MGT303 - Business Information Analysis

Research Investigation and Proposal

Rachel Lai - 00036197TVicki Hetherington

29.01.12Table of Contents

PHASE 1: THE BUSINESS PROBLEM & RESEARCH OBJECTIVES

BACKGROUND INFORMATION…………………………….…………………………………………………………….…3

BUSINESS & RESEARCH PROBLEM……………………………………………………………………………….……….4

LIST OF INFORMATION…………………………………………………………………………………………………………5

RESEARCH OBJECTIVES…………………………………………………………………………………………………………6

PHASE 2: SUMMARY OF FINDINGS

STATISTICS ON RETAIL SALES....................................................................................................7

GROWTH IN ONLINE RETAILING................................................................................................8

REASONS FOR ONLINE RETAILING.............................................................................................9

KEY TRENDS.............................................................................................................................11

BENEFITS OF ONLINE RETAILING.............................................................................................12

CASE STUDIES…………………………………………………………………………………………………………….……….12

CONCLUSION……………………………………………………………………………………………………………….……..13

PHASE 3: PRIMARY RESEARCH PROPOSAL

RESEARCH OBJECTIVES……………….…………………………………………………………………………………..….13

APPROACH TO THE PROBLEM…………………………………………………………………………………………..14

RESEARCH METHODOLOGY.....................................................................................................14

POPULATION & SAMPLE..........................................................................................................14

APPENDIX: SAMPLE SURVEY...................................................................................................15

REFERENCES…………………………………………………………………………………………………………………….…16

Phase 1: The Business Problem and Research Objectives

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Background Information:

Myer is Australia’s largest department store group and has been synonymous with style and fashion

for over 100 years. With a valuable footprint of 67 stores in prime retail locations across Australia,

generating total sales of over $3.2 billion in FY2010, Myer is a leader in Australian retailing. Myer has

a strong connection with its customers, with one of the most reputable retail brands in Australia. It is

known for its welcoming, familiar, trusted, stylish and fun shopping environment as well as its strong

culture of philanthropy and local community engagement.

Myer caters for a large number of Australian households, offering more than 600,000 product lines,

comprising 2,400 brands sourced from over 800 suppliers globally. Myer’s offering comprises eleven

core product categories including womenswear; menswear; youth fashion; childrenswear; intimate

apparel; beauty, fragrance and cosmetics; home wares; electrical goods; toys; fashion accessories;

and general merchandise.

The first Myer store in Bendigo, Victoria 1900

Channels of Operations

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The Myer store network includes a footprint of 67 stores in prime retail locations across Australia.

Myer has 28 of the top 30 shopping centers across Australia including the world-class, international

award winning flagship Melbourne store.

Size

Myer currently comprises 13,000 team members, 56, 000 shareholders and 800 global suppliers.

Total assets are $1,977,962.

Financial Position

In financial year 2011, total sales were $3.159 billion. Myer reported a net profit after tax of $162.7

million.

Business Problem

Retail store sales are dropping. Myer is set to close stores in Victoria and New South Wales and

shrink surviving stores. Myer now has the business decision of whether to expand online and if so,

how to successfully enhance its online presence. The online store must be positioned correctly in

order to complement its existing retail stores in a way that is appropriate for its environment.

Research Problem

To investigate and profile the online retailing environment as it relates to large, well established

retail stores.

List of Information

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Case studies of other well established retail companies opening online stores

Web designs and layouts of existing online stores

Online consumer trends i.e. what consumers are spending their money on, where and which

sites are most visited

Statistics on online shopping i.e. growth trends

Statistics on retail sales drops and outcomes for traditional bricks-and-mortar shops

Reasons for consumers shopping online

Opportunities in the online shopping market

Top online stores in Australia and reasons for their success

Issues facing Australian retail sector at present and in the future

E-commerce trends – advancement in technology and the internet and its effects on online

shopping

Background information and statistics on retail giant MYER

Consumer attitudes towards MYER’s current online store

Explanation

This information will assist in resolving the business problem as it will provide an insight into online

shopping trends as well as highlighting the reasons as to why consumers now prefer to shop online

and the advantages of doing so. These trends will determine whether Myer should expand online

and the information sourced from other successful online shopping sites will hopefully assist in

enhancing Myer’s online profile.

