In general, the paper "Potential Action Steps for David Jones" is a great example of a management case study. By understanding the internal and external business environments, one can understand the strengths and weaknesses that David Jones has and the threats and opportunities that it faces in the market. Operating both in the Australian retail industry and the financial services all characterised by stiff competition, the firm has to optimise its strengths, utilize opportunities, manage threats and work on the weaknesses to improve its competitiveness in the market. The figure below captures alternative strategic options that the firm has dependent on its SWOT analysis. Table 1.
TOWS matrix Strengths -Brand recognition -Exclusive positioning of stores -Association with high fashion -Long history in the market -direct demographic targeting/identification -High margin brand-driven retailing Weaknesses -Relatively few numbers of stores -focuses only on high-income earners -poor online store - Opportunities -Growth in higher-income population -Fashion awareness -regional market -population growth -Green consumers SO-strategies -Diversify into new markets -Widen product range -Strategic partnership with designers -expand into fashion-conscious regional markets WO-strategies -Aggressive online marketing -Create a subsidiary to cater to lower-income earners -Link online retailing as a green strategy to environmentally conscious consumers Threats (T) -Competition from fellow players -Direct sales by designers (designer-owned stores) Inflation -A high population of price-sensitive immigrant consumers ST-strategies -More innovative products -Increase promotion WT- strategies -Develop subsidiary stores that use different pricing structure to address low-income earners -Increase product range to increase customer satisfaction -A clear focus on market segmentation SO- strategies Diversify into new markets David Jones has a long history in the Australian department store industry.
Along the way, the firm has managed to ‘ own’ Australian fashion by targeting high-end consumers who are brand conscious. This means that the retailer has the opportunity to completely dominate the fashion industry in the region as the population of middle and high-income earners grows in the region.
Furthermore, its history and success in the Australian industry imply that the firm has a chance to replicate its prowess in emerging economies in Asia with a growing number of fashion-conscious middle to high-income earners. Widen product range David Jones has been considering entering the financial services market by offering products such as insurance and home loans. This diversification will ensure the firm against fluctuations and business cycles in the retail industry. Strategic partnership with designers The strong position that David Jones enjoys in the fashion and design industry puts the firm in a strong position to establish strategic partnerships and agreements with leading designers around the world.
The firm should pursue exclusive distribution rights in Australia for some global fashion brands. For existing brands, the firm should use its position to negotiate for lower prices to support its high margin pricing strategy as a bulk buyer. Regional markets The firm can expand into regional markets especially in the ASEAN trade block. In China, for instance, the growth of a wealthy middle-income class that has a high taste of fashion presents DJs with an opportunity to expand into the country. WO- strategies Aggressive online marketing The online marketing industry is growing at a very high rate in Australia and worldwide.
Currently, online sales account for a very small percentage for all revenues made. Competitors such as Coles have used online retailing aggressively as a distribution channel such that their inline sales are over $200 million annually. While still on this, the firm should adopt a multichannel rating approach in its distribution to boost their online presence and increase sales. The future of the retail industry lies in retailers innovating more convenient ways of availing their products and services without changes in price, quality or experience (Heineman & Christoph 2010). Create a subsidiary to cater to lower-income earners The current strategy only addresses the higher income earning market segment.
This is because of the higher-end consumers associate the brand with a higher social class and affluence. Shopping at David Jones is a lifestyle of the fashion-conscious high-income earners. To address the lower-income earners, DJs would dilute the value of their brand. To do so effectively, the from will require to acquire or set up stores with a different brand name that addresses the fashion needs of price-sensitive consumers.
This will allow the firm to remain relevant in both extremes of the income scale.