How Should Department Stores Break Through Difficulties?

As foreign capital

First store, 22 years into China

Group in China

Once created brilliant achievements, but in recent years, as the market changes, the department store industry has been impacted and affected in many ways. The performance of Parkson in the Chinese market has gone from bad to worse, with continuous losses and frequent closes.

The impact of the overall consumption of the market and the impact of consumption upgrading on traditional department stores continues to ferment. From the first half performance report of listed companies, we can see that most department stores still show a sharp decline in overall performance in the first half of this year.

How to break through the difficulties has become a difficult problem for department stores.

Industry downturn

In August 5th, the Parkson group issued a profit warning in the first half of 2016. It is expected that the losses recorded in the six months to the end of June will increase by more than 100% compared with the same period last year, mainly due to the weak appetite in the mainland.

As the first store of foreign department stores, the Parkson group, which has entered China for 22 years, has made brilliant achievements in the Chinese market. But in recent years, as the market changes, the department store industry has been impacted and affected in many ways.

Last year, the Parkson group lost 183 million yuan as a whole. In the first quarter of this year, the Parkson group narrowed its losses to 17 million 792 thousand yuan, compared with a loss of 27 million 329 thousand yuan in the same period last year.

Not only Baisheng group, other department stores listed company's performance is also not good, declining performance in the department store industry has become a common phenomenon.

Xinhua Department store, which has issued semi annual report in 2016, achieved 3 billion 700 million yuan in the first half of this year, down 0.72% from the same period last year, but the net profit in the reporting period was only 38 million yuan, a sharp decrease of 69.24% compared to the same period last year.

The Hangzhou semi annual 2016 semi annual report shows that in the first half of this year, total operating income was about 2 billion 515 million yuan, a decrease of 8.77% compared with the same period last year. Net profit of shareholders belonging to listed companies was about 110 million, a decrease of 20.52% compared with the same period last year, and earnings per share were 0.15 yuan, down 21.05% from the same period last year.

The report said that the decline in net income from operating revenue and shareholders belonging to listed companies was due to the downward pressure on the macro economy and the continued slowdown in the overall growth of the retail market.

Intime business group, which operates and manages 29 department stores and 17 shopping centers, has been a pioneer in the department store industry in recent years, but it has not been able to escape from its declining performance.

According to Yintai business group released the first half of 2016 earnings report, as of June 30th, Yintai in the first half of the same store sales fell 4.1%.

At present, there are 45 stores in Yintai, and more than half of the 43 stores that have opened for more than a year have a drop in sales.

Among them, the worst performing department store was Yintai City, Tangshan, Hebei. In the first half of this year, the store's turnover dropped by 37.8%.

It is estimated that net profit attributable to shareholders of listed companies between 2016 and June will drop by 30% to 0% from 1 to June.

The growth of department stores is disappointing. Wanda Group has eliminated Wanda stores in the first half of this year's performance report.

According to the data of China's general merchandise business association, the total sales volume of 80 larger department stores increased by 9.3% in 2015 compared with the same period last year, while the total profit decreased by 12.05%, and the sales profit margin dropped by 19.53%.

Closing shop tide continues to spread

As a result of sharp decline in performance and lack of skills, many department stores are forced to shut down and survive.

Take Baisheng group as an example, corresponding to the decline in performance, Parkson has closed many stores in the country in recent years.

Data show that since 2012, Parkson has closed 11 stores with poor efficiency.

After closing stores in Guiyang, Shijiazhuang, Beijing and other places, in March this year, Chongqing's Daping Baisheng store was operated for about 20 years. Subsequently, Baisheng, Xi'an's East Street, which opened 22 years ago, also announced its closure in June this year.

An important reason for the sharp decline in the performance of Xinhua Department stores in the first half of this year was the closure of its largest department store, Dongfang Hong store last year.

From 2012 to 2014, the annual operating income of Dongfang red shop accounted for about 20% of the company's annual total operating revenue, and the profit generated by the operation was about 25%.

Today, the department store, which has made an important contribution to the performance of Xinhua Department store, has been replaced by the Wangfujing group to become Oteri J.

This year, department stores closed shop pformation phenomenon is still staged.

As a leader in the department store industry, Wangfujing group closed its Monument for Liberation Wangfujing department store in Chongqing in March this year. After months of adjustment, the Department Store officially pformed into a brand discount shop and renamed it "the collection of"

NOVO department, a China fashion department store, has closed 5 stores last year and closed its last store in Chongqing this year.

At the end of last month, Qingdao sunshine department store, which is located in the most prosperous commercial area of Qingdao, was posted on the Hongkong sunshine department store. It announced that it would officially suspend business in August 28, 2016.

The first batch of "Jinding department store" in China did not think of the direction of future pformation until the announcement.

Previously, the Shanghai Pacific department store, located in Huaihai store, was also faced with the choice of closing stores due to its operational difficulties.

Unlike other industries, shops and shops co-exist. In department stores, while department stores frequently close, there are few news about department store opening.

An industry executive told the China Commercial Daily reporter that more than 90% of department stores still rely on the two landlords' joint leasing mode, which is far from the essence of commercial retail. Therefore, the traditional retail business is in urgent need of pformation.

At the same time, the oversupply of commercial facilities and the disorderly competition in the same industry are also one of the causes of the current industry plight.

In addition, the rising operating costs, including rent and staff salaries, have made the department stores that are already weak in growth have been overburdened.

It is foreseeable that the Department Store tide will continue to spread in 2016, and more department stores will face the fate of being closed.

Where to go in the future?

With the change of market situation and the upgrading of consumer demand, it is obvious that traditional department stores are hard to adapt to the market.

But the industry's general view is that department stores will not disappear from the market.

What is the development trend of future department stores?

In July 28th, Wangfujing group's first shopping center in East China was announced to be located in Nanjing, Jiangsu.

The large commercial enterprise, which has been insisting on doing department stores for many years, has already locked the two layout of shopping centers and outlets.

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On the other side of the ocean, the Sears department store, a well known department store in the US, launched a fashionable 220 thousand square foot demonstration shop in February this year.

The new store is several times more expensive than Sears's other brand discount stores. Its convenient and flexible display has been installed in its soft and luminous background, with different categories but related commodities.

At the same time, a large area of wall design is used for fashion display and quick arrival of customers.

After three years of development, the two storey store presents several outstanding features, which have been tested in other stores and will be rebuilt in 700 stores in 822 stores in the next few years.

The chairman of the Sears group said that, based on its own advantages and reasonable departmental extension, the future store will be a truly strong and powerful collection of distinctive businesses that can dominate all store structures.

As a highlight of attracting customers, the visual display of products must be intact.

Insiders pointed out that outdated department stores are expected to become vertical shopping centers in the future.

The boundaries of department stores will become wider and wider, the definition will become more and more blurred, and department stores will become less and less like department stores.

In the future, the experience of novelty, fashion, pleasure, value and so on will become the main elements of department stores. All kinds of crossover, all kinds of Mashup, various combinations of innovation, all kinds of collocation subversion, various network elements, mobile technology, business concept and so on, will appear more and more in department stores, the department store's social and entertainment color will be more and more strong.

Of course, for China's traditional department stores, even if we see clearly the future direction, how to change our ideas and improve the management level and innovation ability based on the retail essence is the top priority now.