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.

27,381 thoughts on “Department Store Industry

  1. Jute is another sustainable material that is often used to make eco-friendly bags. Jute is a strong, durable fiber that is also biodegradable. Jute bags are a great alternative to plastic bags, and they look good too!
    So next time you’re doing your grocery shopping, ditch the plastic and choose one of these Sustainable bags options instead.

  2. IGPC is the leading Clinical SAS Online Training Course in Hyderabad institute based in Hyderabad, that aims to provide the students of India with elite education that can empower a bright future. Through the best SAS training in Hyderabad, IGPC connects students all over India under one roof that provides students with quality education through online learning.

  3. เว็บแทงบอล แทงบอลออนไลน์ เบอร์หนึ่งของไทย ที่เปิดให้บริการพนันออนไลน์อย่างเป็นทางการ รวมไปถึงการทายผลกีฬาออนไลน์ ทายสกอร์ผลฟุตบอล แทงบอลออนไลน์ที่ค่าน้ำดีที่สุด คาสิโน บาคาร่า มวย หวย สล็อต และอีกพนันอื่นๆมากมาย ผู้เล่นสามารถเข้ามาวางเดิมพันได้ง่ายๆ จากทุกที่ทุกเวลาผ่านทางเว็บไซต์ ufa88bet.com เพียงแค่หยิบมือถือขึ้นมาไม่ว่าจะเป็นระบบ iOS หรือ Android ก็สามารถสมัครสมาชิกกับทางเราได้ง่ายๆ พร้อมโปรโมชั่นดีๆที่มีมาบริการทุกวัน สมาชิกใหม่ สมัครแล้ว รับโบนัส 50% ได้ทันที แล้วเริ่มต้นเล่นพนันออนไลน์ที่ต้องการได้ทันที สายพนันบอลก็มีบอลให้แทงทุกคู่ ทุกคืน สามารถเข้าแทงบอลได้ตั้งแต่ขั้นต่ำ 10฿ จนสูงถึง 150,000฿ มีฟุตบอลให้เล่นตั้งแต่บอลไทย จนสามารถแทงบอลได้ทุกลีก ทุกคู่บนโลกใบนี้เลย

  4. It’s pretty similar to Google or Facebook authentication you might have used. However, MetaMask not only allows you to use decentralized applications but also …

    meta click

  5. It’s pretty similar to Google or Facebook authentication you might have used. However, MetaMask not only allows you to use decentralized applications but also …
    meta click

  6. Model girls islamabad escort service have become a popular trend in the city in recent years. As the capital of Pakistan, Islamabad is known for its booming nightlife and vibrant social scene. While many people are aware of the kind of services provided by these model girls, there is still a lot of mystery surrounding who they really are and what they do. In this blog post, we’ll take a closer look at who these model girls are and what services they provide. We’ll also explore how their presence has impacted the social and cultural climate of Islamabad

  7. Being a model karachi vip call girls can be both an exciting and challenging experience. From the glamorous photo shoots to the hustle and bustle of the city, there is something for everyone to enjoy. As a model girl in Karachi, you are part of a unique and vibrant culture that has been growing in recent years. You will have the opportunity to meet people from all over the world and learn about different cultures and traditions. You will also be able to experience the hustle and bustle of the city and explore some of the amazing attractions and sights that it has to offer.

  8. ufabet เว็บที่เหมาะเเก่การลงทุน ufabet เป็นอีกหนึ่งการลงทุนที่ตอบโจทย์ ให้กับคุณด้วย เป็นอย่างมากเลยก็ว่าได้สำหรับการเล่น คาสิโนออนไลน์ ufa88bet ผ่านเว็บ Ufa ของเรานั่นได้มีเกมมากกว่า 1000เกม ให้คุณได้เลือกลงทุน เพราะว่าไม่ใช่ทุกคนที่ เปิดโอกาสตรงจุดนี้ ในการรับแทงบอลได้อย่างไม่อั้น เดิมพันไม่มีขั้นต่ำ และพร้อมที่จะทุ่มเทให้กับคุณได้อย่างเต็มที่ที่สุดอีกด้วย ยูฟ่าเบท เพราะเราคือผู้นำด้าน คาสิโนออนไลน์ ที่มาพร้อม บาคาร่าออนไลน์ สล็อตออนไลน์ รูเล็ต เสือมังกร ไฮโลออนไลน์ เเละอีกมากมาย ส่งตรงจากค่ายดังทั้ง SAGaming , Sexygaming , PrettyGaming , AllBet , EBet , AsiaGaming , DreamGaming ให้ท่านเล่นกับดีลเลอร์สาวสวย เห็นการแจก เห็นหน้าไพ่ ดูการทอยลูกเต๋ากันแบบเรียลไทม์ ให้ท่านมั่นใจในความโปร่งใสมั่นใจได้ 100% มาพร้อมกับระบบ ฝาก ถอน ออโต้ภายใน 10วิ ตลอด 24 ชั่วโมง คอมมิชชั่น 0.7% ของทุกยอดเดิมพัน

  9. The Delhi escort service is an experience you will never forget. If you are looking for the best night of your life, then look no further than the Dwarka escorts service. From the moment you step through the door, you will be greeted by a beautiful and exotic woman who will take care of your every need. Whether you want a simple massage or something more naughty, she will make sure you have the time of your life. And when it is time to say goodbye, you will be left with memories that will last a lifetime.

  10. Neha got upset with his work within two days. She refused to go with him on the third day, saying that she would go for a walk with Sparsh.

    He liked the touch survey, he used to sit in one place by laying his electric wires and used to write some data from the machines on paper. He used to give Neha the things of her choice to eat. There was an arrangement for tea etc. in his camp.

    But how long can the devil of the heart be kept imprisoned? As the days passed, both of them became good friends. The formal talk ended and they both started laughing and joking. The hearts of both were happy. He had found the desired partner. But when everything is easily available, then the mind starts doing something to move forward.

    That’s why Neha used her old weapon – Sparsh, friend, I want to go, but here there is only sand far and wide.
    https://lailachamma.com/call-girl-connaught-place

  11. From some point on, I am preparing to build my site while browsing various sites. It is now somewhat completed. If you are interested, please come to play with bitcoincasino !!
    ..

  12. Thanks for sharing this blog! If someone around you Looking for Philosophy Exam Help, you can get the best Philosophy Exam Help by top experts. Help Assignment offfers you best exam help in Austrlia with 500+ experts. Our experts are working for you day to night. We always deliver you best quality content at lowest price.

  13. Steven is a writer. He has written articles, essays, and books on various topics including politics, history, and philosophy. He is also the host of a political talk show. In his spare time, he enjoys hiking, playing tennis, and reading. Read more.

  14. MetaMask is a free web and mobile crypto wallet that allows users to store and swap cryptocurrencies, interact with the Ethereum blockchain ecosystem, and host …

    meta Click

Leave a Reply

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