David Jones SWOT Essay

David Jones Ltd (DJS), one of Australias oldest and most recognised department farm animals was founded in Sydney in 1838 and is a seller of diversified crossings ranging from clothes to daily home products. This form knowns purpose is to provide the David Jones Board and Senior Management advice through and through the assessment of SWOT, resources, capabilities and strategies with a Balanced S stubcard and Strategy Map as the measurement of the strategies. Part A-1 David Jones Strategic Analysis SWOTSTRENGTHS tag Name, crossway and target PortfolioDJS was the early department come in in Australia and its black-on-white hounds tooth was judged one of the Australias top ten favourite trademarks in cc61. DJS maintains a wide commixture of products and imperfections ranging from fashion to electrical goods with a portfolio of all over 1000 punctuates covering worldwide and local labels as well(p) as its own internal DJS and DJS summation brand names. Services Portfoli oDavid Jones offers both in wargonhousing and financial run to cater for customers. In store profits in allow personal obtain, sprint advisors, beauty and free health screening processs. Financial profits provided include David Jones Platinum AMEX, Qantas Frequent Flyers points and the DJS gunstock card. Corporate services provided include DJ gift cards. Store PortfolioOperates 35 stores and two w behouse outlets in metropolitan locations nationally. The four pension Sydney and Melbourne CBD retail properties are owned outright with 85,000 sqm of retail space plus existing leased properties and the opening of spick-and-span colonisation format stores in areas with appropriate demographics with no major shopping centre. might for Fund RaisingEven with challenging retail conditions, DJS balance winding-sheet exhibits besotted wakelesss exhibited by red-blooded capital flows, low debt to impartiality and debt to asset ratios in FY11 and FY12. WEAKNESSES High print Switching Low Brand LoyaltyDJS is primarily a mid to exalted-end luxury brand. With the multitude of product and service options available for consumers from direct and indirect opponents and the current economic environment, David Jones cross market is now pursuit out bargains when it comes spending. Limited Global brainstormWith the globalization of retailing, DJS lawsuits formidable opposition in an attempt to profit its perceptiveness in domestic and international markets as confirmed in the IbisWorld Report, the globalisation of this industry is low but the ignore is increasing. Weak availousness IndicatorsVolatility in the global equity markets, financial un indisputablety in Europe and the US and weak domestic consumer sentiment impacted on DJS financial performance leading to a decline in all favorableness ratios in 2012 as compared to FY112. Narrow Target MarketDavid Jones directiones on the premium market and with a secern external driver of retail gross r evenue being real disposable income, DJS market primarily comp organizes of the scotch boomers with spunky disposable income, who under the current economic climate ware reduced their spending dramatically. (IbisWorld 2012 p.15) OPPORTUNITIES Growth prospects E-RetailWith developments in technology and an increasing pattern of people utilising either computer or smartphone platforms, the trend towards online shopping is progressively popular market both for its high efficiency and convenience with commodious potential still to be explored in Australia. Statistics show 12% of gross sales earnings are derived from e-retail in UK compared to 4.9% in Australia. personal line of credit transformationWith the rise of E-commerce, consumers rescue to a greater extent than options than ever before. To seize the opportunity and become a more enhanced remunerative unit is to be vigilante crossways channels thereby giving customers many options for purchasing products, which invol ve providing the personalisation of personal stores, online options for convenience and engagement through social media. Brand expansionglobalization brings in more brands and more competition from some other countries. Instead of being a competitor, DJS sees this as an opportunity of a win-win situation by cooperating with more international suppliers show by the introduction of ccc new brands over the past 26 months. strain expansionThe physical store is an experiential centre where customers are able to interact with the brand and although e-retail provides choice, convenience and access, nervus to face customer service still reigns supreme ( occupation sector insider article) the physical store plays an important role in the retail industry allowing consumers to touch, feel and piss a product home fast. By increasing physical presence, and modify systems and processes, companies willing be able to enhance the customer follow out. THREATS Customer income and taste inf luenceReal household disposable income has reflected a downward trend from 2009 to 2013 and household saving did not decrease during 2012, which reduced the take aim of cash flow meaning store sales will be touch by a decreased level of income remaining for shopping afterwards spending on daily necessities. In addition to this, switching be remain low for customer changing their preferences because of the diversity of options like Myer, K-Mart or the brand retailer like ZARA and Gucci. Counterfeit goods marketAs globalisation brings in new and various products, counterfeit goods alike 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 brands products as well as the millions of jobs lost, lost assess revenue and additional welfare spending as a issue of counterfeit products. Competitive environmentThere are an increasing summate of abroad and online compe titors entering the Australia market. In addition, a strong Australia currency and online patronage exploration is also seen as a threat to retailers for it has adeflationary impact on domestic sales4. Growing employment and leases ascent comprise of doing disdain in generalIbisWorld has stated that the capital to wage cost is expected to be 16.590 in 2013. Although industry research indicates employment and wages step-down in 2013, David Jones is increasing sales round working hours and introducing hundreds of new positions in a bid to improve customer service and engagement. Part A-2From our analysis on the external environment we have understood that in recent familys the Australian department store industry has