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Table of Contents

Introduction. 4

Background of Harris Scarfe. 4

Department Stores Industry Overview.. 4

Strategic Positioning. 5

Financial/Revenue Performance of Product Categories. 6

Marketing. 7

Challenges. 8

PESTEL Analysis. 9

Opportunities. 9

SWOT Analysis. 10

Competitor analysis. 11

Cultural diversity. 12

Conclusion. 12

Recommendations. 13

References. 14

Executive Summary

The development of this report recognizes the dynamic nature of the department stores and aims to evaluate the journey of Harris Scarfe in the industry. The report explores the competitive profile of Harris Scarfe in the sector besides providing an overview of the global trends. The changes in the global trends of consumers in the retail market suggest that industry players must develop marketing, financial, management and accounting strategies based on innovation to sustain competitiveness. The report assesses the competitive advantage, challenges and opportunities for Harris Scarfe and concludes with a set of recommendations.

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5.0              Introduction

The report focuses on evaluating the strategic journey of Harris Scarfe, one of the leading retailers in the Australian market. The report focuses on a holistic approach in the assessment of the department stores problems concentrating on accounting, marketing, management and finance framework. The current nature of the global department stores industry presents several characteristics whose roles can either push a player out of the market or enable them to affirm strong positions. The department stores is competitive and industry players have sustain challenges such as customer expectations of seamless experiences coupled with high rentals and heavy overheads (Sun et al., 2009). In this report, assessment of critical problems in the department stores market forms the focal point of assessing the strategic journey of Harris Scarfe especially in terms of how they influence accounting, management, marketing and financial frameworks.

6.0              Background of Harris Scarfe

Harris Scarfe Holdings is an Australian based department store involved in selling bed linen, Kitchenware, electrical appliances and apparel. The firm established in 1849 operates a chain of 66 retail stores, but the department store section remains to be one of the successful segment of the retailer.  Harris Scarfe department face challenges including increasing competition and recent threats of receivership (Reed, 2019).

7.0              Department Stores Industry Overview

 An analysis of the market trend of the Department stores in recent years demonstrates tremendous growth where according statistics it has 5% potential for growth estimated at US$198.5 billion. The e-commerce channels and the invention of the Internet of Things (IoT) continue to revolutionize how consumers purchase apparels, furniture, kitchenware among other items in the department store niche,  with notable changes coming in the form of establishing precise customer needs (Balaji & Roy, 2017).

            The global department stores industry is poised to reach US$683.7 billion in 2025, a trend that will give players in the industry a health gain besides triggering global growth. Harris Scarfe faces stiff competition from one of the leading global retailers such as Nordstrom and Macy`s who have perfect business operation in stores and on the e-commerce space (Swenson, 2019). Other characteristics that define the retail industry on the scope of challenges include a focus on price competition, promotion of brand-related experiences. This is created by manufacturers and cultural differences and local tastes which technically provide barriers for global expansion when it comes to stores with limited capital disposal (Fernie & Sparks, 2018).

Similarly, in the view of increasing global consumerism, partly enhanced by technology and the shift towards e-commerce, department stores in the market have become more accustomed to the partnership as part of sustaining brand visibility (Sivagnanasundaram, 2018). Most department stores in the industry, for instance, JCPenney continue to shift strategic marketing to emphasize on green retailing. The corporate social responsibility component of marketing focusing on environmental conservation has become an extremely vital aspect of customer retention in the retail industry (Ali, 2018).

7.1              Strategic Positioning

There has been a tremendous shift in the department stores industry over the years, and stores have been forced to change business approaches to retain competitiveness. Players in the sector must optimize strategies in marketing, management, accounting and finance to ensure profitability. The primary focus of department stores in the industry would be to establish a healthy customer retention strategies while at the same time ensuring the expansion of new customers. Looking at the spectrum of strengths of Harris Scarfe relative to the dynamics of the market present several outcomes which are consistent with growth. Harris Scarfe's department store has experienced increased sales in the domestic Australian market of up to 39.6% while the sales in the Manchester market grew by 49% since last year. All the retailer's departments have witnessed an increase in sales. The observation of the firm's market category affirms the contribution of product diversification in its business portfolio, especially when looking at the Manchester store. Diversification is critical in affirming competitiveness in the department stores industry (Godley and Hang, 2016).

