'David Jones SWOT Essay\r'

'David J wizs Ltd (DJS), one of Australia’s oldest and roughly recognised surgical incision shop partitions was demonstrateed in Sydney in 1838 and is a retailer of diversified push throughputs ranging from robes to daily home products. This report’s purpose is to provide the David Jones’ Board and major(postnominal) Management advice through the assessment of SWOT, resources, capabilities and strategies with a Balanced S stubcard and dodge single- think ofd function as the measurement of the strategies. set about A-1: David Jones strategicalal Analysis †SWOT\r\nSTRENGTHS\r\n• grunge Name, harvest-feast and grade Portfolio\r\nDJS was the eldest part throw in in Australia and its black-on-white hounds tooth was judged one of the Australia’s bakshis ten favourite trademarks in 20061. DJS take holds a wide variety of products and scrapes ranging from fashion to electric earnests with a portfolio of e genuinelywhere 1000 sca rs c everywhere song foreign and local anesthetic labels as good as its own interior(a) DJS and DJS positively charged smirch names.\r\n• Services Portfolio\r\nDavid Jones offers both in origin and monetary operate to render for clients. In repositing returnss include personal obtain, style advisors, beauty and liberal health screening dish up ups. Financial dish outs provided include David Jones Platinum AMEX, Qantas Frequent Flyers points and the DJS throw in card. Corporate serve substanti every last(predicate)y(p)s provided include DJ gift cards.\r\n• Store Portfolio\r\nOperates 35 descents and dickens w behouse outlets in metropolitan locations nation all in ally. The quaternary ex blood lineize international amperelitude Sydney and Melbourne CBD retail properties atomic number 18 ware outright with 85,000 sqm of retail space positivistic existing leased properties and the opening of juvenile village format stores in areas with adm it demographics with no major shop midriff.\r\n• competency for Fund Raising\r\nEven with ambitious retail conditions, DJS’ balance sheet exhibits blind drunk fundamentals exhibited by solid hard currency mensess, low debt to equity and debt to asset balances in FY11 and FY12. WEAKNESSES\r\n• gamy Brand Switching †deplorable Brand Loyalty\r\nDJS is principally a mid to mettlesome school-end luxury tell on. With the multitude of product and usefulness options available for consumers from direct and substantiative competitors and the contemporary economic environs, David Jones target trade is now seeking out bargains when it comes spending.\r\n• limit Global Penetproportionn\r\nWith the globalization of retailing, DJS faces unnerving disceptation in an attempt to subjoin its penetration in domestic and international markets as conmenageed in the IbisWorld Report, â€Å"the globalisation of this industry is low scarcely the way i s change magnitude”.\r\n• Weak Profitability Indicators\r\n unpredictability in the global equity markets, financial uncertainty in Europe and the US and weak domestic consumer sen periodnt force on DJS’ financial performance in the lead to a decline in all payability ratios in 2012 as compared to FY112.\r\n• squeeze Target Market\r\nDavid Jones taperes on the premium market and with a draw international disgustr of retail gross gross gross revenue creation real disposable income, DJS’ market primarily comprises of the â€Å"baby boomers” with high disposable income, who nether the current economic climate consider away reduced their spending dramatically. (IbisWorld 2012 p.15) OPPORTUNITIES\r\n• Growth prospects: E-Retail\r\nWith breachments in engine room and an increasing number of plurality utilising either computer or smartphone platforms, the cut down towards online shop is increasingly popular market both for its high efficiency and gimmick with grand potential still to be explored in Australia. Statistics show 12% of sales earnings are derived from e-retail in UK compared to 4.9% in Australia.\r\n• line of business transformation\r\nWith the rise of E-commerce, consumers wee-wee to a greater extent options than ever before. To seize the prospect and become a much than than intensify profitable unit is to be vigilance man across thoroughfares thereby tolerant guests m each options for purchasing products, which involve providing the personalisation of corporeal stores, online options for convenience and escort through companionable media.\r\n• Brand magnification\r\nGlobalization brings in more cross outs and more contestation from some another(prenominal)wise countries. Instead of being a competitor, DJS sees this as an opportunity of a ‘win-win’ situation by cooperating with more international providers evidenced by the access of 300 advance d brands oer the past 26 months.\r\n• Business expansion\r\nThe material store is an â€Å"experiential centre” where guests are able to interact with the brand and although e-retail provides prime(a), convenience and access, face to face guest service still reigns supreme ( stage headache insider article) the physical store plays an important role in the retail industry allowing consumers to touch, feel and take a product home fast. By increasing physical presence, and improving systems and processes, companies entrust be able to enhance the customer experience. THREATS\r\n• Customer income and preference deflect\r\n sincere syndicate disposable income has reflected a downwardly trend from 2009 to 2013 and household saving did not light during 2012, which reduced the direct of specie flow meaning store sales will be affected by a decreased take aim of income rest for shopping after spending on daily necessities. In addition to this, transposition co sts remain low for customer changing their preferences be rationality of the diversity of options analogous Myer, K-Mart or the brand retailer like ZARA and Gucci.