Choosing Department Stores And Shopping Centers -- An Interview With Wang Jing, Chairman Of Jiuzhou Vision Business Management Agency

Behind the careless mistake is the lack of clear understanding of the two retail channels of department stores and shopping centers.

It is not only the lack of knowledge of some website editors, but also a lot of knowledge.

Managers also have a smattering of knowledge about this.

To this end, Wang Jing, chairman of Jiuzhou vision business management office, analyzed the difference between the department store and shopping centre on the channel construction of local clothing brands for readers.

Profile:

Wang Jing: currently the chairman of Jiuzhou vision business management office, vice chairman of China Federation of urban commercial network construction and management, and expert member of Specialized Committee, shopping center of China Federation of Commerce.

Wang Jing has more than 20 years of experience in the retail and commercial real estate field. He worked as a partner and vice president of Roland Begg Management Consulting Co., Ltd., Huarun's chief operating officer. He is a senior vice president of Wumart group, and director of procurement in China.

Joint venture or lease?

The traditional Chinese department stores mainly adopt the joint point deduction mode, but with the development of the market, many department stores gradually evolve into shopping centers through specialized integration pformation, and gradually adopt the leasing mode from the property management operation.

Reporter: many operators of garment enterprises think so: the department store and brand cooperation are mainly based on the joint point deduction, and the shopping center is the form of lease.

Then, is the payment point or rent the basic criterion for a business place to be a department store or a shopping center?

Wang Jing: not exactly. Many shopping centers now use the form of a button.

Deduction and rent are not the basic criteria for measuring department stores and shopping centers.

If ZARA wants to enter a department store, 5% of the deduction will not be done by department stores.

Because department stores are unified management, unified cash register, unified propaganda and unified sales promotion.

At the time of promotion, the buckle is double supplement. The department stores make up part of the brand, so that 5% of the fastener points are deducted, so most department stores will buckle more than 20% points.

Because of the relationship between gross margin and the rate of increase, basic fashion and fast fashion brands adopt the big store mode, which is a store form in the field of clothing, but one emphasizes basic and one emphasizes fast.

The gross profit margin of these two models is limited and can calculate the net profit margin.

If the department stores introduce niche fashion brand and new brand, their profits will be higher and the rate of increase will be higher, so the profits of department stores will be increased accordingly.

Reporter: now many department stores are more and more shopping center, and the shopping center has also used the mode of joint point.

So how do you measure a place for a shopping center or a department store?

Wang Jing: in traditional sense, department stores are bought by buyers, but Chinese department stores mainly use joint point deduction mode.

In fact, the department stores and shopping centers in China have similarities in economic form.

However, there are six unified departments, unified management, unified cash collection, unified publicity, unified sales promotion, etc.

Department stores emphasize the brand of department stores, and it is very difficult to make independent stores in the mode of flat effect elimination.

Reporter: but now many department stores are getting bigger and bigger, and many brand shops are becoming more and more independent shops.

Wang Jing: department stores are pformed into specialized shopping centers through specialized integration. They are deeply specialized or market segments, and have entered the category of professional department stores and developed to professional department stores.

Some department stores are shopping centers, and restaurants, brands and cinemas are also introduced.

However, there is a difference between shopping centers and department stores. In terms of property autonomy, most department stores are leasing properties, and shopping centers are self-sustaining property operations. This is also an important difference.

Reporter: it is understood that many shopping centers and international fast fashion brands cooperate with the point of point system, and the points are all single figures. Is this against the routine of the shopping center?

Wang Jing: the shopping center can also use the point deduction system, whether it is the retaining point, the pure deduction point or the pure rent.

Reporter: so what are the advantages and disadvantages of the joint point deduction mode and the leasing mode for the clothing brand?

Wang Jing: actually, these two ways have no absolute advantages or disadvantages for clothing brand.

If you are very confident in sales volume but low in profit, you can choose to rent, that is, the difference of business mode, leading to brand selection into department stores or shopping centers.

Reporter: what is the difference between the joint mode and the leasing mode in the market revenue, the difficulty of investment and the difficulty of operation?

Wang Jing: the key is to look at sales volume.

For shopping malls, joint mode is very cost-effective when sales are high.

If you can't make a fire mall, and the sales volume is not high, it means that the tenant can not undertake the fixed capital mode.

If the rental cost of a brand accounts for 20% of sales, the price of a product is 100 yuan, which is profitable. If only 50 yuan is sold, the rental cost will become 40%.

In this way, the brand can only be withdrawn.

So the key is to look at sales and improve sales.

Reporter: is the shopping center operator more inclined to adopt the leasing mode, especially the newly opened shopping center?

Wang Jing: the form of paction is not fundamental. If the two sides embrace the idea of "win-win" and adopt a fixed rate of deduction, joint venture is still very reasonable, but there is always a game between the two sides.

