MGT303 - Business Information Analysis

Research Investigation and Proposal

Rachel Lai - 00036197T Vicki Hetherington 29.01.12

Table of Contents
PHASE 1: THE BUSINESS PROBLEM & RESEARCH OBJECTIVES BACKGROUND INFORMATION..3 BUSINESS & RESEARCH PROBLEM..4 LIST OF INFORMATION5 RESEARCH OBJECTIVES6

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

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Phase 1: The Business Problem and Research Objectives

Background Information:
Myer is Australias 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. Myers 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

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Channels of Operations
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.

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List of Information
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 MYERs 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 Myers online profile.

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Research Objectives
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 Australias most popular online retailers and the reasons for their success To research Myers 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 Australias $300 million retail sector.

Statistics on Retail Sales

Retail Sales
0.8 Food retailing 0.6 0.4 0.2 0 -0.2 -0.4 -0.6 -0.8 Clothing, footwear and personal accessory retailing 2011 Department stores Cafes, restaurants and takeaway food services Other retailing % Household goods retailing

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 worlds 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 companys 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.

Paypal Mobile Phone Payments

40 35 30 25 $m 20 15 10 5 0 Year 2010 2011

Australian retailers are rapidly rolling out their online strategies, which will implement a multichannel 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 Australias 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 addon services.

Case Studies
JB Hi-Fi and Dick Smith are two of Australias 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 Australias 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 Myers 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 Myers customer base and personal attitudes so to be able to identify key aspects that will enhance Myers 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. 2. 3. 4. 5. 6. 7. Where do you live? ___________________________________________________________ Where is your closest Myer store? _______________________________________________ How often do you shop at Myer? ________________________________________________ Are you mostly interested in Sales items or specific items? SALES / SPECIFIC Have you used Myers online store before? YES / NO Would you be interested in the sale items on offer there? YES / NO What advantages would you see in using Myers online store? ________________________ ___________________________________________________________________________ 8. 9. Do you enjoy shopping online? YES / NO What online shops do you normally frequent? _____________________________________ ___________________________________________________________________________ 10. How does Myer online compare to this? __________________________________________ ___________________________________________________________________________ 11. 12. 13. What is your overall rating of the Myer website with 5 being the highest? 1 2 3 4 5 Would you use a Myer smartphone app? YES / NO What improvements would you make to the Myer online store? _______________________ ___________________________________________________________________________ 14. 15. 16. a. b. c. d. e. Were you able to find the products that you wanted in the search engine? YES / NO Would you be interested in a weekly email newsletter showing sale items and promotional incentives? YES / NO Have you shopped online at any of the following e-tailers? Catch of the Day Deals Direct Big W Dick Smith 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-bites20111218-1p0q4.html (accessed 23 January 2012) Godfrey, A. 2011. Overseas internet spending is killing off Australian retail, but dont blame the GST, http://www.news.com.au/money/money-matters/overseas-internet-spending-is-killing-offaustralian-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-internet20110725-1hx57.html (accessed 23 January 2012) Hitchen, C. 2007. Five things holding back online retail in Australia, http://www.getprice.com.au/5things-holding-back-online-retail-in-australia.htm (accessed 23 January 2012) Myer Holdings Limited. 2011. Myer Annual Report, Available: http://media.corporateir.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/thinktank/white-papers/unravelling-online-retail-%E2%80%93-urbis-reveals-all (accessed 23 January 2012) Stafford, P. 2011. Australias Top 10 Online Retailers 2011, http://www.smartcompany.com.au/internet/20110217-australia-s-top-10-online-retailers2011.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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