Research Objectives

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To understand the online environment as it relates to consumer behaviour

To gain an insight into e-commerce trends

To appreciate the changing pace of technology and its effects on businesses

To predict consumer attitudes in order to come up with innovative ways of maintaining profits in

retail during financial downturns

To investigate Australia’s most popular online retailers and the reasons for their success

To research Myer’s current financial position and the potential need and means to improve

online sales

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Phase 2: Summary of Findings

Online shopping is a form of electronic commerce whereby consumers directly buy goods or services

from a seller over the Internet without an intermediary service. The growth in popularity of online

shopping has had considerable media coverage recently and is expected to grow by 5.1 per cent per

annum over the next five years in Australia (IBIS World). The strong Australian dollar, low costs,

technological advancements, and the willingness of overseas businesses to reduce profit margins

have contributed to the increase in online shopping at the expense of bricks-and-mortar shopping

centres (Woodings, T., Capital, A. & Holtzer, M. 2011). These factors create a major competitive risk

for Australian retailers, significantly impacting Australia’s $300 million retail sector.

Statistics on Retail Sales

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

Retail Sales

Food retailing Household goods retail-ing Cafes, restaurants and takeaway food services Other retailing Clothing, footwear and personal accessory retail-ing Department stores

2011

%

The following industries rose in trend terms in October 2011: Food retailing (0.4%), Household goods

retailing (0.6%), Cafes, restaurants and takeaway food services (0.7%) and other retailing (0.4%).

Clothing, footwear and personal accessory retailing (-0.7%) and Department stores (-0.5%) fell in

trend terms in October 2011 (Australian Bureau of Statistics, 2011). The drop in the latter two is a

possible reflection of poor consumer confidence and the subsequent trend toward online shopping.

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Growth in Online Retailing

(The Nielsen Company, 2011)

Statistics

The surge in online spending will increase by 25% to almost $6 billion in 2011 as mentioned in a

report by Price Waterhouse Coopers (Greenblat, E. & Yeates, C. 2011). It also states that Australians

will each spend more than an estimated $600 online in 2011 compared with $536 in 2010. This

shows significant growth in the sector with online retail sales said to rise by 12.6% a year between

now and 2015 thanks to growing popularity of mobile web devices such as smart phones. GetPrice

report showed 47% of users are now searching for deals on their mobiles and that 30% of those

smart phone users are actually using their phones to shop (Stafford, P. 2011).

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Online Consumer Trends

(The Nielsen Company, 2010)

Reasons for Online Retailing

The rise of e-tailing can be attributed to lower prices, convenience and access to a wider range of

products (Price Waterhouse Coopers, 2011). As consumers are hit by rising interest rates and a

steeper cost of living, they are forced to save rather than spend and so shop online for cheap

bargains. This robs local retail stores of revenue and forces many to engage in massive discounting.

Furthermore, research from PayPal last year shows 40% of all online spending went overseas where

prices can be as much as 50% lower than in Australia (Stafford, P. 2011). This has impacted

negatively on local retail stores with many retailers citing the internet for their dwindling sales. Book

chains Borders and Angus and Robertson, which collapsed early 2011, said online purchases has hurt

its business. The expansion of Amazon, the world’s largest online retailer, significantly impacted

sales of bricks-and-mortar book stores. Retail giant Myer is also set to close stores in VIC and NSW

and shrink surviving stores as it tries to generate as much as 10% of its sales revenue online (AAP,

2011).

