Key Problems And Strategies For Overcoming Them In Target Australia

Key Problems in Target Australia

Question:

Describe how the strategy has been specifically tailored to overcome the difficulty that the firm is experiencing.
 

Target Australia constitutes one of the majors in the domain of retail business which spans over three hundred communities across the nation with its units located conveniently in regional as well as metropolitan areas. Target Group offers the consumers a wide range of products, including the likes of apparels, electrical appliances and games and entertainment. The entity was formed by George Lindsay and Alex McKenzie in Geelong located in Victoria as a result of partnership (target.com.au, 2016). The firm initiated transition model in the ranks of the organization through the means of the refurbishment of old units which aimed to achieve increase as far as profitability is concerned. The firm strives to operate as an ethical, sustainable and responsible business. Owing to complexities of various degrees the firm is in doldrums in recent past. The organization has had a tough time in the light of harsh economic conditions along with poor economic confidence. The firm is battling with poor retailer relationship and other business intricacy. The poor economic climate and environment have resulted in the firm’s declining fortunes as far as earnings are concerned. Furthermore, with the emergence of growing competition from the retailers, the firm is lagging about business interface (Huang & Zhu, 2016).

In recent past, the firm is experiencing troubles and plight while maintaining its operations and also falling apart in the light of increasingly competitive global environment which witness is growing the number of retailers in an expansion phase in Australia and further emphasis on online retaining business.

The following detailed analysis highlights key problems, strategies for overcoming the problems, and measures that define the efficacy of the strategies involved in it.

The biggest problem that the firm is battling to strive with is the brisk decline in profits of the firm. Target’s profit has suffered a hit by thirty-two percent over the two years and further sixty percent since then. The whole retail domain has been in a perilous situation over the last quarter. The investors have lost faith in the retail shares over the past six months. They have been in anticipation for a recovery with the Reserve Bank pushing interest rates to low levels (Cao et al., 2015). The industrial analysts opine that the trends of sales have slowed by 2 percent to three percent in the last three months or so. The trouble of Target group exerts a contagion effect. As a matter of fact, the firm would require discounting heavily to get rid of the stocks. On the other hand, consumers are also not in the correct frame of mind to buy products of Target in particular due to its stocks hitting the rock bottom in the market. The cost of the firm regarding production is also too high. This is resultant of hike in international labor and transportation costs in the industry. This has had a drastic effect on the firm since most of the products and solutions are manufactured in Asian markets. Earlier, with increase of cotton cost the firm’s apparel profitability experienced a severe hit in 2011 (Chang, 2014).

Strategies for Overcoming the Key Problems

At the outset, it is worth mentioning that the Australian Retail domain has witnessed the downward trend post-global financial meltdown. The sectors share in the Australian GDP has been on a downward trend. Having said that, the recent changes in the Australian economy in keeping with the consumer sentiments and behavior had affected a structural shift in the industry (Du et al., 2016). The key problems or concerns identified in this context are mainly, competitors having larger distribution areas. The players mainly, Wal-Mart owns a larger amount of stores and units in comparison to that of Target Australia. The inflation rate, on the other hand, is higher due to fall of the economy in preceding years. The competitors have gone about by the elimination of the negative effect by offering prices for identical products and items. There have been reports of security breaches wherein the personal information of the consumers has been hacked thereby conferring bad name to the organization. Furthermore, the mergers and acquisition of various companies across the globe in the similar domain have resulted in Target’s diminutive fortunes. The firm also lacks diversification regarding products and items which the players have an edge over Target Corporation (Hattersley, Isaacs & Burch, 2013). 

As mentioned earlier, that Target Group has experienced a decline in profitability index. The profits have declined by 32 percent in the preceding years before Mr. Machin joining the group for revitalizing the firm. But things turned worse with profits declining to 63 percent since his joining of the group. Hence, it is imperative for the firm to devise strategies that would improve the condition of the business. The various strategies designed to overcome the problems are laid below.

Online Business operation: In the present context, technology plays a major role in business which cannot be undermined to any extent. In the quest of augmenting the firm’s prospects, Target Group may implement an online business model to attract technologically sound consumer base. The online business model of Target aspires for improvement of sales figures and repositioning itself in the retail domain. Other move includes round the clock operations, and better service delivery to the customers (Wardle, 2015).

Sale of products at a first price: The firm has been selling its products and services to the consumers at discounted rates. This may have reaped benefits primarily. But with the passage of time, this business strategy or approach resulted in the decline of the firm’s performance concerning sales revenue and other indicators. Hence, to recover the lost ground or improvement of profit margins of the organization and overall performance of the firm, Target Group needs to revamp its selling strategy. The firm has changed the pricing strategy by the sale of products at the first price instead of discounted prices. This tactic should facilitate the organization for the avoidance of soaring stock clearances and also strengthen the company in the form of revenue generation. This strategic change would facilitate the firm to improve its business state of affairs by improvement of sales and reestablishment of the firm’s presence in Australian retail domain through differentiation (Tennent & Lockie, 2012).

