by

Department Store Industry

1: INDUSTRY OVERVIEW: DEPARTMENT STORES

Department stores are large retail outlets that contain numerous individual shops, providing a wide range of product lines. Department stores most oftentimes consist of the following product categories:

1)      Food

2)      Cosmetics

3)      Shoes and Accessories

4)      Clothing

5)      Interior Décor

6)      Restaurants

Depending on the type of department store, department stores can offer a much wider range of products, including furniture, toys, electronics, books, etc.

Department stores come in a wide range of qualities and prices. There are such things as “high-end department stores”, which would focus purely on offering high-profile brands and products, while there are more mass-market targeting department stores, which are more likely to include a wider range of products, including practical household products.

That said, department stores will oftentimes try to cater to specific types of market segments. Particularly in the case of department stores in large cities, each department store will try to position itself differently from its direct and nearby competitors: some will try to cater to younger generations, while some will try to cater to the older generations. Some will try to cater to those interested in mainstream brands, while others will focus more on boutique, independent brands.

In the US, the department store industry includes approximately 20 companies operating roughly 3,500 stores. Major department stores in the US include: Sears, JCPenney, Macy’s, and Dillard’s. The industry earns an annual revenue of around $60 billion USD, 95% of which is earned by the largest 8 companies in the industry.

Some links about the industry:

http://en.wikipedia.org/wiki/Department_store

http://vspages.com/mall-vs-department-store-5580/

http://en.wikipedia.org/wiki/Shopping_mall

http://www.hoovers.com/industry/department-stores/1529-1.html

 

SPACE

2a: Implicit or Explicit?

From the department store owner’s standpoint, I would say that space is often sold explicitly, as they would charge the tenants per the size of the lease space. On the other hand, for stalls or booths set up in more open areas of the department store, space may be considered more implicit, as these spaces may be sold with less correlation to the exact size of the space.

2b: Ways of Splitting Space

Department stores have different types of spaces within the building that cater to their customers. The most typical type is the space split by fixed walls into one unit, and can usually be shut off or closed by a door or a shutter. These spaces cannot easily be adjusted in terms of size and layout without investment of significant time and money. These fixed spaces are generally leased out to a specific brand or company, such as Zara, Coach, Burberry, etc.

 

Then there is the semi-fixed space, such as the department store areas dedicated to selling cosmetics or shoes. These are oftentimes open areas in which a specific brand or merchandising line take up certain spaces, but are not divided up by physical walls or entryways. These areas are much more flexible in terms of changing the products being handled, given that one area can easily be changed to carry one brand/line from another; however, certain fixtures used for the displays will be fixed, and hence less flexible to change from a layout perspective.

 

There is also open space, in which temporary booths or stalls are built to sell a smaller line of products or services.

Different from other uses of store space is the use of space to purely focus on selling experiential services. For department stores, the focus generally remains on selling physical products. However, there are rare instances when space is allocated to selling services—one case being when department stores are attached to movie theaters.

 

 

 

 

 

 

 

 

 

 

 

 

2c: Creating Additional Revenue

One of the most standard ways for department stores to create additional revenue is by holding major seasonal sales. Because the product life cycle of clothes tends to be fairly short, many stores have inventory left over by the time they have to replace old products with new products. Having a highly publicized sale allows for these leftover products to be sold, be it at a lower price than its retail value.

One key to making people spend more money is to convince people to stay out shopping longer. A way to do this is to provide adequate opportunity for people to take a break from shopping and rest. Many department stores provide these venues by creating food courts—or in high-end places by providing patisseries or coffee shops at which people can recharge before going back to shop some more.

I also think one of the more creative ways in which department stores have used their space to create additional revenue is through creative use of its open space. Another approach department stores can use to bring people to their stores is to provide an additional incentive to go to that location. A common approach used to achieve this in the U.S. has been to create playgrounds in the open areas of the department stores. This service often incentivizes families to go to a department store, simply because it allows an opportunity for their children to play.

 One more approach commonly used in Japanese department stores to bring more people to the site is to host certain “festivals” or special events in their open space. For example, department stores would often host weekly “mini fairs” on either the ground floor or the top floor, in which one area of the department store would be devoted to hosting jewelry/clothes/food from brands and shops that usually were not represented at the department store. The content would be changed frequently, and the department store would often be able to bring new people into the store by publicizing new, limited-time genres of offerings at their store.

2d: Potential New Ways of Splitting Space

There are several different directions department stores could potentially go in terms of splitting space differently. One direction would be to use space to create more personalized services to customers. Many of the spaces in department stores are “public”, but allocating a portion of space at high-end stores to allow for “private” space may allow for varying experiences for customers. Customers would be charged a premium for making use of these private spaces.