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MYER Net Profit after Tax ($m)

(Myer Holdings Ltd, Annual Report 2011)

Total sales for the full year ended 30 July 2011, were $3.158 billion, down 3.8 percent on last year,

reflecting an unprecedented trading environment and weak consumer sentiment. Myer reported a

net profit after tax of $162.7 million, down 3.6 percent on last year.

Continued…

It is evident that having an online presence is essential to opening up new channels and

opportunities. It acts as a sales window to the physical store which enhances the company’s overall

presence. Many of the large, well established retail stores remained either inactive or ineffective to

this trend, stating complexity and high costs as issues. However, these retailers are now starting to

realise the benefits and embrace an online presence with the launch of web stores for giants David

Jones, Myer and Westfield. Myer started selling a limited range of products online in 2008 and have

now launched a full scale ecommerce operation, showing that online retailing is now being taken

seriously (Hitchen, C. 2007).

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Key Trends

The trend in shopping is now heading toward a multi-channel experience and the mobile phone is

now one of the most important of those channels. PayPal said recently that mobile phone payments

grew from $2.7 million in 2009 to a massive $35 million in 2010 (Stafford, P. 2011). These payments

enable e-commerce merchants to expand their offerings and create new experiences on the phone.

0

5

10

15

20

25

30

35

40

Paypal Mobile Phone Payments

20102011

Year

$m

Australian retailers are rapidly rolling out their online strategies, which will implement a multi-

channel approach to sales and delivery of product. A survey by the Aberdeen Group revealed that

33.3% of worldwide retailers and consumer goods manufacturers engage three channels in their

marketing: store, catalogue and online. “85% of businesses that adopt an ecommerce strategy do so

to take up new market trends” so creating a website to represent and sell ones products is a starting

point (Hitchen, C. 2007). To be successful, Myer will need to define the channels that will work for it

and implement those channels.

The past few years have also delivered another key trend for online retailers – socialisation. This is

evident in the phenomenon of group-buying which is apparent in the Australian market through

group discount sites such as Cudo, Spreets and JumpOnIt. Allowing users to make comments and

reviews, connecting shopping carts to social networks and ensuring customers are able to talk to

each other are the elements of online retail that are becoming more important (Stafford, P. 2011).

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Benefits of Online Retailing

According to Urbis, the net effect of online retailing on shopping centres will be lower future rates of

growth. For this reason, there is a need to expand and cash in on the opportunities of the online

environment. An online store is important as it allows people to research, compare pricing and

browse products they want to buy (Stafford, P. 2011). It also allows them to engage with the brand

other than directly walking into retail shopping centres. While Australia’s largest retailers might be

focused on increasing footfall into their stores, they would be well-advised to create a consistent

multi-channel environment that fosters customer loyalty, drives incremental sales, increases brand

recall and loyalty, and allows them to get to know their customers better (Hitchen, C. 2007). Leading

Australian retailers should also consider ways to differentiate themselves by providing superior add-

on services.

Case Studies

JB Hi-Fi and Dick Smith are two of Australia’s top ten retailers in 2011 according to a survey

conducted by SmartCompany (Stafford, P. 2011). JB Hi-Fi offers free shipping on certain days and

items and has been one of the few success stories in retail during 2010 and that success extends to

online. Dick Smith has been in the top ten for the past three years and its site is bright and bold with

solid branding. This makes it easy to manoeuvre around the site and customers are provided with a

multitude of information to assist in product searches. Customers can also see if a product is in

stock at a local store. These are all value add-ons that enhance the appeal of online shopping. Myer

is yet to break into the top ten even though it is one of Australia’s leading retailers. However, it is yet

to reproduce this same success in online sales. Due to its large variety of stock it poses a greater

challenge to compete with other online stores with more specific product categories. For this

reason, Myer needs to come up with ways to compete with other more popular e-tailers.

