The Embarrassment Of "Maze" In China'S Department Stores

It is reported that by the end of August, the Gan Jia Kou mansion had been newly launched. After the Gan Jia Kou department store, the West Department building of Beijing department store was also reinstalled in the near future.

Several large department stores in Beijing have appeared in succession, which seems to coincide with a difficult problem in the Department Store nowadays.

The new appearance of Gan Jia Kou building is nothing more than adding new brands, expanding or reducing the operating area of each sub area, increasing the pawn shop, and the biggest bright spot is to invest in the COSTA coffee shop.

These changes are indeed refreshing and add a lot of fresh experience.

Beijing's department store also takes the strategy of adjusting the brand.

Following the settlement of international brands such as Cartire and Hermes, Chanel watches, Dunhill men's wear and Tudor tables have been settled in succession. The new China first store seems to be pformed into high-end fashion boutique stores.

These adjustments and changes may bring a "makeover" to old Beijing department stores, but they still can't hide that the department store industry has entered an unprecedented predicament. Where is the way out? Maybe this is a question that should be considered in the department store industry.

Embarrassment of "maze"

The pformation and renewal of these flagship department stores in old Beijing is not a true portrayal of the traditional retail industry in other places.

Coincidentally, in Shanghai, from 100th to twelfth Department stores, the number of old department stores named directly by numbers is only five.

On Huaihai Road, most of them are adjacent to the first department store.

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The first department store was officially closed in March 23rd this year.

Although Li Guoding, general manager of friendship group of Shanghai first department store, insists that the closure of the first department store Huaihai store is based on the adjustment of the business circle structure, not because of poor management and long-term losses.

But in the 1-5 month of this year, the growth rate of shopping malls was only 2%.

Although there is an increase, the growth rate has dropped significantly, and the data also show that compared with the previous year, the volume of passenger traffic in the shop has indeed decreased by 10%.

The twelve department stores in Shanghai have been closed, and it is also revealed that the traditional department stores are facing great difficulties.

Recently, the Secretary General of China general merchandise business association

The materials submitted to the Ministry of Commerce for a report on the development situation of department stores in 2012 showed that China's department store industry developed slowly in the first half of the year, while sales volume of some department stores increased, but the growth rate declined significantly.

At the same time, as mentioned above, Shanghai's first department store Huaihai store has been closed down due to its decline in performance and profits, and has been replaced by BMW 4S store.

According to statistics from the China National Business Information Center, the net profit of many enterprises has declined year-on-year.

In July this year, the retail sales volume of 50 key large retail enterprises increased by only 5.98% over the same period last year, a 16.68 percentage point drop over the same period last year.

From the fourth quarter of last year, the retail industry began to go downhill, which continued in the first half of this year.

At the same time, the hardship in the big economic environment makes the department store's downturn trend more tortuous, and the dilemma is inevitable.

No matter whether it is a puzzle or a predicament, the reason can not escape the coldness of the big economic environment, nor can it avoid the embarrassment of China's department stores themselves.

Affected by expansion, rent and labor costs continue to rise, the department store industry has also suffered tremendous pressure.

At the same time, large supermarkets such as Carrefour, WAL-MART, lotus and so on, which have already been stationed in the mainland, as well as Huarun, Wanjia, Mei Tai Hao, and so on, have grabbed the lead in retail business, while professional shops in clothing, cosmetics, sporting goods and daily necessities have also got a share of the department store. New online shopping and e-commerce have further impacted the fragile representative shop.

These multi format crazy competition has led to a sharp decline in the revenue and operating profits of the department store industry.

In addition, the shopping center, a commercial complex, which provides consumers with multiple experiences, has gradually occupied the market of department stores by providing customers with integrated experience such as leisure, entertainment, and even learning and education, including shopping.

Who moved my cheese?

I remember many years ago, there was a management book that once swept the world - who moved my cheese.

There are more or less people who know the book. The book describes two mice, sniffing and haste, and two dwarfs "hem" and "haw".

They also live in a labyrinth.

The four little boys trapped in the maze, their goal was to find cheese. The two mice, though not intelligent and simple minded, did not stop looking for the next cheese gathering point after finding the cheese.

The two dwarfs, after finding cheese for the first time, sat on their feet and did not want to make progress. They were ignorant of the sudden change of cheese and the crisis. When they found problems, they often complicate matters, which eventually led to hum and haw losing the cheese that should belong to them.

The problems facing the department stores seem to be different from that of hem and haw, how to deal with the changes and crises in the information age.

The emergence of the crisis is not only a reflection of the world economic downturn, but also a result of the slow development of the department store industry.

