Market Warming Shoe Price War Opened Again

Last year, the major department stores in Guangzhou, in order to gather popularity under the financial crisis, set off another round of unconventional large margin sales promotion. Although sales increased, there was no profit growth or even a downward trend. This year, the market is getting warmer and the consumer is looking up. Most businesses are gradually changing the practice of "price war" and promoting sales growth and profits through more value-added services, green marketing and other new marketing methods.

  Improving competitiveness with Expo Tourism

Price promotions will increase passenger flow and improve sales in the short term, but in the long run, gross margins will be squeezed or even negative.

Reporters interviewed learned that this year, Guangzhou's major department stores in addition to traditional sales promotion, more emphasis on "value-added services" and "green marketing". Gao Ping, planning manager of Xinguang department store, said that this year, Xinguang department store will pay more attention to members and launch more feedback activities, such as "Expo Tour" and "Ocean Park Tour" combined with World Expo, Asian Games and other big festivals. In addition, within a fixed period, members can send 200 points every day without consuming. The "Spring Fashion Festival", which is being carried out by Wangfujing department store, is a free new product experience voucher worth 200 thousand yuan to the public, that is, customers can get 200 yuan "new experience certificate of shoes, leather goods and bags" when customers arrive at the store. The friendship store launched this month's "new month of home Promotion Month" featuring the theme of "low carbon lifestyle", introducing green food, environmental protection and energy saving appliances, and plant skin care products.

In this regard, Wang Xianqing believes that since the 08 year of the economic crisis, solving the "survival problem" was the major task of the major businesses at that time, and the "price war" was born. After more than a year's efforts, all sales have improved, and the "survival problem" is no longer a problem. "Better return" has become the goal of the joint efforts of businessmen. Therefore, everyone has shifted their focus to improving their competitiveness. If the former "price war" is aimed at consolidating the old customers, then all kinds of value-added services based on their own style will attract more new customers on this basis.

　 Training "buyers" to improve self run ability

Under the new business pattern, there is another important factor for major department stores to gain more profits. Nowadays, many department stores act as the two landlord mode, and rely on the suppliers to make profits and rely on their own businesses. He said that in the long run, higher self capacity and purchasing power can enable businesses to gain greater profits, which also gives them sustained market competitiveness. On the occasion of the twenty-sixth session of the National Committee of the Communist Party of China, the chairman of the all China Federation of trade unions, Liang Guo Hao, pointed out that changing the business mode, gradually changing from the franchise point to the self purchase and sale, as well as personnel training, is the most important problem facing the retail industry.

It is reported that since the 90s of last century, more and more department stores have shifted from the traditional proprietary mode to the "brand joint operation" mode, which is controlled by brand operators. The brand operators have no need to pay the rent to enter the shopping mall, but by extracting the deduction points from the sales volume of the brand as the gross profit of the department stores. Industry experts also pointed out that the mode of joint point deduction is also the main factor leading to homogenization of brands and commodities in domestic department stores. And homogenization, naturally caused businesses frequent discount war, which also squeezed the department store had not much profit margins.

It is understood that foreign department stores are still using self purchase and marketing mode, shopping malls have professional "buyers" directly to all over the world to purchase goods from manufacturers, especially with their own brands to order fashionable and personalized products, "buyer mode" has become a shopping mall to shape its own image and become a new profit growth point. Xin Guang Department Store Gao Ping told reporters that Xinguang has a certain proportion of cosmetics are proprietary products, and in the "buyer" aspect, she said the company will try to search and cultivate, as a store of talent reserves.

But the rewards are high and the risks are high. For department stores, the use of joint point deduction mode will only affect their income but not lose money. Moreover, most department stores will use the performance elimination system, that is, the lowest performance will be eliminated, so as to stimulate brand companies to try their best to improve sales. But if a department store spends money on goods, sells poorly or does not sell, department stores will lose money. Therefore, commodity purchasing is a great challenge to department stores' purchasing power.