David Jones Situational Analysis: Strategic Options & Recommendations

This report provides a comprehensive situational analysis of David Jones, an Australian upmarket retailer, examining its competitive environment, financial performance, and internal strengths and weaknesses. The analysis covers market size and trends in the luxury retail sector, highlighting its growth despite challenges in the broader retail landscape. A SWOT analysis identifies David Jones' strengths, such as its strong domestic presence and diverse product offerings, as well as weaknesses like aggressive competition from Myer and limited global presence. The report explores strategic options, including increasing brand exclusivity through strategic alliances and expanding private label brands to capitalize on growing demand for upmarket products. Recommendations focus on leveraging private label brands to enhance competitive advantage and address the challenges posed by the evolving Australian retail industry. This report provides a detailed overview of David Jones' current position and potential strategies for future growth and profitability.

Running head: SITUATIONAL ANALYSIS REPORT
SITUATIONAL ANALYSIS REPORT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report will be based on the analysis of competitive environment of David Jones. The
trends in the upmarket retail sector of Australia has been analysed in the report. The corporate
and financial performance of David Jones has been discussed in the report in detail. The
internal environment and competitive advantage of David Jones has been discussed in the
report. The major recommendations which have been provided to David Jones are related to
strategic options that can be implemented by the organization in order to increase the
profitability levels and revenues. The report is based on the suggestion based on expanding
the private label brands of the organization.

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Introduction
David Jones Pty. Ltd or David Jones is an Australian organization that operates in the
upmarket sector of the retail based sector. David Jones had been acquired by the South Africa
based retail organization named Woolworths Holdings Limited. David Jones was established
in the year 1838 by David Jones who is a Welsh merchant and a future politician as well.
David Jones the operates more than 40 stores in different Australian territories and states. The
major competitor of David Jones in the upmarket based sector is Myer. The organization
further opened its first store in New Zealand in the year 2016 (Davidjones.com., 2019).
The report will be based on the analysis of the market in which David Jones operates
and the corporate and financial performance of the organization as well. The SWOT analysis
framework will be used for the analysis of internal environment of David Jones. The strategic
options which can be considered by David Jones for the analysis will also be discussed in the
report.
Market size and trends
David Jones belongs to upmarket or luxury retail sector of Australia. The luxury retail
based sector of Australia has shown high levels of growth in spite of the decline which has
been experienced by the other retail based sectors. The research by IBIS world luxury retail
market is rising on a continuous basis although the other retail sectors have suffered due to
rise in levels of competition. The rise of online retailers has also been able to affect the retail
sectors in a huge manner. However, the luxury retailers are insulated from weak retail based
environment in the country (Barros, Hernangómez & Martin-Cruz, 2016).
The expenditure of tourists on the luxury goods is considered to be a major reason
behind the growth of luxury retail market. The increase in income levels is considered to be a
major reason behind the growth of luxury retail sector. The financial instabilities have not

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been able to affect luxury retailers in Australia. The polarisation in the market has been able
to increase the demands for luxury goods in the Australian market. The revenues of
Australian upmarket retail industry have amounted to 2 Billion Dollars in the year 2018. The
industry has grown at a rate of 9.1% in the last five years of the operations of different
organizations (Daspit et al., 2017). The major organizations which are a part of the upmarket
retail sector of Australia along with David Jones are Myer and Harvey Norman.
Figure 1 – Retail sector of Australia
Source - (Ibisworld.com.au., 2019)
Financial and corporate performance
Financial performance – David Jones had to face disruptive situations in the
upmarket retail sector of Australia. There has been a 58.3 percent drop in the operating
profits that have been gained by the department store. The operating profits of the
organization were 108 Million Dollars in the year 2017 that had dropped to 45 Million
Dollars in the year 2018. David Jones has achieved a gross profit of 820 Million Dollars in

