Assignment Help on David Jones
Introduction:
David Jones was founded by David Jones in 1838 by a Welsh immigrant. It holds the record for oldest departmental store in world trading under original nametag. It is among top 10 most recognized brand names in Australia, with 35 branches all over Australia, with 2 warehouse outlets. David Jones has gone through major developmental changes in last 10 years. After the closure of its 2 outlets, due to losses and failed food chain experience. A bolder strategy was adopted which included overhaul of its stores by linking to exclusive high profile brands. David Jones also introduced online shopping facilities and members reward program in partnership with American express (David Jones 1H, 2013).
During the aftermath of global financial crisis (GFC) affected David Jones as well and their share price dropped from $4.50 and sales declined to 6.4 % in the first half of 2009. Store had to face leadership issues as well in 2010, when CEO Mark Mcinnes resigned amid allegations by a female employee of sexual harassment. David Jones bounced back and appointed Paul Zahra as CEO, who worked hard on improving sales and reputation of David Jones. Most recent financial outlook for David Jones’s show half yearly profit after tax was $73.5 million. Same time last year it was $85 million, decline of 13.5 % (David Jones 1H, 2013).
Australian model Miranda Kerr was face of David Jones from 2008 till March 2013.Until recently model Jessica Gomes was appointed as brand ambassador. David Jones has also recently opened its next generation store at High point shopping centre, Melbourne.
Mission Statement |
To be the world leader in the provision of high quality beauty, home and fashion products and to provide our customers with outstanding service making their shopping experience as enjoyable and as fulfilling as possible.
Situation AnalysisInternational environment |
David Jones is Australia’s leading branded department store. It is set apart from the others by its distinctive positioning as a ‘Home of Brands’; its profitability; splendid in-store design and atmosphere; strong balance sheet; convenient locations; excellent customer service; wide and top notch range of national and international brands; a loyal customer base and consistent margins (David Jones, 2013).
However, the company faces increased online competition, exposure to the dynamic retail spending environment, increased rent, financing, labor and utilities costs. In order to deal with the challenges it faces, David Jones will expand its scope in terms of stock level of existing brands, new brands, floor staff, customer service and expanding the store network. This will ensure an increase in its gross profit margin, expansion of its e-commerce capacity, increased sales, increased capability to deal with hostile retail conditions, increase in its share price hence attracting more investors, increased productivity of staff, a decrease in the number of complaints from customers, an increase in the compliments given by customers and overall long run success of the company (Fitzsimmons, 2013).
The company will increase the range of the various brands of men’s, women’s and children’s fashion, designer, beauty and home products it provides. Further and additional investments will be made in the aforementioned brands. The most effective brands will be identified and secured by the company’s productive merchandise team. The products will be of outstanding quality, excellent design and will come at affordable prices. This will go a long way in the alignment of the company to its strategy of providing high quality national and international brands. In addition, it ensures that David Jones stays relevant and provides the brands that the consumers want to purchase.
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Financial and Non-Financial Situation |
The additional investment will lead to an increase in the company’s output which will in turn lead to increase in revenue and subsequent increase in profits. The company will incur various production and marketing expenses as a result of the increase in output and sales. However, these will be offset by the increased revenue ensuring smooth flow of work and no negative effects to service levels.
The company will minimize costs through the elimination of manual processes, reduction of costs related to the supply chain, automation of store reconciliation tasks and eliminating store administration costs. The company’s revenue and profit will be further increased by the financial services the company offers (David Jones, 2013). These services also provide customer analytics capacities that are extremely valuable to the company
Increase output |
High revenue and profit |
Expansion of the organisation’s store network |
Diversified brand portfolio |
The company’s store network will be developed through the establishment of more stores in high margin locations. These will provide top-notch national and international brands and implement the company’s overall policies. Further profits can be attained through the renovation of various existent stores. The culmination of all these factors will be a high dividend for the company’s shareholders, which will result in increased demand for the company’s shares and thus a higher share price.
The employees of David Jones will undergo induction training when they join the company. This goes a long way in ensuring that they understand the role they are required to play in the organization. In addition, the company’s staff will undergo regular development and performance appraisals to ensure that their performance is up to par and in line with the organizations goals. The management will formulate and enforce policies that facilitate the increase of workers’ productivity and monitor their progress.
Situation AnalysisExternal environment
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Political and Legal Environment |
David Jones is facing competition from local retailers and international online stores. The current loophole in GST along with high purchase prices makes it difficult for David Jones to compete with online retailers. The current loophole in the GST tax laws allows consumers to import goods up to $1000 tax free which makes it hard for David Jones to compete with international online stores due to the addition 10% tax which increases the cost of local retailers compared to online stores. The carbon tax also has led to increase in utility bills of retailers (Sydney Morning Herald, 2013). The government implemented the carbon tax without assisting businesses to cut consumption of power etc.
The current political instability has led to some keen reforms pending which is affecting the business sentiment like that of the GST. The retailers have been lobbying to get the goods purchased online taxed however the government has turned down their request. The current political instability is affecting the sentiment of businesses and the mining boom is slowly coming to an end in Australia. The consumers are delaying purchases due to the uncertainty in political arena and the current elections coming up.
Economic Environment |
There are a few economic factors that are in favor of David Jones. The Reserve bank of Australia has recently cut interest rate that has led to more money in the hand of consumers to spend since they have to pay less for mortgage and credit card. On the other hand the Australian currency has been depreciating which has made imports expensive for consumers purchasing online through overseas websites thus favoring local retailers like David Jones (Yahoo Finance, 2013). The interest rate cut also makes borrowing cheaper for David Jones, which will help them to fund their expansion plan to become an Omni channel retailer.
David Jones has been successful in bargaining with shop owners to reduce the rentals of shops that have helped the company to cut cost. The mining boom in the country is coming to an end and unemployment is rising which means consumers will spend less thus directly affecting David Jones (Sydney Morning Herald, 2013). Since the GFC Australian consumers have started saving 10 cents on every dollar they earn thus indirectly affecting the retail sector.
Social and Cultural Environment |
Gen Y today is a lot more demanding that Gen X, Gen Y want to purchase trendy clothes at lower prices since they don’t have high disposable incomes. Majority of the population in Australia now consist of old people which is a big challenge for David Jones, the needs of these people have changed due to age. David Jones has a new market which consists of immigrants and tourist coming to Australia which it can focus on to make the loss ground. David Jones needs to tackle the challenge to emotionally connect with international consumers coming from different countries (Business spectator, 2013). The lifestyle trends of Australians have been changing with one in five Australians are obese so David Jones has to sell fashion products and sizes keeping in mind the larger market. Now more consumers are shopping online thus to cater to the young generation David Jones has to advertise more online on social media or search engines to increase sales and create brand awareness due to change in shopping habits of consumers.
Technological |
Technology has had the maximum impact on the sales and profit margins of David Jones, Now more and more consumers are shopping online but David Jones did not have any online presence till 2010 which impacted sales leading to lower profit. Myer has installed IPAD’s in the store for consumers to buy online from the store to be delivered later in case the products are out of stock. David Jones had a website in 2000 which they shut in 2003 and had no online presence till 2010 and thus they very much lost ground to online stores. David Jones launched an online store in 2011 and now online sales contribute to large amount of its total sales. David Jones is now in the process of launching a mobile store to combat competition from online retailers
