Pure Department Store: Walking At The Edge Of Low Price And Quick Sale

"This is an innovation in the distribution of interests in the commercial supply chain."

Zhang Huarong, chairman of Huajian group, a shoe making enterprise in Dongguan, recently said that Huajian had just finished talks with Beijing pure department store limited liability company.

Zhang Huarong is so commented, because Hua Jian enters the pure department store to enjoy the treatment: zero rent, zero deduction rate, 7 days checkout period.

Behind this mode is the subdivision of pure department stores for investment promotion, and outlines a new business model for future business.

Suppliers are "high priced"

Huajian group's previous business was mainly to take orders from Europe and the United States, and began to turn into domestic trade in the past two years. It also launched its own brand "Jackie Chan" and "Alan Delon".

But Zhang Huarong found that domestic trade channels did not succeed.

According to him, the products of the famous shoe brand NINE WEST50% are manufactured by Huajian group.

In the US, the price of a pair of NINE WEST sneakers is around $20.

But in China's shopping malls, although NINE WEST has set the price at 800 yuan, the gross profit margin is no more than that of foreign trade.

In addition to the high rate of deduction in shopping malls, there are other kinds of gray costs and inventory costs that have to be spent in order to enter shopping malls.

Zhang Huarong's experience is very representative in the foundry enterprises that turn to domestic trade.

Hu Naipu, vice president of pure department stores, said that at present, there are many problems in department stores, such as high 25-50%, long account period (45 days -9 months), and promotion cost completely pferred to suppliers.

In addition, under the existing supply chain system, clothing has to go through layers of agents from the factory production to the shopping mall. The common process is clothing manufacturers - General Agents - regional agents - distributors - shopping malls.

Such a complete process, consumers will have to face the reality of high prices.

Taking clothing as an example, the increase rate of department stores is on average 6 times, and the high-end department stores such as Yansha are more than 10 times.

The price of shopping malls is so high that consumers can't afford to pay the price. So the shopping mall with a high price has entered a discount circle, which has been discounted all year round, and at the same time it has also sacrificed services.

Taiwan

In addition, Jiang believes that the biggest headache for suppliers is the store account.

In his view, a reasonable account period is 45 days, if the account period reaches 60 days, is the limit which the supplier can endure.

Take the luggage industry as an example, generally from the preparation to production, the period is 1.5-2 months, plus the shelf time is 45 days.

That took 3 months.

If a mall does business for 1 million yuan a month, the increase in liquidity will increase by 1 million yuan every month.

That is to say, a shopping mall accounts for 3 months, plus 3 months of production, then the liquidity of the enterprise must be maintained at 6 million yuan.

The long account is like a supplier's death sentence. There have been many disputes between shopping malls and suppliers in Beijing because of the long accounts.

Like the SOGO department store in Beijing's bustling business circle, its account period lasted for 9 months, making many suppliers tight capital chain and quit SOGO.

65% off single product management

How can we straighten out the contradictions in the supply chain of traditional department stores?

The only way to explore the pure department store is to put aside the intermediate links and directly cooperate with the producers. Secondly, the brand without rent and no deduction will be applied to the brand entering the market, but the brand price required to enter the market will directly hit 65% off of the market price, approaching the wholesale price of the traditional department store.

"Traditional department stores are selling at high prices and slow sales, while pure department stores are selling at low prices, and increasing the turnover rate of suppliers through quick sales."

Hu Naipu said that the price of 65% off of the brand accounted for 80% of the entire department store shopping mall.

But Jiang is not satisfied with the 65% off discount.

"I highly advocate the pure model, but the crown product can't be sold at 65% off."

Jiang Yongxiong said, first, the gross margin of luggage products is relatively low. Two, as a brand with better layout in other traditional channels, it is impossible for the crown to disturb its channel price at a low price.

But the crown still achieved cooperation with the original.

Hu Naipu said that it would be unrealistic to make all the products of famous brands in the market at 65% off now.

Therefore, only 20% of the well-known brands are reserved, and the discount is determined by the manufacturers themselves.

In addition to a small number of brand manufacturers, the main purpose of this department store is like Huajian group, which has excellent manufacturing quality and brand names.

A large number of foreign trade processing enterprises are turning to domestic trade channels, and their products conform to the pure "superior quality and low price" strategy.

Zhang Huarong thinks that the pure department store's mode is very valuable to himself. According to his calculation, the brand he created in China is exactly the same as that of NINE WEST. The sales price in domestic counters is 800 yuan, and after 65% off, it still has a higher profit than foreign trade's 20 dollars.

Another category is the well-known brands of sub brands, such as underwear brand, Li Fang Fang has entered the pure department store, but only the sub brand has joined the 65% off team.

The reporter found that the "007 model" seems to have made the suppliers as cheap as possible, and the actual department store is also a big winner.

Hu Naipu analysis, pure department store implements commodity single product management, that is, according to the difference of each commodity, charging 1-35 yuan paction costs.

This way makes the paction mode of both sides very simple and pparent, and eliminates the artificial grey cost.

Although there are not many commissions, the turnover rate of pure department stores will be greatly accelerated after the price is reduced.

Hu said that the 47 thousand square meter area of pure department stores can achieve 1 hundred million profit in a year.