New shopping centers like fixed lease, because they are not sure about sales volume, but at the same time, they want to ensure their own profits.

Reporter: so there is a saying: for shopping malls, the most perfect way is to receive fixed rent during the incubation period, and then use the discount mode after the sales increase.

Wang Jing: when you enter the market, you will receive a fixed amount of money. There is no risk in the shopping mall. If there is a fire in the mall, you will have a share with the brand.

This idea is a bit of a whimsical idea. It's just standing in the shopping mall, talking to one side of the market.

Business mode determines channel choice.

There is a guarantee of success in choosing the right business channel.

The format of a clothing brand determines whether it will enter a department store or a shopping center in the future.

Of course, this is also related to the cost structure of shopping malls.

Reporter: many clothing brands and media are not too clear about the difference between department stores and shopping centers.

What is the difference between the cost of a department store and a shopping mall for a single clothing brand? This is one of the topics on the retail channel conference of Shenzhen shopping center, but the guests are not very thorough.

Wang Jing: from the experience point of view, there is no real difference in the cost structure of clothing brands entering shopping centers and department stores.

In fact, the format of some clothing brands determines that they will not enter department stores, but shopping centers.

This is related to the cost structure of department stores.

The department stores win with Ping efficiency, and the area of each brand is relatively small.

In addition, most of the department stores in China use the button mode, and the discount points are relatively high, and the clothing balance points are between 22%-38%.

Such a business model has led to many brands with low gross margins, basic fashion and fast fashion, to abandon their entry into department stores, choose independent shops or enter shopping centers, and pay fixed rents.

From the profit and loss account, the percentage of fixed rent divided by sales is equal to the percentage of rental cost in the profit and loss account.

If the sales volume of a store is very high, the percentage will be lower; if the store adopts the buckle mode, its sales will reach 10 million yuan from 1 million yuan, and the percentage of its cost will remain unchanged, all of which will be 22% buckles.

This structure is completely different in finance.

That is to say, shops with high gross profit margins are suitable for survival in department stores, and those with low gross profit margins and high sales are more suitable for shopping centers or independent shops.

Reporter: in addition to the basic fashion and design fashion just mentioned, what are the business models of the current clothing brands?

Wang Jing:

The business model in the past history may have been formed one by one. The department store format includes many brand stores and multi brand integrated stores that many people talk about today.

According to whether the store is a multi brand structure or a single brand structure, we classify the form of clothing into department stores and brand monopolization.

A brand exclusive shop is a form of selling only one brand in a monopoly store. We divide it into four formats: top fashion, fast fashion, design fashion (niche fashion) and basic fashion (basic fashion).

Top fashion includes important designer brand, emphasizing independent design, serving the market segments of the rich class, high quality, high price and high gross profit. Brand and design are driving factors.

The top fashion is more emphasis on classics and nature. From its channels, shopping centers and department stores are balanced.

The second is fast fashion, large scale classification, intensive design management, fast style change, speed as king, service to popular market, fashion and price parallel, quantity gross profit two wheel drive.

Because of many styles and large areas, fast fashion is more accessible to shopping centers.

The third is fashion design, imitation of top fashion, service to market segments, emphasis on individual needs, higher prices, designer orientation.

Such brands are more suitable for entering department stores.

The fourth one is the basic fashion. The major categories are complete, the basic ones are the main ones, serving the popular market, emphasizing cost performance and quantity driving the market.

GAP and UNIQLO are typical representatives of basic fashion.

Top fashion and design fashion are more focused on market segmentation, department stores as the main channel, fast fashion and basic fashion adopt the whole category of large shops, emphasizing the convenience and frequency of purchase.

Reporter: so what do you think is the two channels of department stores and shopping centers, which are more suitable for the development of Chinese clothing brands?

Wang Jing: This is still related to business mode.

If your brand sales are very high and it is running volume, it must be suitable for shopping centers; if you take a profit margin, it is more suitable for entering a department store.

Different types of businesses should have different forms of expression.

The establishment of comprehensive department stores should be independent shops, supplemented by shopping centers, while professional department stores are mainly shopping centers and independent stores.

The top fashion brands should also focus on the establishment of shopping centers and department stores; the fast fashion brand shops should be mainly shopping centers and independent stores; the basic fashion brand shops are mainly shopping centers and independent stores; the fashion brand stores are mainly department stores and independent stores.

On the whole, I think there are five major trends in the future garment industry: department stores are developing in a two-way way to shopping centers and professionalism; fast fashion and basic fashion lead the industry, and the distinction between the two is becoming increasingly blurred.

In China, the growth is faster, but the market share is relatively stable. The slower growth of designer fashion is the main factor in the differentiation of shopping malls. The growth of multi format mode is still the mainstream tone of the future market.