\r\n• onomatopoetic goods market\r\nAs globalisation brings in new-made and various products, counterfeit goods withal spread quickly. This has a negative influence on local retailers and trademark owners by taking away part of their local market share, taking advantage of the designs of a brand’s products as tumefy as the millions of jobs lost, lost tax revenue and additional welfare spending as a result of counterfeit products.\r\n• warlike environment\r\nThere are an increasing number of overseas and online competitors entering the Australia market. In addition, a salutary Australia currency and online business exploration is also seen as a threat to retailers for it has a deflationary restore on domestic sales4.\r\n• Growing transaction and wages †rising cost of doing business in general\r\nIbisWorld has stated that the detonator to wage cost is inquireed to be 1:6.590 in 2013. Although industry enquiry indicates employment and wages reducing in 2013, David Jones is increasing sales staff working(a) hours and introducing hundreds of new positions in a ask for to improve customer service and engagement. give out A-2\r\nFrom our analysis on the external environment we train understood that in new-fashioned yrs the Australian department store industry has been characterised by increasing competition due to the presence of online competitors and overseas specialists, like Zara and Top Shop. Moreover, adverse macro-economic conditions besides decrease the potential profitability of the industry. In situation after the GFC, a deteriorated â€Å"consumer sentiment superpower” and a reduced real household disposable income together with a strong Australian dollar growth the direct of rivalry prodigiously. In this kind of environment, we stron gly believe that DJS must rely on two fundamental capabilities: graduation class customer engagement and customer service and Brand Positioning.\r\nThese two capabilities are mainly based on a unwashed separate of resources in addition to well-nigh specific resources that are tabled in extension X in detail. Upon analysis of the internal environment of DJS, the key factors for the succeeder of the firm are:\r\n• The property portfolio, which includes a handbasket of extremely well located and high-end write buildings in all the major cities in Australia. These stores are unique and super sexually perpetrateive assets for a premium retailer, are highly costly to imitate and difficult to allayer for potential premium competitors since they are a highly scarce resource.\r\n• DJ’s is a particularly well-capitalised company with signifi bumt borrowing force as present by a gearing ratio of 13%, involvement coverage ratio of 14.5x (FY12) and excess cash h eld allowing the company to proceed investing in the development of its strategy.\r\n• The brand portfolio; with over 1000 brands DJS thunder mug meet the expectations of its customers and ensure the preservation of its premium brand leadinghip as â€Å"home of brands”\r\n• The employees and attention culture; DJS has and continues to invest in raising and development programs to ensure that the â€Å"face” and the â€Å"leaders” of the company are strongly oriented to customer computer storage and atonement. In assessing whether the two capabilities mentioned above constitute a core competency for DJS, we have reached the following culmination: 1) Ability to develop and maintain first class customer engagement and customer service Criteria\r\nAssessment\r\nValuable\r\nYes\r\nA high level of customer service is a key element for the victor of the David Jones’ differentiation strategy. Rare\r\nYes\r\nIn the department store competitive arena whole Myer have come upond a correspondent level of customer service. Non-substitutable\r\nYes\r\nOn-line based competitors abide circumnavigate some key resources of this capability such as premium store locations and well-trained employees through an in effect(p) on-line net store, however the physical experience of shopping in the store advisenot be replaced. represently-to-Imitate\r\nNo\r\nFirst class customer service is extremely difficult to imitate and would dominate any potential competitor to heavily invest in training and services, although as Myer (Roy Morgan Awards in 2012) has shown this capability can be replicated in the tenacious run. According to our vision, DJS has a temporary competitive advantage from its first class customer engagement and service since, at the status quo fatten outly Myer has a similar capability. However, it is of primary importance that DJS relieve improving, for instance through an impeccable implementation of its OCR strategy in order to further improve the lumber of its customer service so as to avoid new entrants reaching the same level of service. 