Strategic Issues and Recommendations for David Jones Limited

This report provides a strategic analysis of David Jones Limited, a premium retailer in Australia. It examines the company's goals, mission, and objectives, followed by an assessment of the strategic issues the company is likely to face in the next 3-5 years, including competition and the changing retail landscape. The analysis includes an internal capability assessment, a SWOT analysis, and an external environmental analysis using PESTEL and Porter's Five Forces frameworks. The report concludes with recommendations for David Jones to address these challenges and maintain its market position. The analysis highlights the importance of adapting to changing consumer behavior, addressing competition from international retailers, and developing a modern retail ecosystem that prioritizes shopping experiences over just buying.

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David Jones Limited strategic Issues
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Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Goals, mission, and objectives.........................................................................................................4
Strategic issues that David Jones is likely to face in 3-5 years.......................................................5
Internal capability analysis..............................................................................................................7
SWOT Analysis...........................................................................................................................8
External environmental analysis......................................................................................................9
PESTEL Analysis........................................................................................................................9
Porter’s five forces framework..................................................................................................10
Recommendations..........................................................................................................................12
References......................................................................................................................................14

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Executive Summary.
This report mainly covers a strategic analysis of issues faced by David Jones and the
recommendations of how to handle the issues. However, other various aspects will be
highlighted including the goals, mission, and objectives of the company. In evaluating the
strategic issues, an internal and external analysis of David Jones will be conducted so as to
determine the issues that the company may to face in the long term and short term between three
to five years.

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Introduction.
David Jones is a premium retailer based in Australia. The company was established in
1838 with an original mission to sell “the best and most exclusive goods” by David Jones after
he emigrated to Australia (David Jones Limited, 2019). David Jones is currently a subsidiary of
Woolworths since the departmental store was acquired by Woolworth in 2014; however, David
Jones still operates under its original name. David Jones mainly competes with Myers since they
compete in the same space as well as they sell products from various global brands. The
company has an online store and about forty-five stores. In addition, the company offers
superiors services and products across international and national brands in homewares, food,
beauty, fashion, and technology.
Goals, mission, and objectives.
Goals, mission, and objectives are crucial when it comes to strategic planning since, they
serve as the guide for creating a road map to be followed by the organization. David Jones
understands this concept very well and therefore; the company strategizes its goals, mission, and
objectives critically in order to ensure the success of its operations. For instance, the mission
statement of the company is to the best departmental store in terms of shareholder value,
customer perception and a worldwide center for excellence in retailing (David Jones Limited,
2019, pg. 12). This mission is guided by the company’s vision of being part of world’s most
responsible retailers. The vision can be displayed by the passionate commitment that the
company displays when doing business for its customers. Besides, this forms the basis of the
company’s goals and objectives thereby encouraging staff to be committed towards great
performance.

David Jones Limited strategic issues 5
In addition, the values underpin and inform how David Jones do business. For instance,
the company seeks to embed its values in every dimension of its business operations such as in
brand advocacy and leadership (Woolworths holdings, 2019). Besides, the values state that
customers are collaborative, responsible, inspirational, obsessed and committed to quality.
According to David Jones, quality is the heart of the business since the company is committed to
attaining quality in everything it does. Therefore, the company is focused on ensuring
exceptional quality in each product that is sold as well as in each experience the company
delivers to its customers and people. This has increased the competitiveness of the company as
well as the growth potential due to an increase in market share. Loyalty among customers has
also increased over the years hence contributing to more sales.
Strategic issues that David Jones is likely to face in 3-5 years.
David Jones may experience various strategic issues that are likely to impact the future
growth and success of the organizations in the next 3 to 5 years. The strategic issues may
challenge the goals, missions, and objectives of the business and therefore, it may be vital for the
company to address the issues before they significantly affect the business operations. To begin
with, we have competition. As more established international retailers are entering Australia, the
market conditions are predicted to be tougher since more shoppers may prefer online retail rather
than brick and mortar stores. In addition, since the established retailers such as H&M sell their
own branded items, they are able to make their products much cheaper hence making
surprisingly high profits (Murphy, J. (2015). This may present a challenge for David Jones since
the company uses other brands to have pulling power. This means the company’s brand is worth
less than the brands sold in the companies. Therefore, competing with the companies that sell
their own established brands may be a challenge specifically in the next three to five years.