Conclusion

Additional services: Target Group has initiated strategic change by the implementation of additional services in its units. The services gamut has been broadened by the company for its consumers and thereby improving service delivery quality to the consumers. The services rendered to the in-house customers are efficient and faster than earlier. This has empowered the consumers to have a favorable outlook of the organization in general. Additionally, the structure of the store has been refurbished which augments the ambiance and additional facilities of the store by initiation of in-house coffee shops that has helped in the enhancement of the brand in the psyche of the consumers, by and large (Kamal et al., 2015).

Global trends: Target is one of the prominent retailers in the Australian retail market that provides services to the customers’ apparels, home wares, and general merchandise. As a part of strategy change, Target is providing customers more assortment of various products or merchandises that are in line with the global trends and demands of the customers. Besides, Target is planning to hire in-house designers that would design apparels exclusively for the customers of Target by considering the preferences of their customers and also the international trends. This would improve the brand loyalty among the customers and also the profits for the company.

The discussion above of the strategy implemented by the organization, it is imperative to decipher the effectiveness of the approaches adopted by Target Group. Initially, it was observed that the firm relied on adoption of the new business model since the present day state of affairs aids any organizations to arrest the attention of the consumers (Schneider, 2015). It may be stated that the online business model of target Group would facilitate the consumers to select products and services from an array of products, services, and solutions. Hence, it may be deduced that subscribing to the suggested strategies or for that matter tactics, would make buying experience of the consumers more refined. Also, the modified business policies would necessitate the corporation for revival of existent tactics thereby helping the organization to attain profitability and hence these tactics are justified enough (Higgins, Milne & Van Gramberg, 2015).

In the light of competitiveness in the industry, organizations are required to stock the emerging changes in the retail domain of the country. It is mentioned in the above segment that the strategies implemented or made into use in the ranks of the organization have drawn results much to the benefit of the corporation by and large (Sutton-Brady, Kamvounias & Taylor, 2015). Firstly, Target Group had reduced its dependence of offering consumers at discount rates. With the change in consumer tastes and preference, the consumers are more likely to have a propensity of buying premium products at considerable price rates rather than mediocre products and solutions. Value creation is one of the strategies that helped the firm to gain an advantage over other players in the domain. Target Group had created value for its consumer base since they offer high-end merchandises in the light of global and emergent trends and perspectives (Merrilees & Miller, 2015).

The development in the organization is evident from the financial dynamics. By the means of application or implementation of strategies, Target Group’s financial worth or reading reveal a positive effect. The factual reality is Target’s stock prices soared from the period of February 2014 till 2015, from 55.06 to 75.87 (Wardle, 2015). Here, it is important to learn that during the same time frame, Wal-Mart, which is a major player in the domain, witnessed stocks decrease from 72.81 to 86.18. Having said that, Target Group’s worth increased around 6 USD more than that of Wal-Mart’s both of these two organizations are on the same plane and assume a decent market position. On the other hand, Target’s sales revenue stayed reasonably the same during the same time frame, decreasing by merely less than one percent. The Target Group seems to perform well regarding Cost of Goods Sold and Sales ratio, which signifies that the firm stays ahead of players in the business environment (Chimhundu, McNeill & Hamlin, 2015).

The rationality of usage of such kind of indicators or measures lies in the evaluation of the financial position of the firm. The Key Performance Indicators or KPI in this perspective is a financial consideration or stocks of the firm in keeping with the amplification of consumer sales and broadening of customer baseline (Knight, 2016). It is worthwhile to note that financials readings are apparently unlike to that of consumer enhancement. But a further in-depth analysis reveals that strengthening of consumers only adds to augmentation of the financial health of the performance of Target Group. Therefore, a review of all the strategies and KPIs, it may be construed that the choice of aforementioned strategies is acceptable enough and that it is likely that the entity would invigorate through the means of the same strategies and approaches (Knight, 2015). 

Conclusion:

The overall analysis and in-depth investigation in the contemporary strategic study of Target Group put forth about nuances of how marketing strategies and developments aids in bettering of a firm’s operation and performance. The earlier segment mentions about predicaments or shortcomings in the firm’s operations. The further study reveals about creation and formulation of strategies which intends to resolve the crisis of the firm that it has been subject to in present context. Target initiated refurbishment process in its ranks by revamping the marketing spectrum of the organization, in general. Various methods have been discussed in coherence which highlights the need for alteration of existing strategies to the innovation of policies and thereby relevance of the same in the given perspective. In fine, it may be concluded that Target Group is on the verge of regaining its stature by the means of application of diverse strategies and policies applied in the given proposition. 

References:

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Chimhundu, R., McNeill, L. S., & Hamlin, R. P. (2015). Manufacturer and retailer brands: is strategic coexistence the norm?. Australasian Marketing Journal (AMJ), 23(1), 49-60.

Du, F., Yang, F., Liang, L., & Yang, M. (2016). Do service providers adopting market segmentation need cooperation with third parties? An application to hotels. International Journal of Contemporary Hospitality Management, 28(1).

Hattersley, L., Isaacs, B., & Burch, D. (2013). Supermarket power, own-labels, and manufacturer counterstrategies: international relations of cooperation and competition in the fruit canning industry. Agriculture and human values, 30(2), 225-233.

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Kamal, O., Brown, D., Sivabalan, P., & Sundin, H. (2015). Accounting information and shifting stakeholder salience: an industry level approach. Qualitative Research in Accounting & Management, 12(2), 172-200.