COMPANY PROFILE -Westfield Group
Business Sector :Retail
Operating Geography :Australia and NZ, Global
About Westfield Group :The Westfield Group first began as a shopping centre in the western suburbs of Sydney. Westfield Corporation came into existence in the year 2014, when the Westfield group got divided in terms of area of operations. Westfield Corporation is one of the leading shopping centre companies in the world with its centers’ located across the USA and in UK. Westfield corporations cater to the food, fashion, leisure and entertainment demands of the consumers through its 40 malls. It hosts 2000+ people as of 2012.
Westfield Group Revenue :AU $635.5 million - FY2014
Competitive Analysis of Westfield Group
|1. Pop-Up retail concept enhances small retailers to be a part of the chain|
2. Cart concept allows local players to broadcast their products to wider audience
3. Efficient use of technology for sustainable business
4. Good CSR activities like promoting education
5. Partnering with retail partners to increase their sales
6. Good operating margin compared to the biggest player
|1. The company is having a poor interest coverage ratio, chances of bankruptcy
2. The CAGR at -24.9 % make the stocks risky for investment, less equity capital
3. D/E ratio is good but poor stock performance can remove investor confidence and increase debts.
4. Its high profile brand retail partnership is a barrier for other countries entry
|1. Getting into new markets like China, India, Saudi Arabia, UAE|
2. Diversifying into other product segments
3. Increasing the GLA by increasing more centers
|1. Other Competitors increasing their GLA by increasing more centers
2. Buyers going to other centers offering lower prices for luxurious products
3. Property pricing for expansion and trade regulations
4. Retailers moving to other competitors
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Detailed SWOT Analysis of Westfield Group
1. The pop up retail store concepts gives the local retailers to show their products to a huge customer base. This helps them in developing their business and it is a cost effective way, for trail running that how much a retailer is generating revenues/gross leasable area.
2. Cart concept also helps the local people to market their goods to a large consumer base. This concept allows the management to build good relationship with the local population who may not have the financial means to own/lease a large area.
3. They are in the use of technology like waste water management which has helped them in an increase of 283% in waste disposal and a drop of 4% in water drawn, 5% reduction in indirect energy consumption. These technological uses reduce their operational costs.
4. Efficient Corporate social responsibility by collaborating with schools for education, letting local populace use the area of the centre for fundraising activities.
5. Partnering with the retailers also has a significant impact to customize the sales of the retailers and increase the revenues. This also helps in identifying the revenue/Gross leasable area. Identifying retailers as per the consumers’ preferences in a particular area also helps in increasing the sales.
6. It has a medium operating margin of 65%, which means that for every dollar of revenue generated it can keep 0.65 dollars. This is higher compared to the largest competitor Simon Group in USA market. This reflects the operational efficiency in terms of lower inventory costs and quicker turnover of goods.
1. The interest coverage ratio of the organization is very low at 1.0, lower compared to the industry standard of 1.8 and 4.5 of Simon Group. The ratio indicates the ability of the organization to meet the interest dues to it. This indicates a high chances of bankruptcy as a brief spell of bad sales can be disastrous for the organization.
2. The Cumulative Annual Growth rate stands at -24.9% as compared to 6.8% of the industry. This indicates a risk of high volatility of the shares. The investor confidence will be shaky and will reduce equity capital inflows.
3. The Debt/Equity ratio stands good at 0.7, which means that liabilities are less for the firm; however with low CAGR, the investor confidence will fade and the organization in order to get cash flowing will have to be more dependent on the debt capital. Moreover the interest coverage ratio is low, which means it cannot pay interest on debts. This can have disastrous consequence for the organization.
4. More focus on high priced retailer in developed countries may not act as a good strategy for entrants into developing countries.
1. Markets like UAE, Saudi Arabia India have a high projected growth rates in the retail sector. Moreover the two Middle Eastern countries have a wealth class which goes with the product portfolio strategy of the company. India with its rising middle class and open trade policies can be a good market. Moreover the joint venture model can also be used in India to get an entry in the Indian market.
2. It can add more product ranges by bringing diverse retailers to attract more consumers. Variety product ranges will increase the number of customers
3. More number of stores in UK, USA can pose a challenge to the other competitors. It will increase their Gross leasable area, which with their operational efficiency will help in generating more revenues.
1. The other larger players increasing their market share and through it market capitalization by increasing more number of centre in the USA, which is its primary market.
2. Consumers moving out to other competitors providing pricing discounts and better ambience for shopping.
3. Big retailers being wooed by competitors offering lower rates for leasable areas.
4. Property taxation rules and policy which can be a hindrance in their bid for expansion and increase in property taxes in operating markets.Westfield SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
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Westfield Group SWOT & PESTLE Analysis - SWOT & PESTLE.COM
SWOT & PESTLE.com (2020). Westfield Group SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/westfield-group/ [Accessed 14 Jul, 2020].
In-text: (SWOT & PESTLE.com, 2020)