David Jones Limited strategic issues 6
Secondly, the omnichannel strategy is deemed to fail in the next three to five years.
According to Brian Walker, a respected retail analyst based in a Sydney consultancy firm, the
omnichannel strategy of sales is already dead. Brian states that a channel does matter since all
that matters is the brand you are buying from (Robertson, 2018). Therefore, even if one buys
from online stores or over the counter at stores, what a person will mostly consider is the brand.
This means in the next three to five years; there may be an emergence of the retail ecosystem
which will focus more on shopping rather than buying. This is because buying does not focus on
the shopping needs of the customers. Shopping is exciting, fun, social, human, experiential,
rewarding and interactive and therefore, more companies may need to both delight customers
and satisfy them.
Since David Jones is leaned towards the omnichannel strategy, the company may fail to
maintain its market since according to experts, both shopping malls and departmental stores are
officially under threat. In addition, Davis Jones does not have complete control over how they
deliver the most innovative and exciting shopping experience since more focus is on cost cutting
so as to maintain short term profits (Robertson, 2018). Therefore, the company may be forced to
develop a more modern retail ecosystem that provides a complete shopping experience to
customers.
Thirdly, consumers may become unconfident of David Jones products. For instance, in
2018, David Jones profit dropped by 38% despite higher gross margins (Mitchell, 2018). Aspects
of low wage growth, underemployment, high levels of household indebtedness, and muted
consumer sentiment may double in the next three to five years hence affecting consumer buying
power since the prices of products are still high compared to other brands. This means the

David Jones Limited strategic issues 7
company may have to uniquely differentiate itself as well as create amazing experiences for its
customers in order to ensure success in the coming future.
Internal capability analysis.
Opportunities, risks, strengths, and weaknesses provide an organization with an analysis
that allows an organization to evaluate its abilities and expectations. The analysis guarantees an
organization the opportunity to obtain success in the future as well as secure company resources
from depletion or waste. David Jones Limited is considered a household brand since it has been
around for 181 years (Xu, Gao, and Hammond, 2017, pg. 152). In promoting the brand, David
Jones uses a differentiation strategy as a major strength. This is because the differentiation
strategy allows customers to perceive products as valuable and different compared to other
products in the market. In addition, the customers are thereby willing to pay a higher price for
the luxurious and premium goods. David Jones keeps a clear focus on industry market
boundaries so as to understand the needs of customers as well as areas that the company can
address in its research and development.
David Jones also introduces new brands each year as it strives to provide high-quality
products for its customers (Bailey, 2019, pg. 9). Besides, each product is taken through a process
of scrutiny so as to ensure only the best products are stocked in the store. Through this strategy,
plans and measures are therefore put in place to ensure a wider customer penetration. This allows
the company to adjusts its supply chain so as to respond to customer demand. Nonetheless, the
brand still has a strong presence, and therefore it has a higher potential to attain more market
share over international companies in the local market.

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SWOT Analysis.
SWOT Analysis of David Jones Limited
Strengths 1. David Jones has a strong domestic presence since it is the oldest
departmental store that is still operating in the retail sector of
Australia (Ellem, 2012, pg. 456).
2. The store has a wide range high quality international and Australian
brands across beauty, fashion and living.
3. Competitive prices for both international and national brands.
4. Stores are in high value locations and low risk (Hansel & Hammond,
2014, pg. 167).
5. The company has forty-five established stores.
Weaknesses 1. Reduced sales due to the entrance of international online retailers.
2. Limitation in global penetration.
3. Changing consumer segments and difficult trading conditions have
weakened the company’s financial position.
4. Cash used to refurbish the stores may lower the cash flow for other
operations.
5. Due to may brands available, brand loyalty is low while brand
switching is high.
Opportunitie
s
1. Internal restructure of management may enhance the profitability and
productivity of the company.
2. Leveraging on the brand can allow the company extend its product
lines or enter into other product extensions.
3. David Jones has higher chances to establish itself into the
pharmaceutical business.
4. New fashion targeted for the small stores may enhance the market
presence of the company.
5. Increased chances of increasing profits due to the rise of e-commerce
and various options for purchasing products.
Threats 1. High competition from international retailers both in the online and