been characterised by increasing competition collect to the presence of online competitors and overseas specialists, like Zara and Top Shop. Moreover, adverse macro-economic conditions further decrease the potential profitability of the industry. In fact after t he GFC, a deteriorated consumer sentiment index and a reduced real household disposable income together with a strong Australian dollar increase the level of rivalry signifi rumptly. In this engaging of environment, we strongly believe that DJS must rely on two fundamental capabilities first class customer engagement and customer service and Brand Positioning.These two capabilities are mainly based on a third estate group of resources in addition to some specific resources that are tabled in Appendix X in detail. Upon analysis of the internal environment of DJS, the bring up factors for the success of the firm are The property portfolio, which includes a basket of extremely well located and high-end profile buildings in all the major cities in Australia. These stores are remarkable and highly desirable assets for a premium retailer, are highly costly to imitate and difficult to substitute for potential premium competitors since they are a highly scarce resource. DJs is a partic ularly well-capitalised confederation with signifi grasst borrowing capacity as exhibit by a gearing ratio of 13%, absorb reporting ratio of 14.5x (FY12) and excess cash held allowing the company to continue investing in the development of its strategy. The brand portfolio with over 1000 brands DJS can meet the expectations of its customers and get a line the preservation of its premium brand leading as home of brands The employees and forethought culture DJS has and continues to invest in development and development curriculums to ensure that the face and the leaders of the company are strongly oriented to customer remembering and satisfaction. In assessing whether the two capabilitiesmentioned to a higher place constitute a core qualification for DJS, we have reached the following conclusion 1) Ability to develop and maintain first class customer engagement and customer service CriteriaAssessment semipreciousYesA high level of customer service is a anchor element for the success of the David Jones differentiation strategy. obsolescentYesIn the department store private-enterprise(a) arena only Myer have hitd a similar level of customer service. Non-substitutableYesOn-line based competitors can circumnavigate some profound resources of this potency such as premium store locations and well-trained employees through an efficacious on-line web store, however the physical experience of shopping in the store cannot be replaced. Costly-to-ImitateNoFirst class customer service is extremely difficult to imitate and would require any potential competitor to heavily invest in training and services, although as Myer (Roy Morgan Awards in 2012) has shown this capacitance can be replicated in the long run. According to our vision, DJS has a evanescent competitive advantage from its first class customer engagement and service since, at the status quo only Myer has a similar capability. However, it is of primary richness that DJS keep improving, for ins tance through an impeccable implementation of its OCR strategy in order to further improve the quality of its customer service so as to avoid new entrants reaching the very(prenominal) level of service. 2) Brand Positioning ability to maintain premium leadership status in the department store market as the Home of Brands CriteriaAssessment semipreciousYesThis capability helps DJS to justify its premium de endpointine and to increase customer unwaveringty. RareYesThe premium brand of DJS is a unique capability no ones in the actual competitive environment can rely on a similar core competency. Non-substitutableYesThere is no strategic substitute for this capability the DJS brand is one of the most iconic brands in Australia. Costly-to-ImitateYesDeveloping a brand identity element comparable to DJS is not one that can be achieved easily by competitors due to the massive investment required and the unique historical conditions that have contributed to form it. DJS has a Sustainable Competitive reward from its brand and in our opinion, the firm should heavily leverage on it to successfully implement its future strategy. PART A3 Stakeholder AnalysisStakeholder groupSpecific interestAssessment of Shareholder measure out alignment1. EmployeesEmployees in David Jones as same as other employees who are interested in premium payout, promotion, training and cognition from employers. Fair company policies e.g. safety workplace and effective company communication and structure are additional requirement staff are looking Employee reward to hike employee to flow in their idea to the business e.g. Innovation Workshop Training provided to retain staff executive leadership program, Future leaders program, Operations Online Compliance Training Incentive program in different level of management that align with shareholder value, e.g. newly Frontline Incentive Incentive program only represents part of employees salary which center employees interest is not fully ali gned with shareholders.2. CustomersCustomers in David Jones prefer exclusiveness. The products they corrupt from DJS wont be able to find outside the store. That also applies toshopping experiences which they are serviced in professional and friendly environment that cannot be experienced in other shops. Customers expect DJS can provide the best(p) brand with premium quality and reasonable price. Only added value products can be found in DJS Customers are common to look for smash price with top quality and service however shareholders expect DJS to be more profitable with generous dividend, especially DJS have maintained GP in these few years. It is a fact that both parties interests are contradicted. in the end customer satisfaction draws high sales and allowance account. Mainly happy and loyal customers can maintain the profits in long term which shareholders can receive take in3. SuppliersThey want to maintain good relationship with David Jones and make long term contract to get good adjustment for their business. Because of the news report of DJ, suppliers want to achieve their brand recognition in the market. Suppliers value do not align with DJs shareholders value, they desire to maximize their margin but the cost of goods increase which raze shareholders dividend. But considering the brand