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Conclusion

This information highlights the increasing trend toward online retailing as a result of advancements

in technology and the internet and the resultant demise in sales of traditional bricks-and-mortar

shopping centres. It expresses the increased use of smart phones as a catalyst for this trend and how

shopping is now headed toward a more multi-channel experience focusing on socialisation and the

group-buying model. These trends emphasise the direction online retailing is going and pinpoints the

need for traditional retail stores to expand online and in what capacity to ensure success in the

competitive retail environment. The business problem of whether Myer should expand online is

evident through the literature review but in what capacity that is appropriate for its surroundings is

still unknown.

Consumer attitudes toward the existing Myer website need to be analysed in order to reveal what

improvements can be made to enhance the online shopping experience with a focus on user-centred

design. The outcome of this information will also enable Myer to discover consumer preferences and

buying habits. Statistics on the number of page visits of more successful retail websites would

provide a benchmark comparison for these improvements. Facts on the demographic that Myer is

selling to will further determine how best to attract them to the website and have them buy. As

online sales become more important, information on sales trends will also be critical to compete

with other retailers.

Phase 3: Primary Research Proposal

Research Objectives

To reveal consumer attitudes toward existing Myer website

To collect statistics on other retail website hits to reveal most popular shopping websites

To understand the need for user-centred design

To analyse consumer behaviour regarding sales items and frequencies of sales

To examine the demographic of Myer’s target audience

To discover the proximity of consumers to retail stores such as Myer and whether location

influences online sales

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Approach to the Problem

The overall methodology to be used should be Descriptive in nature. This type of research is used

extensively when the research purpose is to explain, monitor and test hypotheses, and can also be

used to a lesser extent to help make predictions and for discovery. It is essentially used to describe

situations.

Descriptive research is an appropriate channel for this research proposal as it can be an important

tool in understanding consumer behaviour. It involves the use of survey data such as questionnaires

which contain specifically formulated questions that are objective or subjective in nature and gather

facts such as demographics and opinions from respondents as well as satisfaction, involvement and

perceptions. This is especially beneficial in sourcing information relating to Myer’s customer base

and personal attitudes so to be able to identify key aspects that will enhance Myer’s online store and

boost overall sales.

Research Methodology

The specific research techniques to be used will be interviews and surveys incorporating a series of

closed and open ended questions such as dichotomous, multiple choice and scaled response

formats.

Population & Sample

A population refers to the entire group of people, events or things of interest that the researcher

wishes to investigate (Sukaran, 2009: p. 262). The population in this study is all existing online

shoppers resident in Australia. Sampling is the process of selecting a sufficient number of elements

from the population for a sample. The sample in this study is consumers aware of Myer and size 30 <

n < 500.

The sample will be obtained via shopping centres, websites, social media networks and

telemarketing and will be done through the provision of incentives. For example, a pop-up ad survey

may appear after an online purchase has been made with an offer of a shopping voucher or discount

as an incentive to complete the survey.

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APPENDIX: MYER SAMPLE SURVEY

1. Where do you live? ___________________________________________________________

2. Where is your closest Myer store? _______________________________________________

3. How often do you shop at Myer? ________________________________________________

4. Are you mostly interested in Sales items or specific items? SALES / SPECIFIC

5. Have you used Myer’s online store before? YES / NO

6. Would you be interested in the sale items on offer there? YES / NO

7. What advantages would you see in using Myer’s online store? ________________________

___________________________________________________________________________

8. Do you enjoy shopping online? YES / NO

9. What online shops do you normally frequent? _____________________________________

___________________________________________________________________________

10. How does Myer online compare to this? __________________________________________

___________________________________________________________________________

11. What is your overall rating of the Myer website with 5 being the highest? 1 2 3 4 5

12. Would you use a Myer smartphone app? YES / NO

13. What improvements would you make to the Myer online store? _______________________

___________________________________________________________________________

14. Were you able to find the products that you wanted in the search engine? YES / NO

15. Would you be interested in a weekly email newsletter showing sale items and promotional incentives? YES / NO

16. Have you shopped online at any of the following e-tailers?

a. Catch of the Day

b. Deals Direct

c. Big W

d. Dick Smith

e. JB Hi-Fi

If yes, did you rate this experience greater than that on the Myer website? Why? YES / NO