Another potential use may be to make the spaces more flexible. Instead of sticking with a model that leans heavily toward having “fixed” spaces, changing to a model in which it would be much simpler, cheaper, and quicker to change tenants may be an attractive approach for department stores that are pursuing a more trendy, up-to-date feel.

3: TIME

3a: Implicit or Explicit?

Department stores generally sell time implicitly: this is because the product being sold generally isn’t associated with a particular time limit. For example, it is not like a massage, where you are buying 60 minutes worth of service. The transaction is associated with a physical product unattached to time.

3c: Selling Time Explicitly

Time is currently being sold explicitly at certain department stores, although these cases are generally not a reflection of its overall business model. For example, some department stores may include shops that offer time-explicit services. Some department stores have massage shops, which are time-based service sales.

 As another example, some department stores in Japan have small football fields on their rooftops, which people can rent out on an hourly basis.

(http://www.futaba-sp.com/omiya/2010/03/post-23.html)

 

 

Some department stores also include game centers for children—some of these entertainment options include machines that run for a set period of time per game.

 

 

 

Department stores will often have restaurants on one of their floors. These restaurants can often choose to set time limits to each group of customers (ex. 2hr limit) to be able to take in more customers during peak times.

(http://www.mitokeisei.co.jp/shop/10_skygarden/11keizan.html)

 

 

 

3d: Creative Things to do with Time

There are a couple things that could be done creatively with time—some of which may already be being done to varying lengths at department stores. One might be to offer some sort of benefit if a certain amount of time is spent within the department store. For example, if a customer was to receive certain benefits if they stayed for 5 hours at a department store on an off-peak day, this could incentivize customers to spend more money during their wait time, and this could also help to improve the image of the department store by maintaining more customers.

 

Another thing they might potentially consider doing is to include shops that provide rental services. Some shops may already do tuxedo/dress rentals, which would be time-based; they could potentially take this further by doing time-based rentals of other high-end luxury clothes and accessories.

4a/b: Physical and Non-Physical Rate Fences

Below are several examples of physical rate fences (owner-tenant relationships are more likely to be involved with physical rate fences than the tenant-customer relationships)

  • (Owner-tenant POV) Depending on the size of the space being rented, owners can choose to increase or decrease the rates
  • (Owner-tenant POV) Certain areas of a department store are likely to be more popular/convenient; hence an owner can charge more depending on the location of the space within the store (http://www.ehow.com/facts_6313023_average-retail-lease_.html)
  • (Tenant-customer POV) For services such as restaurants within the department store, tenants can set rates by charging differently between open areas and private rooms

In terms of non-physical rate fences, I would say that there are many opportunities to create rate fences, depending on the type of service/product the store sells. There are also several opportunities within the owner-tenant relationship:

  • (Owner-tenant POV) Depending on the lease period, the owner can set different rates to charge the tenant
  • (Owner-tenant POV) Depending on the credibility/attractiveness of the tenant, the owner can set different rates
  • (Tenant-customer POV) Depending on the quality of the product, functionality of the product, or time/length of the service, rates can be set differently. There is an enormously wide range of examples of this in department stores. A Gap outlet, for example, may sell a tank top for $10, while a Burberry outlet would sell a similar styled tank top for $150. Similarly, a cell phone with 3G functionality may sell at a cell phone provider outlet at a certain price, while a phone with 4G functionality would sell at a much higher price.

4c: Creative Ways to Set Rate Fences

Some ways I can think of setting rate fences creatively is to perhaps offer more intangible services—rather than just the physical products. For example, an I Love Bangkok t-shirt may only cost $5 at the actual retail shop, but if the customer already knows what he/she wants, but doesn’t want to make the trip up 7 floors and 5 minutes of walking to get there, the store could potentially charge an extra $1 to have the t-shirt brought down to the concierge desk of the department store for a quick pick-up.

29,727 thoughts on “Department Store Industry”

  1. Thank you for sharing such valuable information. Your post is well-defined. We have expert writers that are well-trained and experienced in the subject of
    PC Crack

  2. Thanks for this great post, i find it very interesting and very well thought out and put together. I look forward to reading your work in the future. to link

  4. It’s the same topic , but I was quite surprised to see the opinions I didn’t think of. My blog also has articles on these topics, so I look forward to your visit. casinocommunity

  10. Thanks,You always select relevant topics for your blog.I really love to read your blog. If Your college assignment is still undone.You Don’t need to worry .Here you can get Instant Assignment Help with our expert at lowest price. We also provide all types of assignment service Dissertation, Essay writing service, Assignment help, Course Work etc.