recognition and reputation, both shareholders and suppliers want to capture market shares. They have to obtain a balance surrounded by their interests.4. CommunityThe community expects DJ anxietys more almost corporate social responsibility such as social public assistance and environment sustainability such as producing environmental annual report and reducing greenhouse gas emissions. DJS outlines a list of environmentally sustainable managements to bear away greenhouse gases, wastes and promote energy saving. DJS give charity leave to employees to mount the National Breast Cancer Foundation and monetary support other charities. Community is not full y satisfied as DJS only concern a small portion of the society. Every group of stakeholders value has certain degree of alignment 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 careful to avoid any relationship damage. Part A-4 David Jones Generic Business Level StrategyIn a highly concentrated and competitive retail environment, David Jonespursues a Differentiation 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 expand this market to include the younger generation with medium to high disposable income. David Jones is known as a quality store and to achieve this, it focuses on providing a combination of exclusive product ranges, a high standard of customer service, image and store presentatio n and location. This is directly evidenced by optimisation of the David Jones private label and the introduction 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 BTransformationSuitabilityAccording to pro-rata population, the number of online customers in Australia ranks the third, but the sales generated from e-channel are far lower than other countries (IBIS-pp33). Although there is increasing competition in online business, retailers need online channels to expand business and take advantage of e-commerce to serve both national and international customers (IBIS-PP4). FeasibilityIn 2012, David Jones invested more than A$11 million in Technology CAPEX (AR12) and allocated a 200 person team in c ollaboration with IBM to successfully implement its scientific revolution. High bargaining power with suppliers and very strong brand identity can greatly assist in the Price Harmonisation Process. Overall, David Jones has the obligatory borrowing capacity and management skills to properly implement its turnaround strategy. harmonyDJS strategic point of Transforming the Business is not entirely consistent with its generic business level strategy but aims to provide a solid structural retail platform upon which its supplemental strategic points of strengthening the core business and growing the store network canflourish as signified by price harmonisation which allows DJS to be competitive on price but not a discounter. Shareholders Value significanceThis is fortuney 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 jibe of years to recover and reduce profit margin in the pithy term. Better customer engagement via mobile or internet and price reduction through price harmonization will attract more customers to shop at DJS over competitors, with potential to kickoff the expenses and eventually increase profit margin in long term.Strengthening the core businessSuitabilityAfter the global financial crisis, expected profit margin decline to 3.9% in 2012-2013s department industry with scaling brook of disposable income, cost reduction becomes a key factor for property GP margin (IBIS pp19). Keeping high margin categories helps to increase GP margin. Brand portfolio is also important for mitigating competition from the effect of globalization. However, even though DJS has a better roll management system, cutting time for dynamic headroom events may still cause excess inventories, which may incur inventory costs. Overall, this strategy is suitable in the current environment. FeasibilityIn 2012 David Jones added 85 new brand s into its 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 refurbishment program. This together with the turn in product mix (Fashion&Beauty/Home) should guarantee a higher(prenominal) GP margin. The reduction of the CODB is based on the management teams capabilities and on the new investment in technology that have allowed a more efficient way of conducting business.ConsistencyStrengthening the Core Business is directly related to DJS generic strategyof differentiation through its focus on Offering the best National and International Brands and the high value refurbishments it is undertaking. By continuing to invest in and expand its brand portfolio as well as the image and presentation of its stores and the provision of accompanying services, DJS provides an experience not offered by any other department store in Australia. Shareho lders Value ImplicationIn the short time, expanding labels and store refurbishment will lower DJS margin. In long term, the aim for David Jones is to minimize COBD and strengthen GP generation which improves operational profit and ultimately increases dividend to shareholders.B2 Key Stakeholder ImplicationsImpact on this stakeholder groupProposal to better align stakeholder interests with shareholder value 1. Employees verificatory open challenge and opportunity. It is risky but it will be profitable if success cast out senior management was forced to leave DJS due to internal restructure happened in 2012.Time to adapt new systems and management. High risk to fail the negotiation with supplier to harmonise the cost.2. CustomersPositive better shopping experience (store refurbishments). Open another channel to shop (Internet/mobile) welcome lower price better customer service more brands to shop sum up 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.3. SuppliersNegative Cost of good is authorise to price harmonization agreement. Profit is minimised. Increase competition between suppliers when DJS usher in morelabels to sell. Increase brand awareness and market share to offset the margin loss due to price harmonisation. Shareholder is also benefit if sales are promoted by lowering the price.4. CommunityPositive busy apps and website will facilitate 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.The new strategies have both positive and negative impact on stakeholders. The above analysis gives us a picture that custo mer is clear succeeder and supplier is loser in these new strategies. DJS has a lot of whole caboodle to do in order to create 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.