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.

29,422 thoughts on “Department Store Industry”

  3. Escorts in Lahore are available to provide pleasure and companionship for those seeking an intimate experience. The area is renowned for its selection of top-tier escorts providing private services to wealthy clients who value discretion and privacy. Trusted providers offering escort services in Lahore have established reputations, boasting talented professionals who offer everything from dinner dates and individual female escorts in lahore encounters through to duos and fantasy experiences. With attractive models available all year round, clients can expect the highest levels of customer service, with reliable ladies providing quality time with an enjoyable atmosphere.

  4. Karachi is the biggest city in Pakistan and has a booming entertainment industry. Being a vip call girls in karachi can be both exciting and challenging. It’s a great opportunity for anyone who is looking to make a name for themselves, but it also comes with its own unique set of challenges. In this blog post, we’ll explore what it’s like to be a model girl in Karachi, from the glamour to the struggles. We’ll discuss the good and the bad, and what it takes to make it as a model in one of the world’s most vibrant cities.

  7. I like this post, And I guess that they having fun to read this post, they shall take a good site to make a information, thanks for sharing it to me.Visit Here

  8. I like this post, And I guess that they having fun to read this post, they shall take a good site to make a information, thanks for sharing it to me.Visit Here

  9. This is the best information I ever read on this blog will share the information. How to protect yourself from fake donations? Then, Unfortunately, the only way to protect yourself from fake donors fully is to choose only one safe type of donation. For complete details about this, you can read one blog about the way to protect from fake donations on twitch.

  11. Gain knowledge much more about 5G Core Training to expand your professional knowledge and skills. Learnizo Global provides further course information. We provide individual and corporate training, so whether you’re looking to further your career or give your team a competitive advantage, we have a training option for you.

  18. This is a great article thanks for sharing this informative information. I will visit your blog regularly for some latest post. I will visit your blog regularly for Some latest post. Worktop chip repair

  23. I am very impressed with your writing safetoto I couldn’t think of this, but it’s amazing! I wrote several posts similar to this one, but please come and see!

  24. Karachi is the biggest city in Pakistan and has a booming entertainment industry. Being a model girl in Karachi can be both exciting and challenging. It’s a great opportunity for anyone who is looking to make a name for themselves, but it also comes with its own unique set of challenges. In this blog post, we’ll explore what it’s like to be a Karachi Escorts Services , from the glamour to the struggles. We’ll discuss the good and the bad, and what it takes to make it as a model in one of the world’s most vibrant cities.

  28. 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! the avenir

  29. Are you looking for an exciting night out in Karachi? Look no further! We have put together a comprehensive list of the Karachi Escorts Organization and call girls in the city so that you can enjoy a night of fun and excitement. Our top picks are sure to provide you with an unforgettable experience. Read on to discover our top picks and all the details you need to know about each option.

  30. Escorts in Islamabad are highly sought after, providing quality companionship services to visitors of the city. Many escorts offer a variety of services, including outcalls, dinner dates and overnight stays, plus more specialized services depending on individual needs. The safety and security of the client is paramount and is taken very seriously by each Islamabad Escort Girls. When looking for an escort, it is important to verify their credentials and experience to ensure a safe and enjoyable experience. Professionalism, courtesy and discretion are hallmarks of a reputable escort service provider in Islamabad.

  32. KKPL is a reliable Kilo Wool Serge provider. It is a well-known firm that offers its customers high-quality apparel material at a reasonable price. The entire company’s team works relentlessly to provide the best service possible in line with the client’s demands. So, rather than wasting time, go to the company and acquire the Kashmiri Shawl of your choice.

  33. Are you looking for a night of excitement and pleasure? Look no further than the amazing selection of Super-Hot Escorts in Lahore and Call Girls! These gorgeous ladies are ready to make all of your fantasies come true and provide you with an unforgettable experience. With their stunning beauty, captivating personalities, and intimate services, these ladies will have you feeling like royalty. Read on to learn more about these incredible escorts and how they can make your wildest dreams a reality!

  34. If you are looking for an unforgettable night in Karachi with some of the hottest escort models and VIP call girls, then you’ve come to the right place. In this ultimate guide, we’ll provide you with all the information you need to find the perfect match for your evening. From the best locations to where to find the hottest models, we’ve got it all. So, let’s get started!
    https://karachiescorts.website/

  35. Are you looking for the best Islamabad Hot Escort Models and VIP Call Girls? If so, you have come to the right place. In this ultimate guide, we will explore the different types of escort services available in Islamabad, their features, and the best places to find them. We’ll also discuss the pros and cons of using escort services, what to look out for when hiring an escort, and some tips to make your experience with a call girl as enjoyable as possible. So, without further ado, let’s get started!
    https://fancyislamabad.com/

  37. Call Girls Services in Karachi can’t handle, whether it is an office party, a social gathering, a business gathering, or any other unique event. It is possible that we will need to bring in a female companion for an intimate session at some point in time. Many people are drawn to our agency by these attractive giants because of their unique forms. Because our young girls are well-educated, they are able to communicate effectively with their customers, allowing them to better grasp any circumstance.

Leave a Reply

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