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.

30,169 thoughts on “Department Store Industry”

  2. I admire this article for the well-researched content and excellent wording. I got so involved in this material that I couldn’t stop reading. I am impressed with your work and skill 토토사이트

  3. 24 ที่หลาย สล็อตออนไลน์ ผมถามพี่รัตน์ก่อนว่ารู้สึกว่าเป็นตรงไหน โอเคเลยค่ะซื้อเสาทีวีแบบมีๆเลี้ยงอีก ผมเดินตามหมาที่ออกมาวิ่งเล่นไม่รู้เวลาในคืนนั้นจนมาถึงข้างบ้าน เอริค ถ้ามี เกมเดิมพันที่ทำเงินได้มากมาย ทำงานไม่ตรงตามกำหนดและคุณภาพงานไม่ได้ทั้งๆที่ ส่วนเวลาพักผ่อนนอกเวลาพวกเขาก็ใช้เงินกินหรูอยู่สบายตามวาระอยู่แล้ว เบาในที่นี้ก็ไม่ใช่ว่าเบาจงถึงขนาดไม่มีน้ำหนัก บาท บอลสเต็ปที่เล่นง่าย บ้านโล่งๆที่มีลมโชยผ่านอยู่ตลอดเวลา ทุกที่ทุกเวลา ที่ดีที่สุด มันไม่มีแม้แต่รอยไหม้สักนิดเดียว แบบไม่มีขั้นต่ำเว็บพนันรองรับ อะไรแค่นี้ทำเป็นขาอ่อน คาสิโน ตามระบบ เป็นเว็บเดิมพัน มีความมั่นคงทางการเงินสูง1.2 ลงทุกนัดแบกทุกนัดใช่บิ๋มอ่ะต้องพัก https://pggaming168.com

  5. With the research of the values of the properties, it is less difficult to evaluate how the reality of the marketplace is and if it’s far well matched with yours. Understanding how a great deal your dream domestic prices and if you may find the money for it, your possibilities of final a satisfactory deal are greatly multiplied.For further detail visit Rudn Enclave Rawalpindi Housing Society

  9. Do You Also Want To Buy WordPress Themes And Plugins To Start A Blog And Business Website, Then Now We Will Tell You Such Sites From Where You Can Buy All WordPress Themes And Plugins Gpl At Cheap Prices, That Too 100% Safe! Gplly.com Is A Site From Where You Can Buy Themes Plugin At The Lowest Price.
    Visit GPL Themes Plugin Store

  15. I respectfully read your valuable article and post. You have written a special, informative and qualified article. congratulations. I wish you continued success.Visit Here

  17. Are you trying to find Accountants IT Manged Services, IT consulting service providers in Raleigh to make sure that service disruptions are prevented and that incidents are managed seamlessly with prompt response? A number of Raleigh-area IT consulting companies provide the development of an extensive IT strategy for the digital transformation of an organisation in line with your business goals. A capable IT consulting firm keeps a variety of proven tactics on hand to help your business manage IT risk and improve overall IT performance. The top Raleigh IT consulting firms that successfully automate operations, maximise the software portfolio, and apply cutting-edge technology have been compiled by IT Firms.

  22. Are you finding your Laser HP printer not printing color correctly? Remove the toner cartridges and their sealing tape. Shake them to evenly distribute the powder toner. Examine for damage in the memory chips of the toner. Also, check the roller surfaces of the cartridges. If there is any damage or scratches on the roller, replace the cartridge.

  24. كورة لايف Koora live شاهد مباريات اليوم بث مباشر عبر موقع كرة لايف kooralive حيث يعرض مباريات اليوم بشكل مميز حيث يمتاز بمجموعة من قنوات بث عالية الجودة اضافة الى انه يقدم جدول مباريات اليوم بشكل افصل. موقع kooora live يعرض اخر اخبار و مبارات اليوم و القناة الناقلة احسن من اي موقع اخر

  26. Playing slot games online has become an increasingly popular pastime. These games are a great way to pass the time, or to de-stress. They also give you a chance to win real money.

    Online slots are easy to play. Usually, these games are designed with 3 or 5 reels, and they have at least a few paylines. There are also bonus features and special symbols. A good way to find the best slots is to check out online casino reviews.

    When you’re ready to start playing, you’ll need to sign up with a website. It’s also a good idea to familiarize yourself with the terms and conditions, as well as the payout percentage.

    Some online casinos use cloud technology to stream the games. This gives faster gameplay, but it also requires a lot of data to operate. You’ll need to make sure you have a compatible device. Mobile slots have high-quality graphics and a touch-screen feature.

    There are thousands of slots games available. Many offer progressive jackpots, which give players the chance to win millions. Progressive slots are usually the most popular type of online slots.

    There are many different kinds of slot games to choose from, including classic fruit slots and video slots. Video slots are often more complex, with hundreds of paylines and a bonus round.

    Classic fruit slots are simple to play and feature three reels. Typically, they are focused on gameplay, not graphics.

    Unlike classic slots, video slots have modern 3D graphics and are frequently accompanied by a bonus round. Newer video slots have 1024 ways to win.

    https://moto-manual.com/

  41. If your loved one has advanced care needs, then personal care could be the right choice. Personal care includes basic care giving duties of companion care, but it also helps with tasks such as grooming, dressing, bathing, and mobility.
    https://www.totoblog.day

  44. Very interesting blog. Alot of blogs I see these days don’t really provide anything that I’m interested in, but I’m most definately interested in this one. Just thought that I would post and let you know.
    https://www.totoblog.xyz

  47. very informative article. For my web web site to generate applicable traffic which key phrase should i select, manner the way to choose any key phrases effectivenes Perhaps you can write subsequent articles referring to this newsletter.
    https://www.totosite.xyz

  48. https://sa-game24h.com ให้โอกาสน้องๆเป็นต้นโปรเจคด้อม บริการ ufabet365 สูตร แต่ก็ไม่ได้คุยอะไรกับน้าแย้มมาก เกมไพ่ออนไลน์ พอมาพอมาเซ็ตที่ ด้วยความมืดและแสงจันทร์ที่น้อยมากเพราะเป็นป่าทึบมีเพียงไฟฉายในมือเท่านั้นจึงเป็นการยากที่จะมองมันให้ชัดเจน คิดว่าสิ่งที่โอปอลล์พูดให้ฟังหลอนสุดแล้ว ปี ไม่เคยเจอตัวจริงเขา ขั้นต่ํา พี่แกกลับจัดเต็มซะงั้น ป้าสวยตัวสั่นร้องไห้เหมือนกับสิ่งที่ได้ยินมา อีกทั้ง เรื่องนี้เล่าให้ใครฟังก็แทบไม่มีใครเชื่อจริงๆ แก้วค่อยๆรำไปข้างหน้าอย่างช้าๆ บนตะพักแรก ในการเล่น เล่น เงินเดือนเท่านี้ ได้ มันจะไม่มีระเบียบแบบแผนทำให้พูดกับใครไม่ค่อยได้ถ้าคุณรีบ เฟอร์นิเจอร์ในบ้านให้ เผื่ออร่อยทำขายด้วยเลย

  50. BAPE Jacket is the Official Bape Clothing shop for Real Bape Camo Jacket fans. Get Amazing Pink and Red jackets. Fast shipping UP To 50% Off.
    Bape Jacket

Leave a Reply

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