  14. Thank you so much for this excellent blog article. Your writing style and the way you have presented your content is awesome. Now I am pretty clear on this topic, keep it up! Feel free to visit my website; 카지노사이트

  16. I do not even know how I ended up here, but I thought this post was good. I don’t know who you are but certainly you’re going to a famous blogger if you aren’t already 😉 Cheers!
    카지노사이트

  17. Pretty nice post. I just stumbled upon your weblog and wanted to say that I’ve truly enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again very soon! Feel free to visit my website; 토토

  20. Are you Man and not happy with your Female partner in physical way, pick the Right Partner With Rajendra Place Escorts girls are super hot and beautiful her body was attracting you and complete your all kind of physical need More Click here:- Rajendra Place Escorts

  22. Nice thanks for sharing informative post like this keep posting if like more details visit my website linkhttps://fullstackmasters.in/react-js-training/

  28. Your given information is very useful for us… This is exactly what I am trying to find… The Kenya e visa processing is easy and fast. You can get your visa within a few days after completing the process. So make a plan with your friends and family, get a visa, and enjoy the journey.

  29. dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1217/submission/original/1217-2620-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1216/submission/original/1216-2619-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1215/submission/original/1215-2618-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1209/submission/original/1209-2612-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1208/submission/original/1208-2611-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1212/submission/original/1212-2615-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1221/submission/original/1221-2624-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1225/submission/original/1225-2627-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1227/submission/original/1227-2629-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1226/submission/original/1226-2628-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1228/submission/original/1228-2630-1-SM.html
    dinarek.unsoed.ac.id/jurnal/files/journals/1/articles/1229/submission/original/1229-2631-1-SM.html

    rebej.abejor.org.br/files/journals/1/articles/947/submission/947-1-1868-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/945/submission/945-1-1865-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/944/submission/944-1-1864-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/939/submission/939-1-1859-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/938/submission/938-1-1858-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/940/submission/940-1-1860-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/948/submission/948-1-1869-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/949/submission/949-1-1870-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/951/submission/951-1-1872-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/950/submission/950-1-1871-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/952/submission/952-1-1873-1-2-20221006.html
    rebej.abejor.org.br/files/journals/1/articles/953/submission/953-1-1874-1-2-20221006.html

  32. Open the Robinhood app and sign in with your email address and password. Tap the Account (person) icon in the bottom right corner. Tap the three bars in the top right corner. Robinhood Login, founded in 2013, is a fee-free platform that makes trading in the stock market easy — too easy, according to some experts and regulators. And it doesn’t offer the tax-advantaged investment accounts that are key to building long-term wealth.

  34. There are a number of legitimate online websites that feature individual escorts in Lahore. You should carefully read the profile of any independent escort you are considering to hire. Many of these sites have guidelines and requirements that you should follow. It’s also a good idea to contact an escort ahead of time to discuss your requirements.

  35. You have done a great job. I will definitely dig it and personally recommend it to my friends. I am confident they will benefit from this site.
    a href=”http://poojaescorts.in/agra-escorts.html”>Agra Escorts | Escort Service in Agra

  37. This article gives the light in which we can observe the reality. This is very nice one and gives indepth information. Thanks for this nice article.

  38. Looking for charming girls for as night partner in bed than choose Mumbai Escorts girls are so much fabulous they are fully capable to fill all your personal and physical need when you fill him in the arm you will feel like heaven Read more Click here:- Mumbai Escorts

  43. يدوي – Yadawie

    متجر يدوي متجر متخصص في :

    جلابيات
    جلابيات استقبال
    جلابيات سعودي
    جلابيات خليجي
    جلابيات فخمه
    مجوهرات
    اكسسوارت حريمي
    جلابيات حريمي
    جلبيه
    جلبيه حريمي

    Give Us A Visit :
    https://yadwee.com/

  44. เตียง Noteray มีหลากหลายแบบ หลากหลายขนาดให้เลือกซื้อ ติดตามได้ที่เว็บไซต์ noteray.com หรือ คลิกที่ link : เตียงนอน Noteray

  45. Link alternatif terbaru ,dijamin memberikan pengalam luar biasa yang tidak adan dapatkan ditempat lain tentunya.You can click here for more details : gan88 paling dipercaya

  47. Supreme NMN Supplement In USA

    Vitamin B3 is a vitamin B3 antioxidant that may be found in Vitamin NMN Supplement in USA. This form of vitamin B3 raises NAD levels, which is necessary for cell health. NAD is a coenzyme that helps cells generate energy, and it also helps to repair DNA. https://supremenmn.com/

  49. erkenci kuş

    can yaman biography
    An SEO specialist is someone who specializes in understanding and mastering the algorithms that underpin search engine results in order to assist their clients and businesses in appearing in search.

  50. Have you ever thought about including a little bit more than just your articles? I mean, what you say is important and all. Nevertheless think about if you added some great images or videos to give your posts more, “pop”! Your content is excellent but with images and video clips, this website could definitely be one of the very best in its field. Excellent blog! Pakar SEO

Leave a Reply

Your email address will not be published. Required fields are marked *