Harris Scarfe has established a perfect competition in the market besides innovating to incorporate e-commerce space in marketing and sales of merchandizes (Bonetti & Perry, 2017). The market size of the store is also in an upward trend when considering its financial growth position. For instance, between the year 2011 and 2013, the revenue of the department store grew from $528m to $792m, whereas its market potential has doubled since the shift into the digital marketing and sales space (Bonetti & Perry, 2017). The acquisition of the retailer by Pepkor in 2011, does not only provide a strong financial position but also improves management and marketing. The acquisition remains to be one of the significant strengths of the firm given the scope in which it enhanced its global position. The retailer continues to grow and establish a universal possibility of dominating the department store industry.

7.2              Financial/Revenue Performance of Product Categories

Table 1.1: Product assortment

Although the table indicates a relatively stable performance of product sales and stock variance, Harris Scarfe must implement strategic measures that allow improvements in categories Loose China, napery and glass wear. Accounting information on sales and stock variance of the retailer indicates growth in sales. Still, when comparisons are conducted concerning the overall market and competitor portfolio, it becomes necessary that Harris Scarfe develops a comprehensive marketing and management strategies implicit on promoting the level of sales. In the dinner sets, category revenue increased from $14.176million to $22.211 in the last financial year while similar trends were observable in the kitchen accessories and cookware categories.

Kitchen accessories increase in revenue sales assumed an upward trajectory from $52.111 million to $57.646 million. The cookware sales revenue increased from $105 million to $152million within the same period. However, the findings from the Apparel section of the retailer indicates a drop in sales of where the sale of fashion accessories registered a 50% drop. In comparison, handbags and wallets recorded significant declines in revenue sales of 90% and 7.6% respectively. The statistics in the decline of sales revenue paints a worrying trend in the business sustainability of Harris Scarfe, demanding effective marketing measures (Mitchell, 2015).

7.3              Marketing

Harris Scarfe needs to revamp its marketing strategies to remain competitive in increasingly dynamic department stores industry. Current marketing approaches tilt towards the utilization of technology and social media. Besides the traditional frameworks that focus on product diversification, pricing, place and promotion, the impact of social media marketing in the department stores industry cannot be ignored (Schöni, 2017). The revenue stream from sales of Harris Scarfe can receive massive boosts with accuracy and precise implementation of technological strategies in marketing. The use of social media ads to drive sales, for instance, require robust engagement campaigns, sense of agency creation and establishment of targeted audience ads (De Pelsmacker et al., 2018). Further, Harris Scarfe needs to reconsider the use of influencer marketing for unique and value-driven content besides establishing google shopping campaigns.

7.4              Challenges

Although Harris Scarfe runs a successful franchise due to product portfolio diversification, several weaknesses are inherently influencing performance in the negative direction. The retailer's three primary product categories, including furniture, bedroom and homewares experience stiff competition basing on the recent statistics that suggest a relatively slow growth rate (Fernie & Sparks, 2018). It is evident that the overall growth of the department stores industry is impressive, but the three categories in which Harris Scarfe makes significant investment continues to lag with an annual growth rate of 1.3%. Currently, the furniture retailing category in the global market is valued at $7.4 billion, and the growth estimates for 2018 to 2023 is relatively low at $8.4 billion.

Further concerns that should trigger changes in financial, management, marketing and accounting frameworks involve the prevailing selling performance that assumes a downward trend. Harris Scarfe must adopt strategies that trigger increased sales and retention of customers in the categories of bedding, accessories and books. The sales in books, linens and accessories experience low performance with much of the challenges emanating from pricing, layout and low density of stock. Although Harris Scarfe continues to create strategies for market penetration, the problem of low global presence remains inherent while compared to competitors such as Myers and Target, the store has little brand loyalty. 

