2015).

The major recommendations that can be provided to David Jones are based on the expansion of the private label brands. This has been a major advantage of the organization over its major competitor Myer in the upmarket retail market. The growth of demands of upmarket based products need to be addressed by the organization with the help of its private label based products.

Conclusion

The report can be concluded by stating that David Jones operates in a market area which has few players. However, the organization needs to develop the operations and offer exclusive products in order to face the aggressive competition that is faced in the Australian retail industry.

References  

Barros, I., Hernangómez, J. & Martin-Cruz, N. (2016). A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7(3), pp.149-159.

Daspit, J.J., Chrisman, J.J., Sharma, P., Pearson, A.W. & Long, R.G. (2017). A strategic management perspective of the family firm: Past trends, new insights, and future directions. Journal of Managerial Issues, 29(1), p.6.

Davidjones.com. (2019). David Jones Online | Shop Fashion, Beauty, Home & More. Retrieved from https://www.davidjones.com/

Demir, R., Wennberg, K. & McKelvie, A. (2017). The strategic management of high-growth firms: a review and theoretical conceptualization. Long Range Planning, 50(4), pp.431-456.

Durand, R., Grant, R.M. & Madsen, T.L. (2017). The expanding domain of strategic management research and the quest for integration. Strategic Management Journal, 38(1), pp.4-16.

Dyer, J.H., Godfrey, P., Jensen, R. & Bryce, D. (2015). Strategic Management: Concepts and Cases. Wiley Global Education.

Engert, S., Rauter, R. & Baumgartner, R.J. (2016). Exploring the integration of corporate sustainability into strategic management: a literature review. Journal of cleaner production, 112, pp.2833-2850.

Ethiraj, S.K., Gambardella, A. & Helfat, C.E. (2018). Theory in strategic management. Strategic Management Journal, 39(6), pp.1529-1529.

Frynas, J.G. & Mellahi, K. (2015). Global strategic management. Oxford University Press, USA.

Hill, C.W., Jones, G.R. & Schilling, M.A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Ibisworld.com.au. (2019). Luxury Retailing – Australia Industry Research Reports | IBISWorld. Retrieved from https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-goods-services/luxury-retailing.html

Insideretail.com.au. (2019). Luxury retailing industry on the rise in Australia. Retrieved from https://www.insideretail.com.au/news/luxury-retailing-industry-on-the-rise-in-australia-201803