Australian Department Store Industry
Discuss about the Fashion Retail Shows A Strong Season Of Growth.
In the era of competitiveness there is high demand for businesses to come up with new ideas, services or products in the market. In this era if the companies do not upgrade their services or products, these would become unattractive and will results in closing down the company. if the business organization is genuinely interested in running their business as long as possible, then it is essential to realize the importance of innovations and marketing strategies to maintain their competitive position in the market. These marketing strategies include the formation and implementation of the desired planning to achieve the goals of competence and growth of company in order to sustain the market position of company. This report contains a brief analysis of these marketing strategies with the internal capabilities of “Target”. This report also includes SWOT analysis of the company.
Australian department store industry has struggled in last five years. This struggle was due to weak retail environment in the industry and some negative sentiments of the consumers. These sentiments dragged the industry in this struggling period. It is expected to fall the industry revenue at an annualised 0.9% over five years. Industry revenues through the fiscal year of 2017-18 expected to $18.3 billion (IBIS World, 2018). Target is operating more than 300 stores across the nation as well as has an online business. In the industry Target employs more than 14,000 team members across its support offices, stores and sourcing outpoints in Asia.
In this industry, Kmart is leading the industry in terms of percentage shoppers with 23.1% shoppers alone and other rival of Target is “Big W” which comes third just after Target having 20.5% shoppers of the industry (Mortimer, 2016). In this segment of approaching the new customers to compete with Kmart, Target is facing some issue in ensuring a safe environment for its customers and team members. In terms of percentage of dollar share by other rivals of Target, Myer is leading the industry with 8.3% market share and Target comes at second place followed by the Kmart and Big w respectively (Morgan, 2015). In market share Mayer is the only competitor for Target. Target is facing some issues related to efficient use of its natural resources.
In recent years considering overall scenario, spending of fashion retail in Australian market has increased by 17% in online and 5.7% in-store year-on-year (Roberts, 2016). Company is showing its growth rate in different segments according to the market requirements and following the trend for respective segment as shown below
Competitors of Target Australia
Figure 1 Source from https://www.americanexpress.com/au/content/merchant/pdf/business-insights/industry-trend-report-australian-fashion-retail.pdf
Target Australia works with a multi-channel distribution supply chain system. In this practice company follow multiple steps as offshore manufacturing and consolidation, pick and packaging, goods on hangers, replenishment DC’s and then direct to the store.
In the updated report for the first half of 2017, Wesfarmers mentioned that the overall performance of Target in this difficult trading period is reflecting its significant business. In this period company has experienced a 17.4% decline in its sales and also decreases in earnings before interest and tax (EBIT) of 78.4% to $16 million. During this period, company’s buying and inventory programmes were completely reset which had a direct impact on business when company got its seasonal clothing stock for the past six months (Koehn, 2017).
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Financial |
· 8.3% of total industry market share · $18.3 billion revenue expected for 2017-18 financial year · Productivity boosting target is set to increase by 20% |
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Customer |
· 20.5% shoppers of the industry · 2nd highest customer holding company · In order to remove loss making items company has reduced its product range from 100,000 to 70,000 |
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Internal process |
· Diversity of the people is main priority of Target · Target is continuously focusing on a transparent and an ethical supply chain. · Company is trying to deliver quality products to its customers · Company is seeking proposals from recycling providers and waste collectors to reduce its waste stream |
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Learning and growth |
· Company is providing on job training to its employees for better response to their customers. · Company prefers prime locations for its new outlets. |
Whenever innovation or new product is introduced it has various effects on the overall business of the organization. It may impact the business to strengthen or may have weakness to decline the growth rate. This innovation or product can provide opportunities or may have threats too (Dalal, Sonia, Yogita, & Malik, 2015). Therefore, a SWOT analysis is required to identify its Strengths, Weaknesses, Opportunities, and Threats it may have.
Market recognition- Target Australia is a well-established organization operating in stores nationwide and also listed in online shopping market.
Market share- Company has a high market share and stands at 2nd position in market share holders list of the industry.
Change in Fashion- Fashion is upgrading very frequently which increases scope for new products
Ability to control stock on hold: In the past few years company is facing stock management issues which weaken the success of new products (Wesfarmer, Target, 2017).
Mismanagement of natural resources: Company is facing a major problem of mismanagement in utilising its natural resources available to the organization.
Market growth: Australian market is showing a continuous growth in departmental store industry which is a plus point for Target to introduce new products and innovate its strategies as well.