Although the traditional department stores such as Zhongyou department store, such pure profit is not high.

But in this way, pure department stores can quickly assemble consumers, bind suppliers, and support the chain operation of their stores.

Once the Dalian lock mode is realized, the supplier will automatically bind the pure department store.

The reason is that suppliers no longer need to negotiate with multiple shopping malls.

ZARA fast fashion

The ITAT model, which used to be very popular for the first two years, is also a zero rent and zero deduction rate for suppliers. According to sales volume, it is divided between suppliers, property parties and ITAT three parties.

Under the support of IT system, the three parties achieve pparent profit distribution.

However, the ITAT mode will soon decline because suppliers are mostly goods in stock and far from fashion trends. It is difficult to protect consumers' continuous enthusiasm.

Pure department store 80% is a non famous brand, how to protect the continuous attention of consumers? Pure Marine Department, vice president of pure department store, said that the pure department store established its own fashion center, which is composed of teachers of Beijing Institute Of Fashion Technology, famous designers and fashion personages in China.

At the same time, fashion designers and designers are regularly organized to "shop" to evaluate products and eliminate products that are not popular with consumers.

In addition, the core is that the single product management mode established by pure department stores is different from the extensive brand management or category management of traditional department stores.

Like ZARA, the single product management under the support of ERP system can see the real time sales data of each single product, and suppliers can call data at any time in the pure department store backstage system to guide their production.

Zhang Huarong believes that this is very valuable for manufacturing enterprises. Enterprises can understand consumer preferences in a timely manner and shorten the supply chain to reduce inventory.

Xie Ping, a professor at Beijing Institute Of Fashion Technology, said that in Europe, ZARA's fast fashion mode made it one of the largest clothing companies in the world.

The way of ZARA is to guide the design by pferring daily sales data to headquarters.

But the weakness of ZARA is that the foundry enterprises are distributed in some small countries, sometimes the quality is not satisfactory.

The suppliers chosen purely are foreign trade foundry enterprises with excellent production capacity.

Therefore, as long as the fashion information is rapidly pmitted to the enterprise end, pure department stores can also become China's ZARA.

"Traditional department stores are selling at high prices and slow sales, while pure department stores are selling at low prices, and increasing the turnover rate of suppliers through quick sales."

Hu Naipu said that in this way, pure department stores can quickly assemble consumers, bind suppliers, and support the chain operation of their stores.

Once the Dalian lock mode is realized, the supplier will automatically bind the pure department store.

The reason is that suppliers no longer need to negotiate with multiple shopping malls.

The calculation of the ocean proves that the zero rent, zero deduction rate and the wholesale price of 80% of the whole product do not affect the profit point of the shopping mall: the department stores strive to sell 1 billion a year, and the average price of the single product is 200 yuan, which means that nearly 8 million products are sold every year.

The average paction fee per commodity is 20 yuan, and the profit is 1.6 billion.

The new model challenged

But not everyone is optimistic.

Chen Liping, director of marketing department of Capital University of Economics and Business, who is the first Chinese retailer to change the "profit oriented" mode of retail business, believes that the so-called paction fee is essentially a disguised deduction.

Zhang Huarong and Jiang Yongxiong are worried about the traditional department stores. Chen Liping, who has been committed to the comparative study of retail trade between China and Japan, thinks that the cost of circulation in China is very high and the retail industry really needs to change.

But the chronic disease such as high discount rate and long account period is only a symptom of "morbid" in retail industry, not fundamental.

Chen Liping said that the "profit driven" mode, which does not take any risk at all, is the biggest obstacle to the long-term development of China's traditional retail industry.

The Japanese department store industry has always been the object of learning and emulated in mainland China, but the landslide in recent years has further confirmed this point.

"Returning to camp is the only way out."

In view of the pure department store "007" mode, Chen Liping believes that the surface looks very good.

However, the paction fee collected in the end is essentially a return point, only a different call.

"Don't change the soup.

All commercial risks are still borne by the supplier side. "

Many people in the department store also hold similar views with Chen Liping. Although some people in the industry believe that the "007" model may be a good pition in the process of pforming retail business from traditional joint operation to self operation, but he also believes that it will not last for too long.

Jiang Yongxiong believes that unlike traditional department stores that earn profits from rent, deduction and occupation, the department stores have enough room for development on the basis of 7 days' accounts. Manufacturers speed up the turnover of capital and speed up the turnover of goods.

However, the key is to adhere to this model purely, instead of changing the rules of the game once it becomes a strong terminal.

Outside, traffic is not too convenient, and it is not like otter, all well-known brands, which can satisfy many consumers' desire to spend big money on big cards. Although Xie Ping thinks that the most valuable commodity in pure department stores is actually 80% of the non famous brands. In many fashion people's wardrobe, only 10% of the famous brands are in the market, and the other 90% may be non famous brands that conform to their own taste and taste. Therefore, Xie Ping predicts that the real fashion people are directed at the 80% unknown brands of pure department stores. However, how to use the 80% non famous brands to attract consumers and protect consumers' continuous attention and recognition is a topic that must be considered for a long time. Meanwhile, the department store is located in the Fourth Ring Road of northeast Beijing.