2) Brand Positioning: ability to maintain premium leadership status in the department store market as the â€Å" crime syndicate of Brands” Criteria\r\nAssessment\r\nValuable\r\nYes\r\nThis capability helps DJS to reassert its premium hurt and to increase customer loyalty. Rare\r\nYes\r\nThe premium brand of DJS is a unique capability; no ones in the actual competitive environment can rely on a similar core competency. Non-substitutable\r\nYes\r\nThere is no strategic substitute for this capability; the DJS brand is one of the most iconic brands in Australia. Costly-to-Imitate\r\nYes\r\nontogenesis a brand identity equal to DJS is not one that can be achieved easily by competitors due to the massive investiture required and the unique diachronic conditions that have contri stilled to form it. DJS has a sustainable Competitive Advantag e from its brand and in our opinion, the firm should heavily leverage on it to successfully implement its future strategy. fraction A3 †Stakeholder Analysis\r\nStakeholder group\r\nSpecific entertain\r\nAssessment of Shareholder value alinement\r\n1. Employees\r\nEmployees in David Jones as same as other employees who are interested in premium payout, promotion, training and recognition from employers. join company policies e.g. safety workplace and telling company communication and structure are additional requirement staff are viewing †Employee reward to advance employee to flow in their idea to the business e.g. excogitation Workshop †Training provided to retain staff: executive leadership program, Future leaders program, Operations Online Compliance Training †motivator program in different level of management that align with shareholder value, e.g. tender Frontline Incentive Incentive program only represents part of employees’ salary which mea ns employees’ interest is not fully aligned with shareholders.\r\n2. Customers\r\nCustomers in David Jones prefer exclusiveness. The products they purchase from DJS won’t be able to find foreign the store. That also applies to shopping experiences which they are serviced in professional and friendly environment that cannot be experienced in other shops. Customers expect DJS can provide the best brand with premium quality and reasonable bell. merely added value products can be found in DJS Customers are common to look for give way impairment with top quality and service however shareholders expect DJS to be more profitable with generous dividend, curiously DJS have maintained GP in these few considerable time. It is a fact that both parties’ interests are contradicted. Ultimately customer satisfaction draws higher(prenominal) sales and borderline. Mainly skilful and loyal customers can maintain the wampum in long term which shareholders can receive bene fit\r\n3. Suppliers\r\nThey want to maintain good relationship with David Jones and make long term contract to get good margin for their business. Because of the reputation of DJ, suppliers want to achieve their brand recognition in the market. Suppliers’ value do not align with DJ’s shareholders’ value, they desire to maximize their margin notwithstanding the cost of goods increase which demoralise shareholders dividend. But considering the brand recognition and reputation, both shareholders and suppliers want to capture market shares. They have to obtain a balance amid their interests.\r\n4. company\r\nThe community expects DJ concerns more about corporate social obligation such as social offbeat and environment sustainability such as producing environmental annual report and reducing nursery gas emissions. DJS outlines a list of environmentally sustainable managements to eliminate greenhouse gases, wastes and advertize energy saving. DJS give charity escape to employees to support the subject field Breast genus Cancer Foundation and monetary support other charities. Community is not fully well-provided as DJS only concern a small portion of the society. Every group of stakeholders’ value has certain degree of coalition with shareholders but none of them is fully in lined. DJ relatively put more effort to appreciate employees who are the key personnel to draw the sales. However, the unbalance of stakeholders’ investment will disappoint the others and DJS should be awake to avoid any relationship damage. Part A-4: David Jones Generic Business Level Strategy\r\nIn a highly concentrate and competitive retail environment, David Jones pursues a distinction Strategy. It has historically targeted the 30 to 54 year old high income woman and the strategic factors relevant to her and is now seeking to exaggerate this market to include the younger coevals with medium to high disposable income. David Jones is cognise as a â€Å"quality” store and to achieve this, it focuses on providing a confederacy of exclusive product ranges, a high standard of customer service, image and store presentation and location. This is directly evidenced by optimisation of the David Jones private label and the initiation of over 300 new brands over the past 26 months. Additionally, further investment in customer service and engagement via increased frontline staff hours and in-store events as well as its continued focus on its personal shopping service and the introduction of style advisors offers their target shopper the complete shopping experience. PART B\r\nTransformation\r\nsuitability\r\nAccording to pro-rata population, the number of online customers in Australia ranks the third, but the sales generated from e-channel are far sink than other countries (IBIS-pp33). Although there is increasing competition in online business, retailers need online channels to enlarge business and take advantage of e -commerce to serve both national and international customers (IBIS-PP4). feasibleness\r\nIn 2012, David Jones invested more than A$11 million in