Occasional Offers: Company has an opportunity to offer discounts on some occasions to strengthen company’s relationship with its existing customers and attracting new customers.
Market competition: In the industry company has a tough competition with its rivals in terms of number of customers as well as in terms of its market share.
Customer demands: Today customers demanding for more in terms of products as well as services. Introduction of new product may be associated with a requirement of new service and customers need to be satisfied for their requirements.
Multichannel Distribution Supply Chain System
With this analysis it is observed that the company has a capability to compete with Myer to achieve first place in the market share holders list. Also company has a wide network stores across the country that can help to maximize the number of customers to compete with Kmart leader in terms of number of shoppers (Low, 2016).
In order to sustain in the competitive market target has some competitive advantage like:
- Company has reset the marketing spend
- Focused on developing customer relation to lead the culture so over the time period
- Company is continuing the involvement of marketing mix to ensure the effectiveness of their investments(Cameron, 2017).
Company is struggling in managing its natural resources and stock holding problems. There are some other problems company is dealing with like safety and quality of products etc. therefore, company can make some innovative strategies to overcome these problems. Since company is ranked low for low average spending of per customer, it can make new strategies to improve this spending. For this change company can provide some additional discounts and attractive offers on selected brands to increase the sale for per customer. This increment in purchasing of per customer will ultimately improve its average spending of per customer. This strategy can help the company to increase its overall sales resulting in higher growth and high revenue generation (Wesfarmer, 2017-18 priorities, 2017).
Analysis of the company is demanding for some efficient strategies. Although company is performing well in terms of sales and growth but in order to sustain in such competitive market it has to implement some innovative strategies. It is recommended to the company to provide on job training to its employees and improve their stock management so that company can overcome the burden of out of fashion stock. Company is working on reformation in the recent time so this reformation must be according to the market trends so that it would benefit both the management and company.
Conclusion
In the last after this SWOT analysis it can be concluded that company is performing well but it needs to reform its structure in order to compete with its rivals. Company has a tough competition which requires some major changes in their strategies. Analysis of market size and trends shows that company can improve its growth rate and annual turnover, and financial and corporate analysis reflects that company has the potential to achieve this. This analysis reflects that company is capable of achieving big targets and is improving its gwoth rate continuously.
References
Cameron, N. (2017). Taarget CEO: We Want Brand Love with Mass Reach. Retrieved from CMO: https://www.cmo.com.au/article/620333/target-ceo-we-want-brand-love-mass-reach/
Dalal, G., Sonia, Yogita, & Malik, S. (2015). Online Marketing: A SWOT Analysis. The International Journal of Business and management , 3(7), 12-16.
IBIS World. (2018). Department Stores – Australia Market Research Report. IBIS World. Retrieved from https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/other-store-based-retailing/department-stores.html
Koehn, E. (2017). What’s Happening at Target? Revenue’s Fallinf, but Experts say Turrnarounds Take Time. Retrieved from Smart Comnpany: https://www.smartcompany.com.au/industries/retail/whats-happening-target-revenues-falling-experts-say-turnarounds-take-time/
Low, C. (2016). International Brands Target Australia’s Unsaturated Consumer Market: Deloitte. Retrieved from The Sydney Morning Therald: https://www.smh.com.au/business/companies/international-brands-target-australias-unsaturated-consumer-market-deloitte-20160120-gm9rli.html
Morgan, R. (2015). Retail Perspectives: Different Ways of Rating Australia’s Clothing Stores. Roy Morgan. Retrieved from https://www.roymorgan.com/findings/6396-retail-perspectives-different-ways-of-rating-australias-clothing-stores-201508172306
Mortimer, G. (2016). Hoe Kmart Ate Target: A Story of Retail Cannibalism. ABC NEWS. Retrieved from https://www.abc.net.au/news/2016-05-31/kmart-ate-target-story-retail-cannibalism/7461564
Roberts, E. (2016). Australia Fashion Retail Shows a Strong Season of Growth. Sydney: American Express Australia Limited. Retrieved from https://www.americanexpress.com/au/content/merchant/pdf/business-insights/industry-trend-report-australian-fashion-retail.pdf
Wesfarmer. (2017). 2017-18 priorities. Retrieved from Wesfarmer: https://sustainability.wesfarmers.com.au/our-businesses/department-stores/target/2017-18-priorities/
Wesfarmer. (2017). Target. Retrieved from Wesfarmer: https://sustainability.wesfarmers.com.au/our-businesses/department-stores/target/
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