7.5              PESTEL Analysis

The dynamic nature of the department store industry implies that operations of stores receive influence both from internal and external factors.

 Table 1.2: PESTEL Analysis

7.6              Opportunities

The department store industry in the sale of beddings, furniture, appliances and clothing remains vibrant with opportunities, and Harris Scarfe must identify and use them to promote brand visibility, customer attractiveness and retention coupled with global expansion (Nikhashemi & Valaei, 2017). The rise of the e-Commerce market presents the opportunity for growth in the industry, and the strategic management of Harris Scarfe must shift focus towards the use of technology to enhance the marketability of its products. Technology enhances market penetration besides cutting the operation of the cost, which contributes to higher profit margins and the overall sustainability of the business. Evaluating the three significant categories of Harris Scarfe's product portfolio; furniture, bed linens and homewares indicates an intrinsic opportunity for the store to expand its market scope. The furniture category has higher barriers for new entrants due to the high financial costs of operating, implying that traditional retailers face limited competition from new market entrants.

7.7              SWOT Analysis

Table 1.3: SWOT Analysis summary

7.8              Competitor analysis

Competitive Profile matrix

Table 1.4: Competitive profile matrix

The competitive profile matrix above indicates the scope of competitiveness of Harris Scarfe relative to one of its strong competitors. Evaluation of the matrix shows that although Harris Scarfe establishes strong brand reputation, market share, product diversification and franchise of foreign goods, competition remains stiff. Best and Less stores, for instance, has a strong brand reputation built on customer loyalty and product affordability (Pappu & Quester, 2008). 

8.0              Cultural diversity

Research affirms that cultural diversity and inclusion are critical in driving business success at local and global levels. It is important that firms in the department store industry embrace divert in matters of leadership, workforce, workplace culture and marketing. Looking at strategic positioning of Harris Scarefe especially in its effort to increase global market penetration underlines the need to adopt measures keen on advancing cultural diversity. Leadership diversity for instance remains a key element of organizational approaches implicit on promoting success. It should be part of Harris Scarfe`s management strategy to diversify leadership to include aspects of youth engagement.

Cultural diversity is an integral component of understanding customer base value. Cultural diversity and inclusion tend to attract customers to brands and according to a research in the United States, Canada and the UK, 42% of ethnic minority shoppers report that they would switch to retailers committed to diversity and inclusion (Shephard, 2019). Cultural diversity also entails organizational structures that hire diverse teams and discourage creation of culturally insensitive products or ads. In essence, the scope of cultural diversity at Harris Scarfe should entail promotion of product penetration in global and local market with clear vision of fulfilling cultural values and needs of customers.

9.0              Conclusion

The department store industry presents opportunities for expansion of franchises given the growth of consumer markets in the global arena. However, stores must establish coherent strategies to develop competitiveness in the market as the retail industry, in general, is characterized by limited barriers to new entrants. Understanding the dynamics of product and marketing innovation, changes in cost and efficiencies coupled with the role of increasing globalization should form the focal points through which department stores like Harris Scarfe create and implement strategies for management, marketing, accounting and finance.

10.0          Recommendations

• Increase the scope of investment in online marketing and sales of products. Adoption of e-commerce in the general retailing industry has seen increased revenue and profits for some the leading retailer, an approach that can also be adopted by department stores. Amazon.com registers revenue of $280.5 billion from e-commerce.
• Establish a partnership with influential market leaders such as Best and Less and JCPenny to expand operations in the Australian market. Although in a general retailer industry, Walmart provides a perfect example of why Harris Scarfe needs to adopt partnership. Walmart`s partnership in the UK with Asda helps cut losses.
• Increase diversification of earnings base by increasing investment into general consumer goods. Diversification of earnings and products implies that Harris Scarfe achieve a buffer against potential revenue reduction. Mashreq Bank in the UAE provides a perfect example of how diversified earning improves stability of business
• The stores management needs to increase leadership frameworks that allow innovation. Amazon.com innovative leadership provides evidence of how innovation can drive company success in any industry.