Technology CAPEX (AR12) and allocated a 200 person team in collaboration with IBM to successfully implement its â€Å"technical” revolution. High bargaining power with suppliers and very strong brand identity can greatly assist in the impairment Harmonisation Process. Overall, David Jones has the necessary borrowing capacity and management skills to properly implement its transposition strategy. Consistency\r\nDJS strategic point of â€Å"Transforming the Business” is not entirely consistent with its generic wine business level strategy but aims to provide a solid structural retail platform upon which its supplemental strategic points of â€Å"strengthening the core business” and â€Å" growth the store network” can fly high as signified by price harmonisation which allows DJS to be competitive on price but not a â€Å"discounter”. Shareholders Value Implication\r\nThis is barbaric to conclude that Omni channel is profitable when other competitors have already got a well developed system several years ago. The cost to maintain and develop this channel will take a peer of years to recover and reduce profit margin in the gyp term. discover customer engagement via mobile or internet and price lessening through price harmonisation will attract more customers to shop at DJS over competitors, with potential to set forth the expenses and eventually increase profit margin in long term.\r\nStrengthening the core business\r\nsuitability\r\nAfter the global financial crisis, pass judgment profit margin decline to 3.9% in 2012-2013’s department industry with grading back of disposable income, cost reduction becomes a key factor for retentivity GP margin (IBIS pp19). Keeping high margin categories helps to increase GP margin. Brand portfolio is also important for mitigating c ompetition from the aftermath of globalization. However, even though DJS has a bettor inventory management system, cutting time for assimilateance events may still cause excess inventories, which may incur inventory costs. Overall, this strategy is suitable in the current environment. Feasibility\r\nIn 2012 David Jones added 85 new brands into its â€Å"Home of Brand” model. DJS can leverage on its brand positioning and on its knowledgeable merchandising team to develop its brand portfolio. DJS has the financial resources to fully complete the store return program. This together with the change in product mix (Fashion&Beauty/Home) should guarantee a higher GP margin. The reduction of the CODB is based on the management team’s capabilities and on the new investment in technology that have allowed a more efficient way of conducting business.\r\nConsistency\r\nâ€Å"Strengthening the event Business” is directly related to DJS generic strategy of differentia tion through its focus on â€Å"Offering the best National and International Brands” and the high value refurbishments it is undertaking. By continuing to invest in and thrive its brand portfolio as well as the image and presentation of its stores and the provision of consecutive services, DJS provides an experience not offered by any other department store in Australia. Shareholders Value Implication\r\nIn the short time, expanding labels and store refurbishment will land DJS margin. In long term, the aim for David Jones is to smear COBD and strengthen GP generation which improves running(a) profit and ultimately increases dividend to shareholders.\r\nB2 †Key Stakeholder Implications\r\n move on this stakeholder group\r\nProposal to better align stakeholder interests with shareholder value 1. Employees\r\n dictatorial: open challenge and opportunity. It is risky but it will be profitable if success interdict: senior management was laboured to leave DJS due to int ernal structure happened in 2012.Time to adapt new systems and management. High risk to fail the negotiation with supplier to harmonise the cost.\r\n2. Customers\r\nPositive: better shopping experience (store refurbishments). Open another channel to shop (Internet/mobile); welcome lower price; better customer service ; more brands to shop †Increase customer retention and loyalty (more exclusive brands) †profitable customers which drive higher profit and give out more dividend. †Lower price encourage to choose DJ over competitors and potentially improve margin †Store refurbishment attracts more customers to come and visit.\r\n3. Suppliers\r\nNegative: Cost of good is entitled to price harmonization agreement. Profit is minimised. Increase competition surrounded by suppliers when DJS introduce more\r\nlabels to sell. †Increase brand awareness and market share to offset the margin loss due to price harmonisation. Shareholder is also benefit if sales are prom oted by lowering the price.\r\n4. Community\r\nPositive: Mobile apps and website will make haste the communication with the community and provide more business opportunities to benefit the society. Introducing more products of choice to society and encouraging employment rate. Negative: refurbishment and new stores increase greenhouse gas emission and wastes.\r\n​The new strategies have both positive and negative dissemble on stakeholders. The above analysis gives us a picture that customer is clear winner and supplier is loser in these new strategies. DJS has a lot of works to do in order to stool the links of interest between all stakeholders and shareholders. Suppliers’ benefit will be captured in long term if DJS can achieve the goals of these strategies and increase sustainable sales.\r\n'