______________________________________________________________________________

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References:

AAP. 2011. ‘Myer cuts space, boost online sales’, http://www.cio.com.au/article/406970/myer_cuts_space_boosts_online_sales (accessed 23 January 2012)

Australian Bureau of Statistics. 2011. Australian Social Trends – Online @ Home, June, Available: http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/LookupAttach/4102.0Publication29.06.116/$File/41020_Online_Jun2011.pdf (accessed 23 January 2012)

Australian Bureau of Statistics (2011) Retail Trade Australia, ABS Publications, www.abs.gov.au (accessed 23 January 2012)

Baltzan, P., Phillips, A., Lynch, K. & Blakey, P. 2010. Business driven Information Systems (Australian and New Zealand Edition) McGraw Hill, North Ryde, NSW

Cummins, C. 2011. ‘Myer to close or shrink stores as retail malaise bites’, http://www.theage.com.au/business/myer-to-close-or-shrink-stores-as-retail-malaise-bites-20111218-1p0q4.html (accessed 23 January 2012)

Godfrey, A. 2011. ‘Overseas internet spending is killing off Australian retail, but don’t blame the GST’, http://www.news.com.au/money/money-matters/overseas-internet-spending-is-killing-off-australian-retail/story-e6frfmd9-1226101760658 (accessed 23 January 2012)

Greenblat, E. Yeates, C. 2011. ‘As stores close doors, consumers open wallets on Internet’, http://www.smh.com.au/business/as-stores-close-doors-consumers-open-wallets-on-internet-20110725-1hx57.html (accessed 23 January 2012)

Hitchen, C. 2007. ‘Five things holding back online retail in Australia’, http://www.getprice.com.au/5-things-holding-back-online-retail-in-australia.htm (accessed 23 January 2012)

Myer Holdings Limited. 2011. Myer Annual Report, Available: http://media.corporate-ir.net/media_files/IROL/23/231681/Myer_Holdings_Limited_2011_Annual_Report_to_Shareholders.pdf (accessed 23 January 2012)

Myer Pty Ltd. 2011. Available: http://www.myer.com.au (accessed 23 January 2012)

Rumbold, S. 2011. ‘Unravelling Online Retail – Urbis Reveals All’, http://www.urbis.com.au/think-tank/white-papers/unravelling-online-retail-%E2%80%93-urbis-reveals-all (accessed 23 January 2012)

Stafford, P. 2011. ‘Australia’s Top 10 Online Retailers 2011’, http://www.smartcompany.com.au/internet/20110217-australia-s-top-10-online-retailers-2011.html (accessed 23 January 2012)

The Nielsen Company. 2008. Trends in Online Shopping – A Global Nielsen Consumer Report, February, Available: http://th.nielsen.com/site/documents/GlobalOnlineShoppingReportFeb08.pdf (accessed 23 January 2012)

The Nielsen Company. 2010. Global Trends in Online Shopping – A Nielsen Global Consumer Report, June, Available: http://hk.nielsen.com/documents/Q12010OnlineShoppingTrendsReport.pdf (accessed 23 January 2012)

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The Nielsen Company. 2011. Nielsen Online Shopping Behaviour, March, Available: http://tw.en.nielsen.com/site/documents/2011ShopperTrendOnlineshopping-en.pdf (accessed 23 January 2012)

Woodings, T., Capital, A. & Holtzer, M. 2011. Ten Issues facing Australian Retail in 2011, Available: http://www.taylorwoodings.com.au/Assets/files/F2-Turnabout-Retail-V1-(2).pdf (accessed 23 January 2012)

Zikmund, W.G, Ward, S., Lowe, B. & Winzar, H. 2007. Marketing Research (Asia Pacific Edition) Cengage Learning Australia Pty Limited

*Word Count: 2481 (excluding title page, contents, appendix and references)

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