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    What Is The Future Direction Of The Department Store Industry?

    2014/5/30 9:26:00 57

    Department StoresFutureDevelopmentDirection

      Concentration view


    The closure of a series of department stores, leaving the industry in addition to a sigh, more are thinking of difficulties and challenges. Department stores are seeking transformation and breakthroughs in many aspects such as market environment, commodity service combination, business mode, real estate strategy and new technology application.


    To tap the needs of target customers as the core, with precise positioning, selection of unique commodity The meticulous service, the access to the whole life circle, the well built shopping environment and the "sophisticated department store" created by the scientific and technological means that advance with the times should be the direction for the future development of the department store.


    Following the closure of Qingdao Licang Bora department store, Jimo's store in Jimo is also hard to escape. On this day, Bora department store closed. The closure of Bora department store is not a case in the department store. In May 5th, Parkson Ji'nan store also lost Mai City. In April 28th, the Beijing Wangjing Hua Tang shopping center, which had been in operation for 8 years, was officially closed. A chain store in East Fourth Ring Road has been shut down since the end of last year. The vacancy rate of the whole project has reached 50%.


    The closure of these department stores, leaving the industry, in addition to a sigh, is more thinking: these closed department stores, their location is not good, or the surrounding is nearly saturated?


    Internal distress


    stay Retail in China The traditional format of department stores has always played a pivotal role in the layout. As a traditional retail channel, department stores used to be the concretion of "high, big and bad" consumption in Chinese national memory. However, in the past few years, the domestic department stores are no longer in sight: sales growth is exhausted, and the profit level goes from bad to worse.


    The reason for this is that after 9 months of investigation and research, CB Richard Ellis released the two report on the evolution of China's retail industry in July 8th, the development trend of department stores. The conclusion is that, for department stores, the rapid development of China's economy and retail industry is both a huge opportunity and a rapidly changing internal and external environment. This is also the origin of various external difficulties faced by the department stores in the transformation of retail industry.


    Domestic economic growth decelerated, total social and total growth slowed down; the rise of diversified retail formats and business competition continued to escalate; the rapid development of online shopping had an impact on physical retailers, where traditional department stores were more affected; the rising cost of personnel and rents increased the profit margins of department stores. The four aspect was the external distress of department stores.


    Compared with external difficulties, department stores' internal worries are even more hindered. Today, with the richness of social goods and the increasing diversification and experience of consumers' shopping demand, the limited business area of the department stores has restricted the further development of the department stores objectively. The excessive dependence of domestic department stores on the mode of joint operation has led to the weakening of its commodity operation ability, and the profit space has been eroded by the rising operating cost.


    Transformation


    Faced with the situation of internal and external difficulties, the voice of traditional department stores has been increasing in recent years. According to the statistics of World Bank Richard, the main countermeasures of department stores are: department store shopping center, self operation business, upgrading the proportion of private property and online and offline business linkage.


    Shopping centers in department stores: shopping centers are gradually becoming consumers' preferred places of consumption with their rich formats and good shopping environment. The traditional department stores, which have relatively simple formats, hope to create a shopping experience similar to the shopping center through the expansion of shopping malls, the introduction of fashion brand flagship stores and the increase of shopping experience elements.


    Self operated business: the experience of famous foreign department stores shows that mature self-employed businesses can often provide more profitable profits for department stores, so self-service business is regarded as a good prescription for domestic department stores to get out of difficulties, and has increased investment in recent years.


    Upgrading the proportion of its own property: the data of the state bond Richard show that the rents of quality shops in major cities in the past ten years have reached a compound annual growth rate of 6%, and rents have been increasing year by year. In order to control the rising rental cost, some department stores have increased the proportion of their own property through development or project acquisition.


    Online and offline business linkage: with the booming development of online shopping in China, more and more department stores begin to pay attention to and test the construction of online platforms. Department stores hope to build the online shopping platform and satisfy consumers' online browsing, offline experience and online order buying behavior, so that consumers will be locked in a seamless sales closed loop. {page_break


      Reshape commercial competitiveness of department stores


    "China's consumer market still has huge room for development. In the foreseeable future, China's retail market will remain double-digit growth. In order to get out of the current predicament, it is imperative for the department store to enhance and rebuild the core competitiveness of the department store. Chen Zhongwei, director and executive director of CBD research division, told reporters that "department stores can start from three aspects: store network expansion, business mode optimization and new technology application."


    Expanding the store network and expanding the scale of the chain: due to the short development time and the "separation" of local department stores, few domestic department stores have built up a real national network. Meanwhile, the construction of shopping centers in recent years has made the shopping centers have a tendency to catch up with the Department stores in the importance of retail channels. Under such circumstances, the department stores should speed up the layout of the whole country to consolidate the channel scale advantage and expand the chain effect. There are two ways for a department store to expand its network: endogenous expansion and extension. When carrying out endogenous expansion, it is suggested that department stores should adopt the two wheel drive real estate strategy based on their own conditions to balance their scale, capital and operational risks in the expansion process. However, extended expansion makes the department store the possibility of breaking the market barrier and improving the market share by merging.


    Deepening joint operation and gradually developing self run: self run ability is the order. Department store It distinguishes itself from the core business capability of shopping centers. The manpower, capital and business resources required for self capacity have to be accumulated and cultivated for a long time. Therefore, for a long period of time, through the "single product management" to strengthen its own commodity management and operation ability, and deepen the joint operation, we still choose the mainstream business mode in the rapid development of domestic department stores. The high profit consideration of proprietary business is buyout, pressure and capital risk, as well as the training of designers, buyers, sales and management teams, and the self-cultivation capability of domestic department stores will be a gradual and long-term process.


    The introduction of new technology to create full channel retail: large-scale application of new technologies such as e-commerce and mobile Internet is an irreversible change. It brings the shock of physical retail while also allowing the online and offline integrated channel retail mode to become possible. CB Richard Ellis recommends that as a traditional entity retail terminal, department stores should firmly base their own store network and brand advantage, and enter the online retail business from the localization life and offline experience and service to the full channel retailing across the mobile, online and multi-level stores.


    At the time of the big wave of electricity supplier and the transformation of China's department store, many department stores proposed to create "quality department stores" to misplace most of the low-end products of online shopping. "The simple pursuit of high-end products can not fundamentally deal with the homogenization of thousand stores." compared with the goal of mining the target customers' needs, the "delicate department store" created by precise positioning, selected special products, meticulous service, access to the whole life circle, carefully constructed shopping environment and technological advances with the times should be the direction for the future development of the department store.

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