Department Stores: Gradually Developing Commodity Self Operated Business

In the department store industry, self positioning capability is defined as "feature plus supplement", which is an important means to build commodity differentiation and enhance brand image, and is also the core business capability of department stores from shopping centers. A number of recent studies have shown that although joint ventures are a mainstream business model for quite a long time, it is no longer possible for department stores to create greater profit margins. On the contrary, the experience of famous foreign department stores shows that proprietary business composed of exclusive and private brands can create huge profits and differentiate. For example, in developed countries such as Europe and the United States, most shopping malls such as Martha department store and Lane Crawford adopt self operated mode with a gross gross profit margin of more than 40%.

China's department store industry is still in its infancy. The proportion of self-employed goods in most department stores is around 10%, and the gross profit margin in the department stores is only around 20%, about half of that in foreign countries. We need to change the old "landlord" role and try to participate in the deep management of commodities, such as buyout marketing of some hot brands and styles, so as to enhance the right to speak. The self-cultivation ability of department stores is a gradual process.

The core of chain store operation is the intensive and standardized allocation of production factors, including the channel management of brand commodity resources, the standardized management and location criteria of store operation, and the brand management of site conditions, which are generally reflected in three aspects: expansion of formats, expansion of space and expansion of organizational structure. This form of management changed the form of single and independent store organization in the past, which not only maintained a large number of sales advantages, but also adapted to a variety of market demand.

Differentiated management is a strategy for department stores according to the needs of consumers, which is different from competitors in location selection, market layout, personnel management, competition strategy, products and services, so as to form its own unique competitive advantage. It is a department store that strives for the ultimate consumer. Brand cognition Important means (business positioning, commodity selection, personalized service). In business circles, large shopping malls (including department stores) are connected side by side, and they can provide customers with similar brands, similar commodities and similar services, such as selling goods through low-end discount and promotion. High-end brand Innovative products and innovative services. According to the differentiated management concept, the development level of department stores can be divided into three categories. First, luxury department stores, with high-end brands as the main body, people do not need much traffic. The two is life department stores, which can meet the needs of every member of a family. The three is fashion department stores, which cater for young people to pursue the trend of consumption.

Current China Department store The biggest difficulty is the improvement of operating costs, especially the rental cost, which is already unbearable. Due to the competition of quality network resources and soaring real estate prices, rent has risen sharply, and limited profits have been further compressed or swallowed by rent. According to the research of CBM, the rent growth rate of premium shops in major cities in China has reached 6% over the past 10 years. In order to control the annual rental cost increase, many department stores have increased the proportion of their own property through development or project acquisition.

High quality commercial property is a very scarce resource. A high proportion of quality owned property can not only lock down operating costs, ensure the stability of department store operations and optimize the layout of the design, but also in the long run, is conducive to resisting the sharp rise in rents and enjoying the value revaluation of property revaluation.

In addition, department stores can increase the proportion of their own property and avoid the risk that the lease can not be renewed at maturity. All department stores, especially those with better location, can be renewed after the lease expires, which is very important for the normal operation of department stores. If it can not be renewed, department stores will have to find similar locations and bear the additional costs arising from migration, decoration, temporary closure and higher rent of new owners. Further, if we can neither renew nor choose a similar location, we will be faced with the risk of closing stores, and even adversely affect the business objectives and future development strategies of department stores.