Bbmm506 - Management - Assessment Answer

BBMM506  Strategic Management  David Jones Case Study Assignment Help

Assignment Task:

DAVID JONES IN 2012 

Dallas Hanson University of Tasmania 

Introduction In 2012 David Jones (DJs) was in a state of change, selling branded goods to a good market segment and re-entering the e-market. It was also in a good position to look around and assess opportunities in a broad market that was in trouble, with many firms struggling to sell goods at satisfactory margins. 

Early history David Jones was founded in 1838 by Mr David Jones. The original (and, interestingly, enduring) intention was to 'sell the best and most exclusive goods and to carry a stock that embraces the everyday wants of mankind at large?! The store was located in the centre of Sydney in George Street. This was an excellent location in the growing colony and the store prospered. In 1856 David Jones retired but a few years later the organisation fell on hard times and he returned to restore its fortunes. Within a few years of his return, the store was again profitable. 

His son Edward Jones joined the firm and under his leadership, the George Street premises were remodelled along the lines of a European-style department store. There were several floors of furniture and household furnishings, as well as imported clothing, and the store also had Sydney's first hydraulic lift. A profitable mail-order business was also established. 

At the end of the century, the company decided to manufacture at home, and it set up a major factory for clothing. In 1906 it became a public company. It also expanded: a large new store was opened on Elizabeth Street in Sydney, and then a further store on Market Street in Sydney in 1938. The Elizabeth Street store was so successful that it attracted other stores and eventually it moved the centre of retailing in central Sydney from George Street to the fringes of Hyde Park. 

After World War II, David Jones became an established fashion leader in Australia and became known for its fashion shows that highlighted the latest in European styles. The  post-war boom benefited David Jones and as its sales grew it expanded numbers of stores, and by 1959 there were nine, 

The 1990s and Adelaide Steamship's sad performance In 1980 the Adelaide Steamship Company acquired a major interest in David Jones. In the 1980s and 1990s, using borrowed funds, the two companies cooperated in the acquisition of a range of other companies, including Petersville Sleigh, Tooth and Company and Penfold's the stationers, as well as Woolworths. The Melbourne move came after the acquisition and rebranding of Buckley and Nunn, and the Adelaide move in 1985 after DJs acquired the John Martin's department store chain. 

The recession of the early 1990s hit the now diversified firm of David Jones very badly and many of its lenders became nervous. Consequently, much of the portfolio had to be sold very cheaply and the two companies were led into bankruptcy. This was the end for Adelaide Steamship, which was delisted, while David Jones, with a valuable brand and excellent store locations, was spun off as a public company. In 1995 it announced an A$800 million public float.} 

In the late 1990s the stores were again under threat and DJs began a sale-of-store-leaseback scheme to finance renovation of the ageing store chain. It also re-entered the Perth market via the acquisition of Aherns, one of the most prominent department store chains in that state. In 1997 CEO Tideman was replaced by Just Jeans CEO Wilkinson, who drove the refurbishment and oversaw a strong move back into high end brands, redressing an error by Tideman who had moved the chain downmarket. Wilkinson also made two other less successful moves. The first was to expand the successful in store food halls into a full-scale food business via ‘Foodchain', basically creating high-quality food boutiques. The idea of this diversification was to decrease reliance on the traditional stores, and A$90 million was spent on the exercise before it was realised that it had not worked and it was closed down.* In 2000 DJs also moved into e-retailing with the launch of David  easier. Gathering data on customers is also far easier with point-of-sale systems that collect standard demographic information. This allows targeting of sales to the small group or even individual level.22  points from supermarkets and petrol stations, and holders do not have to redeem their points at a DJs store. DJs also has a specific store card, but this does not have points attached to it. Overall, a score of 12/20.21 

The two big players in this industry therefore operate in all major marketing areas, but differently (Myer ended up scoring 55/100 and DJs 46.5/100). Target and Big W also run marketing programs, concentrating on catalogues and appeals to families. The broad retailing industry in Australia is, however, far behind international standards on e-commerce.  The approach by these players to locating stores in the total retailing market is highly structured,

It is clear from  that DJs stores are extremely well located for the high-income segment it targets, with Myer in a similar but not quite as exclusive set of locations. Kmart, Big Wand Target are also located within reach of their (lower end) market segments. Target, however, has a good exposure to higher-income areas and an excellent exposure to regional (non-big-city) areas. This may provide it with an opportunity to expand its market share. Target USA may be a model for them: it is moving upmarket with branded goods via advertisements in magazines such as the New Yorker, which appeals almost exclusively to the top-income/high-education demographic. The idea is to carry on with broad family appeal but have selected high-end branded goods also available. This delivers the shoppers who buy branded in some areas but are budget shoppers for most items (this is a growing market).  All players have benefited from changes to computer-based technology that has made ordering, sales and warehousing 

The GFC and strategies for DJs and Myer in 2012 The retail sector in Australia has experienced considerable problems related to the global financial crisis. There has been a downturn in consumer expenditure and an upturn in consumer savings rates. In the first quarter of 2011, DJs' sales went down 11 per cent, and down 15 per cent on that financial year. Zahra warned that profits would fall 15–20 per cent. Myer also suffered falls in sales and profit but to a lesser extent. 23 

In addition to losses of consumer confidence, retailers suffered from the move by many shoppers to online buying. New models of internet trading had emerged with London's Net-A-Porter as the first mover. Net-A-Porter's insight was that the online experience needs to replace the champagne in the change room at Prada and doormen and impeccable service at Chanel on a computer?24 It provided great boxes for products, with ribbons and bows, and dressed up the mail experience. The innovator, Megan Quinn, has moved to Melbourne and is talking extensively about this new model. 

By late 2011 commentators were negative about the industry, suggesting store closures and changes to the overall cost base of DJs, Myer and the discount department stores.25  DJs' response to the crisis has been aggressive. In March 2012 CEO Zahra released a three-pronged strategy. 

Written Report:

You are to use the case study guide as a road map only. Your paper should include the following:

1. Executive Summary

2. Identification of the Problem 

3. Type of Industry

4. General Environment Analysis (External – 5 Forces)

5. Understanding of Competition

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