David Jones Limited strategic issues 9
offline retail industry (Hansel & Hammond, 2014, pg. 168).
2. Cost reduction strategies have led to the loss of suppliers.
3. The rate of domestic retail competition is increasing due to new
brands coming in constantly.
4. Limited brand loyalty that projects loss of sales in the future.
5. Increase in financing costs, utilities, rent and labor.
External environmental analysis.
The analysis of the external environmental allows a company to build a competitive
advantage by identifying exiting opportunities for expansion and growth that may allow an
organization to reap various benefits. The following PESTEL analysis demonstrates how various
factors may support David Jones to improve.
PESTEL Analysis.
Opportunities Threats
The Government has enforced laws
and regulations that prevent the
embezzlement of market power by
organizations.
Political factors The tax rate is above the OECD
average and therefore, David Jones
is affected by the tax policies.
There is a presence of positive
economic conditions that promise
increase in return on investments.
Economic
factors
Despite the positive economic
conditions such as low interest rates,
the sales of the company are still
going down.
David Jones is a huge contributor
of CSR activities. For instance,
David Jones provides funds for the
research of cancer hence ensuring
the health Australian children and
Social factors The changing habits and preference
of customers affects the profitability
and growth of the company.
The customer loyalty towards the
company has begun going down.

David Jones Limited strategic issues 10
women (David Jones Limited,
2019).
Technology upgrade offers
customers the opportunity to shop
online.
In addition, through technology, the
company is able to open the next
generation stores hence ensuring
market dominance.
Technological
factors
The presence of international retail
stores decreases the opportunity to
major in online shopping since the
international stores have better
technologies that offer excellent
shopping experiences.
The company is focused in
adopting environmentally friendly
products and practices (David Jones
Limited, 2019). For instance, the
ethical sourcing of products.
Recycling of waste is highly
encouraging hence reducing
ecological damages.
Environmental
factors
Some suppliers have still not fully
adopted the idea of ethical sourcing
and this affects David Jones
products.
David Jones exclusivity clause
gives them an advantage over
competitors to entice more brands
to supply for them.
Legal factors The company is liable to legal
actions due to the bullying of
suppliers or misrepresentation of the
safety of products.
Porter’s five forces framework.
This framework is based on the idea that the forces analyze the attractiveness and the
competitive intensity of a market (Martin, 2018). The forces help identify and understand the
strengths that give an organization a competitive position or a strong position that an
organization might adopt. In addition, Porter's five forces help evaluate whether new services

David Jones Limited strategic issues 11
and products have the potential to be profitable. Therefore, by understanding the strengths, an
organization can improve its weaknesses hence avoiding mistakes.
Threats of new entrants.
The threat to new entrants in David Jones is minimal since the retail industry is shrinking
due to increased operational expenses which lower the appeal of the market. In addition,
retaliation from the established competitors keep the new entrants at bay.
The threat of substitutes.
The threat of substitute in David Jones is high. For instance, David Jones offers similar
products to other retail stores since they both get supplies from the same suppliers (David Jones
Limited, 2019, pg. 11). Therefore, customers can acquire the same products from either of the
competing firms at ease. In addition, buyers may be inclined to specific brands, and since the
store has no exclusive rights to the brands, the buyers have the freedom to buy the products from
other different stores. This, in turn, leads to the intense rivalry between firms since they compete
for a larger market share.
Bargaining power of buyers.
Customers have high bargaining power since they can avoid purchase if they locate more
satisfying deals. Besides, buyers have information and knowledge regarding the products they
purchase; therefore, they are sensitive to brands and prices. Since buyers can switch between
brands without incurring switching costs, David Jones relies on differentiation so as to cultivate
royalty from its consumers.

David Jones Limited strategic issues 12
Bargaining power of suppliers.
The bargaining power of suppliers is low since suppliers are many and switching costs
are minimal. This means there is no threat of forwarding integration.
The rivalry between competitors.
The rival between firms is very intense. This is because various firms compete for the
same consumers. Besides, since the industry revenues are shrinking, the firms target each other’s
market share hence resulting to high marketing rivalry. David Jones also uses differentiation as
the main competitive advantage for gaining more market share (Xu, Gao, and Hammond, 2017,
pg. 154). However, the operating costs of the stores are high, and therefore, David Jones has to
rely on economies of scale to drive profitability.
Recommendations.
To begin with, David Jones may have to adopt a retail ecosystem which focuses more on
shopping rather than buying. This is because as the international retailers enter the Australian
market, the competition will be about how to provide a great and superb shopping experience to
customers (Robertson, 2018). Since the international retailers have better strategies and the
technology to provide such shopping experience, David Jones may have to increase its chances
of survival by adopting retail ecosystem. This is because the company will be able to anticipate
the needs of the consumer and therefore ensure the consumers have a superb shopping
experience as they purchase their products.
Secondly, David Jones should focus on exclusive and private brands hence differentiating
themselves from various online stores. This will provide the consumers with the ability to buy
specific brands from its store hence reducing the need to discount the products (Brook, 2019).