Retail Industry Essay examples

2470 Words Feb 24th, 2015 10 Pages
University of Technology, Sydney
Myer Holdings Limited
Financial Statement Analysis: 22319

Group Assignment Part 1

Macroeconomic & Industry Analysis

Macro EconomicAnalysis
Worldwide economic turmoil spread in 2007 as a result of the Global Financial Crisis (GFC), with its effects continuing to be felt by many industries and economies, and particularly the retail sector. Currently, the global economy is resuming to a state of growth, with majority of economies recovering and stabilizing well. However, the Euro-zone Sovereign Debt Crisis has provided cause for uncertainty, affecting consumer confidence levels at a global scale. Recent figures have inspired investor confidence, with yields on government bonds returning to pre GFC
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As such, it is imperative that Myer initiate new strategies relating to distribution and e-commerce. It is anticipated that the retail sector will face further uncertainty in the coming years relating to volatile economic conditions as well as record high levels of consumer uncertainty.
Industry Analysis: Porter’s 5 Forces
1. Rivalry between existing firms: Moderate-High
Driver
Degree of Driver
Industry growth rate
Moderate
In recent times it has become evident that department stores within the retail industry are facing significant hardships, which have resulted in lowering profits following the GFC. This is characterised by consumer confidence and interest rates at an historic low. Thereby indicative of both global and local market uncertainty. This is particularly an issue at the forefront of a consumer driven business, which relies heavily on consumer confidence. However, there exists opportunities for firms within the retail sector to expand and develop through the adoption of innovative distribution platforms such as online and omni-chanel, with industry sales expected to increase by 0.9% in the current year to total $121.1 billion. In addition to this, industry revenue is expected to contract -3.0% in 2014, suggesting that Myer will continue to experience volatile earnings growth.

Market Saturation
High
Over the last decade the retail industry has become increasingly more saturated avenues. This includes: 1) Domestic competitors such