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the recent years. However, the expenses have increased due to the store openings and new
food based formats (Ibisworld.com.au., 2019).
The transformational initiatives which have been implemented by the organization
have led to reduction of profit levels of David Jones in the market. The re-platforming of
online activities by David Jones have paid off and online sales of the organization have
grown by 21.4 percent. David Jones further aims at 10 percent of the total online sales the by
the year 2020 with the help of different the omni-channel fulfilment centres and the expertise
of regional supply chain as well. The management of David Jones has started providing
maximum levels of focus to the reduction of production based costs of the organization
(Insideretail.com.au., 2019).
Corporate performance – The online sales of David Jones have played a major role in
improving the corporate performance of the organization. 2018 has however proved to be
quite difficult for David Jones as the organization has been struggling to operate due to the
challenges which are provided by the trading conditions in Australia and South Africa. The
implementation of new technologies related to online operations and new inventory in the
organization is considered to be an important factor that is able to affect the corporate
performance which has been depicted by David Jones (Insideretail.com.au., 2019).
SWOT and competitive advantage
Strengths – The domestic presence of David Jones is strong as the organization has its
operations in different sectors that include, fashion, food products and electricity. The variety
of products which are offered by David Jones can be considered to be a major reason behind
the growth of the organization. The upmarket retail industry of Australia has few players and
has been captured by David Jones in an effective manner. The stores of the organization are

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developed and operated in the areas that are based on low risks and are able to provide high
value to the customers (Demir, Wennberg & McKelvie, 2017).
Weaknesses – David Jones however faces aggressive competition from a major player
in the upmarket retail based industry, Myer. The global presence of the organization is not up
to the mark and this has been able to reduce the levels of profitability in the upmarket retail
based industry. The market segment that has been targeted by the organization is narrow as
the operations of the organization are only based on the premium market segment. The
products which are thereby offered are only based on demands of the premium customers
(Durand, Grant & Madsen, 2017).
Opportunities – Major opportunities are provided to David Jones based on effective
and profitable acquisitions of organizations with the aim of expanding its operations in the
market. The implementation of private label strategy is also able to provide a chance of
growth to the organization. The structure of the management of David Jones can be changed
to some extent for the purpose of increasing the levels of profitability in an effective manner
(Dyer et al., 2015).
Threats – The competition which is faced by David Jones in the domestic market can
have an immense effect on its future operations. Although the market consists of few players,
the increase in demands of the upmarket products can also increase the number of
organizations that plan to enter the market. The loyalty based levels of the customers in
upmarket retail industry is also quite low and it is considered to be a major threat towards the
operations of David Jones in the future (Engert, Rauter & Baumgartner, 2016).
Competitive advantage – The competitive advantage based strategy that has been
implemented by David Jones is related to the concentration that is provided by the
organization to the core business operations including, credit card based operations and the

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departmental stores. The organization is also able to return excess levels of cash flows to the
shareholders in order to avoid the need of excess working capital (Insideretail.com.au., 2019).
The dividends which are paid by the organization are higher as compared to its competitors in
the industry like, Myer and Target. The analysis of competitors is considered to be an
important part of the operations of David Jones in the retail industry. The private label brands
which are offered by David Jones in the industry are able to provide major levels of
advantages to the organization based on its growth based needs (Hill, Jones & Schilling,
2014).
Figure 2 – Competitive environment of David Jones
Source - (Insideretail.com.au., 2019)
Strategic options
David Jones currently offers its products to the upmarket based retail customers of
Australia. The organization has been able to build a customer base in this particular segment
with the help of different products that are offered by David Jones under its private label. The

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organization has not invested its resources in diverse portfolios and products. A major
strategic option that can be implemented by the organization is related to increasing the
exclusivity of the brand (Ethiraj, Gambardella & Helfat, 2018). The organization needs to
make effective strategic alliances in order to increase the brand equity in an effective manner.
The different organizations which can act as efficient strategic partners of David Jones
include, Disney, Naturica, Scotch & Soda, Kenzo, Burberry Beauty. The future strategic
partners of the organization will be able to provide a level of exclusivity to David Jones in the
upmarket retail sector (Frynas & Mellahi, 2015).
Recommendations
The major recommendations that can be provided to David Jones are based on the
expansion of the private label brands. This has been a major advantage of the organization
over its major competitor Myer in the upmarket retail market. The growth of demands of
upmarket based products need to be addressed by the organization with the help of its private
label based products.
Conclusion
The report can be concluded by stating that David Jones operates in a market area
which has few players. However, the organization needs to develop the operations and offer
exclusive products in order to face the aggressive competition that is faced in the Australian
retail industry.

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References
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