For example, although the gross profit rate of department stores can generally reach 25% to 30%, the net interest rate can only be maintained below 5%.

And the growth in sales over the past two years has begun to show a marked decline.

Because of this, department stores began to find a way out.

According to industry sources, in order to ensure the gross profit margin of the market, the department store has to raise the entry fee and the deduction point. At the same time, in order to attract the world's top brand, the shopping malls should pay the decoration fees according to the requirements of the international suppliers. The two parts of the cost will eventually be pferred to the consumers and indirectly push up the commodity prices.

In this way, the characteristics of department stores such as high prices, few varieties, and monotonous environment, and lack of competitiveness, will lead to the increase of entry fees and deduction points, forming a vicious circle.

Faced with such a puzzle, there is another strategy for department stores to gradually adjust themselves to the highly sought after shopping centers instead of adhering to the business philosophy of simply buying and selling simple deals.

"The convergence of shopping centers and department stores has taken shape."

Guo Zengli, director of China shopping center industry information center, said that in strict sense, China has almost no pure department stores such as Lian Crawford, especially the new generation of department stores and shopping centers. The boundaries between them have become increasingly blurred.

Take Beijing Xinguang world and Shanghai's Jiu Guang Department store as an example, the two think they are doing department stores, whether they are their own property or rental property, they all adopt the way of deduction and bottom guarantee, which is actually a traditional business model of department stores. However, their business philosophy and investment mode adopt the commercial complex mode of multi-functional combination of shopping centers.

This may indeed work in the short term, but in the long run, the department stores can not only catch up with the sales volume of shopping centers and MALL, but lose themselves and lose the characteristics of the department stores themselves.

The way out for a department store is to find a way for others.

Out of the Department Store

The layout, renovation, and widening of shopping malls seems to be a pformation strategy for department stores to break out of the maze and to break through tight encirclement.

However, for different types of department stores, it is necessary to explore a suitable way from the way of management.

As in the past, the department store in Japan mostly adopted the joint operation system, that is, the cooperation with suppliers to take the way of brand deduction and profit sharing.

This business model brings recession to the Japanese department stores, which is worth reflecting on the Chinese department stores.

Fan Yanru, Deputy Secretary General of the Chinese Department Store Association, also believes that the profit sharing mode of the joint operation mode is not high, and the profit of department stores has been getting thinner and thinner in recent years.

The malpractice of the joint venture system has been gradually revealed, and it has become the most critical turning point for the department store to break through the dilemma.

Regarding this, Chen Liping, director of marketing department, School of business administration, Capital University of Economics and Business, believes that China's department stores are in urgent need of business innovation. It is best to adopt the mode of "joint operation + self run + leasing", of which 40% self run, 40% joint venture and 20% lease.

Self run includes self run projects, self operated commodities, private brand development and brand agency.

However, Fan Yanru believes that the risks and costs of self employment are very high, and the first is the problem of talent and capital.

"Business enterprises have been running in the pool mode for so many years, and buyers and other talents have been faulting."

Secondly, the brand agency is not accomplished overnight. Before it could be discussed directly with the brand, it is now an agent. There are two levels of agents. There is a contract between the brand agent and the agent. It is impossible to turn around at once.

In addition, due to the need for a pformation of the way of operation, most of the large department stores now have a very small proportion of self employment. Even the Wangfujing department store group, which has a high profile of self-development capability, accounts for less than 2%.

Therefore, the most practical one is the gradual pition from "joint operation + lease + self run" to "joint operation + self run + leasing".

This is confirmed in the new world department store in Beijing.

According to Hongyang, assistant general manager of Beijing new world department store marketing, its Yantai project has 180 thousand square meters, that is, "department store +Shopping Mall" mode, which is also the first attempt of new world department store.

"The adjustment space of the old shop is limited, mainly the brand optimization, to the greatest extent possible to meet the needs of consumers in the surrounding area; and the new store is a brand new combination, with the shopping center mode added, the retail ratio will definitely be reduced."

According to the textual research of Japanese department stores, the rapid development of online electronic shopping has grabbed the market share of department stores, and the negative impact of economic weakness has made some inexpensive and inexpensive products.

Brand is very popular.

Compared with those in Europe and the United States, the number of Japanese department stores is excessive and the supply exceeds demand. These three factors have become the main reason for the depression of department stores.

In addition, the sale of goods in different department stores is very similar, which has no distinctive features, which has led to some department stores losing their competition.

In addition, Li Chengbo, deputy general manager of the Bai Da group, believes that there may be some measures to promote the development of the retail industry in the near future, which are also great benefits for retail enterprises.

It can be seen that the overall policy is conducive to the pformation and development of department stores.

Yi said, "poverty is changed, and change is common."