David Jones

4203 Words17 Pages
Executive summary

David Jones Limited is an Australian based department store chain that was founded by David Jones in the year 1838. Currently, the company has about 37 stores located in most Australian states and territories. The Australian department store industry is mostly dominated by large players which are David Jones and Myers, alongside smaller and independent companies. The report analyses David Jones’s external environment using Porter’s Five Forces model alongside the PEST model.

The industry does not possess major threat from new entrants due to strong barriers to entry and strong competition for retail space. There is also a strong rivalry between competitors as limited space is being contested by major players alongside
…show more content…
New South Wales, Victoria and Queensland are the regions contributing over 75% of the 18.9 billion industry revenue. Westfarmers (Target and Kmart) and Woolworths (BigW) are the two largest companies competing on low-cost strategies (Porter, 1980). Myers and David Jones, holding 15.3% and 10.5% market shares respectively (Figure 1), compete on differentiated strategies targeting the upper consumer market (Porter, 1980). Over 10% of the total working population are employed in this industry (Productivity Commission, 2011).
In recent years, department stores industry has contracted since the hit of Global Financial Crisis creating shock on consumers’ confidence (Figure 2), despite Australia’s narrow escape from going into recession (Uren, 2009). As a result, the marginal propensity skyrocketed after GFC effect hit the economy from nearly mere 3% in mid-2007 to 12% in late-2008 (Figure 3). To stimulate the economy, RBA employs monetary policy by continuously lower cash rate since 2011 (RBA, 2012).
Although 2012 has seen some increase in the industry revenue, IBISWorld predicted continuous decline until 2014 (Outlaw, 2012). David Jones announced in its ASX Release 40% decline in profit-after-tax in 2012 is expected, partly associated with costs involved in its new strategic initiatives (David Jones, 2012). Myer, David Jones’ closest competitors, experienced decreased total sales of 3.8% and stated in

More about David Jones

Get Access