The Primary Factor Of Crisis In Traditional Department Stores: Rent Rise

The nightmare of a business enterprise happens to happen.

In September 8th, members of Pacific Century general store in Beijing received members from Pacific Ocean.

Not only that, except for the Pacific department store, the Wukesong store in the Pacific department store is about to close.

Tao Yucong, manager of the Pacific department store, Ying Ke, was appointed spokesman for the Beijing area to deal with customs issues. He said the reason for closing the store was that the lease of the property was due, and the rent raised by the other party was no longer renewed by the company.

10 years ago, brave words occupied the market share of 1/4 Beijing, and 10 years later, or faced with the fate of losing Beijing, the Pacific department store was only present.

Pacific Department Store

Pacific department store closed two stores in Beijing, which is one of the most important events in Beijing's department stores in recent years.

According to sources from Taiwan, because of the unsatisfactory planning in the store, the business circle changed and the owners of the building wanted to raise the rents significantly. In August 18th, the board of directors of the Pacific department store of China decided to end the operation of Pacific store Beijing Ying Ke Dian.

In addition, the Beijing Wukesong store in the Pacific department store was established in 2009. Due to frequent changes in owners and repeated delays in investment, the board of directors of the company also decided to terminate the lease with the new owners.

Pacific department store Beijing district staff said that the decision to close the two stores was very sudden. Up to now, the company is still operating normally, and the stores are also in line with the requirements of relevant departments in Beijing to do the related rehabilitation work before closing the store.

Earlier, Tao Yucong denied that the Pacific department store was poorly managed. He said that the main reason for closing the store was that the rent of the property was too high, and that the range of change was relatively large. Therefore, it decided to close the existing address and look for a new store in the future.

The above Pacific Department Store insiders confirmed this statement. "Although I have not come to the specific rent change data, I am sure that when the Pacific Department Store entered the Pacific Century mall, the rent of property was very low 10 years ago.

Now, the start-up capital of an ordinary shop needs 1 million yuan, which has greatly affected the normal operation.

The bottom line and online rental information of the property of the Pacific Century Center show that the price of the entire Pacific department store opened by the developer at the end of last month is 28 yuan / month / square meter.

The total area of the Deshang is about 65 thousand square meters, and the annual rent is 21 million 840 thousand yuan.

In response to this, Liu Hui, chairman of Beijing Chao Yi zero business consulting company, said in an interview that the owners of PCCW were originally Hua Xi Le Mao, and originally had to build large shopping centers. Therefore, it was necessary to introduce the main stores like Pacific department store. Last year, Hua Xile Mao changed his mind.

Pacific Department Store currently has about 10 stores in Chongqing, Shanghai and Chengdu.

To shut down the store market in Beijing, industry analysts said that in 1993, when the Pacific Department Store entered the Chinese market, the domestic department store industry was still in its germination stage. However, in recent years, with the upgrading of department stores, the current format of Pacific department store has not adapted to the development of Beijing market.

The above industry analysts believe that with the development of Moore formats of integrated shopping malls, consumers are more inclined to the consumption mode of integration of consumption, leisure, catering and entertainment.

The traditional department stores, because shopping function is single, and can not effectively attract customers, will gradually decline.

However, the Beijing market is considered to be a competitive market for business enterprises.

The Pacific chose to close its 2 store in Beijing and was speculated by the industry as leaving the Chinese market.

However, various information from the Pacific Department Store showed that the company had no such intention for the time being.

At the same time, the above Pacific Department Store insiders said that the layout of the future market in Beijing is also being discussed internally. However, there is now a voice in the interior that, in view of the high rent of commercial real estate, it may choose to build property in the future or take a big shopping trip.

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Traditional department store crisis

The Pacific department store closed down the traditional chassis of the department store.

Two years ago, Zheng Zhigang, executive director of the new world department store, predicted that in the next 3-5 years, the department store industry would go through the pition from integration to adjustment and even calm. At that time, the department store industry was only a forward looking forecast, but now it seems that the industry is unfortunate.

For industry, rent rise is the first problem.

The industry insiders said that the rental of property in the industry is 10 to 15 years or even longer.

More than 10 years ago, it was the early stage of the development of Chinese department stores and even commerce. The general commercial real estate project investment was not simple. Many commercial real estate projects were leased out at a low price.

However, in recent years, when many commercial enterprises are faced with the re signing of the lease, they will encounter a sharp increase in the rent of commercial real estate and the cost will rise sharply.

In addition, commercial enterprises are losing the advantage of labor cost control.

The vice president of the famous retail business said that the commercial enterprises were labor-intensive enterprises, and the Chinese market had the advantage of labor cost before.

However, in recent years, with the macroeconomic background of inflation, the minimum wage limit has been increased in many areas, and all kinds of insurance should be provided for all employees. This also adds to the burden of enterprises in a certain sense.

For traditional commercial enterprises, the impact from the field of e-commerce is even greater.

The Pacific Department Store insiders said that we are also doing some research. The impact of e-commerce on the whole industry is more obvious in recent years, and especially the impact of department stores is the most significant.

Because e-commerce enterprises are still competing for the market with traditional channels, e-commerce enterprises, which have no store rental cost, will have lower profits to consumers.

In fact, the impact of e-commerce enterprises has made many traditional department stores to make adjustments.

Some department stores such as intime department store listed in Hong Kong have also joined e-commerce services in traditional businesses to cope with the increasing trend of e-commerce consumption.

The vice president of the famous retail enterprises said that under the inflation condition, the business enterprises were given the function of stabilizing prices. In fact, the rise in the cost of labor and the increase of the purchase cost caused by the rising cost of manufacturing enterprises have forced the profits of the commercial enterprises to be small.

Wang Wei, the chairman of the National People's Congress and chairman of the BBK commercial chain Limited by Share Ltd, once made a statistical analysis. He made a comparative analysis of the annual report data of 24 listed retail enterprises and 13 supermarket suppliers in 2009.

The representatives of retail enterprises include Suning Appliance, step by step, supermarket supplier, including Kangshifu, Unilever, Tsingtao Brewery and so on.

The results showed that the average net profit margin of 11 retail enterprises in 2009 was only 3.15%, while that of the 13 suppliers was 18.96%.