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.

34,709 thoughts on “Department Store Industry”

  2. I’m constantly searching on the internet for posts that will help me. Too much is clearly to learn about this. I believe you created good quality items in Functions also. Keep working, congrats! singapore online casino

  4. Hello There. I found your blog using google. This is a very well written article. I’ll be sure to bookmark it and come back to read more of your useful information. Thanks for the post. I will definitely return. If you want write for us please visit here: write for us technology

  5. Awesome Blog !!! Thanks to Admin for sharing the above list. I visited many pages of your Blog. Really your Blog is Awesome. Keep Sharing such good Stories.
    If you want write for us please visit here: write for us fashion

  7. As an element of its decriminalization efforts, various Asian outsiders have begun using condoms while in the workplace. While this could incite extended unprotected intercourse, it moreover antagonistically influences STI and HIV transmission rates. Along these lines, Singapore should consider introducing relative plans in its news source.Indian escorts in Singapore

  8. Indian escorts in Singapore offer various organizations for a wide range of individuals. They figure out transportation to and from various spots. You can contact a Singapore Escort clearly for extra information on their organizations and costs. In any case, you should understand that they hold the honour to decline your request at whatever point.

  11. Extremely helpful post. This is my first time i visit here. I discovered such a large number of intriguing stuff in your blog particularly its exchange. Truly its extraordinary article. Keep it up. slot new member 100%

  13. Moviz Land

    موفيز لاند افضل موقع عربي للافلام والمسلسلات بدون اعلانات وبه تطبيق خاص للاندرويد يسمح بربط جوالك بالتلفاز

    Give Us A Visit :
    https://Movizland.icu/

  14. Of course, your article is good enough, baccarat online but I thought it would be much better to see professional photos and videos together. There are articles and photos on these topics on my homepage, so please visit and share your opinions.

  18. Download Workshop Repair Manuals, Wiring Diagrams, EPC’s for all cars, vans, trucks, lorries, etc. Petrol, gasoline, diesel, hybrid PDF & OEM.
    Workshopmanuals.org is proud to offer complete workshop manuals for most vehicle makes and models. Instant download for professional repair manuals that include wiring diagrams, engine part and disassembly guides. These repair guides will have everything the DIY’er will need to repair and maintain their car, truck or van. We cover both traditional combustion engines and the latest electric vehicles. If you have any questions or need help you are only one click away!Buy and details installation manual workshop Online chat support and demo video. Instant download now. thanks

  19. Venmo introduced the peer-to-peer app industry in 2009. College roommates built it, an easy method to send money to anyone. After four years, PayPal obtained the payment forum. With its straightforward foundation and PayPal’s inventive nature, it fastly became famous among customers and widely approved among all kinds of merchants. Furthermore, it is clear to utilize, offers an authoritarian social feed, and allows fast access.

    https://sites.google.com/bankologi.com/venmologin/

  20. Get the hot service from attractive girls in Delhi Escort who are extremely accommodating to men’s unique requests. Delhi Escorts is the finest choice if you’re looking for a partner for sensual pleasure. The females are too attractive and talented in what they do. For any Delhi-based man, the services the girls offer to guys are too attractive to ignore. Given that they provide such unique matchmaking services, any man would have confidence in an independent Delhi escort. Beautiful women give men absolutely exceptional services that allow them to have a great time. Take advantage of the sexy Delhi call girls who will do anything for you in the city. https://www.delhiescorts.club/

  24. Want A beautiful woman arms in bed so choose high profile Agency miss Delhi Mussoorie Escorts Independent girls are romantic and knowing how to provide satisfaction our girls are available only 3 to four-star hotels only so you can enjoy full night without worry Read more visit website our do call given no :-

  27. Bangalore Escorts Available 24/7 at Codella.biz. Hot looking Stunning High Class escort Call Girls Available. Our sexy call girls giving you unlimited sexual entertainment like GF Experience. our service is available 24/7

  32. At ELuv’s Scrubs, we have high respect for all the medical staff and wish to do something for them in return for all their good deeds, so we are here with a wide spectrum of stylish nursing scrubs. So stop your searches for “scrub sets cheap” and turn to our collection. We assure you will never be disappointed with our cribs collection!

  33. I respectfully read your valuable article and post. Your efforts have paid off. You have written a special, informative and qualified article. congratulations. I wish you continued success.Click Here

  35. Whores are constantly introduced to dangers of urging. Notwithstanding, it’s essential to see that Singapore’s certified situation on prostitution makes it a terrible way of behaving for clients, pimps, and venders. Consequently, sex labourers fear counter suits from clients who could make a move against them. Whore Indian escorts in Singapore are a wellspring of thriving for both the whore and the client. The escorts are a point of convergence for insurance and family relationships. These escorts can reestablish an individual to an elated and significant life after a weak and miserable state.

  36. Working from home has become a popular trend in recent years, and the educational sector is no exception. With the advancement of technology, more and more teachers, professors, and other education professionals are opting to work from home. There are many advantages to working from home in education, including increased productivity, cost savings, improved work-life balance, greater flexibility, and better job satisfaction. In this blog post, we’ll be exploring the top five benefits ofhttps://tajahindinews.in/other/enjoy-your-leisure-time-with-sexy-escorts-in-islamabad/ in education. Read on to find out why this approach is becoming increasingly popular in the educational sector.

  40. A splendid, expert lady friend of your who prefer who will arrive at subsequent to your door with a naughty smile and a choice to fulfill your myth sounds precise, doesn’t it? Well, we can provide you with the suitable in shape to fit your each your bodily desires and busy timetable. You will genuinely be pampered for choice. Read More Escort Girl Service

  45. Attractive, post. I just stumbled upon your weblog and wanted to say that I have liked browsing your blog posts. After all, I will surely subscribe to your feed, and I hope you will write again soon!

    카지노사이트

  48. It’s really great. Thank you for providing a quality article. There is something you might be interested in. Do you know majorsite ? If you have more questions, please come to my site and check it out!

Leave a Reply

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