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.

35,950 thoughts on “Department Store Industry”

  1. An online slot casino is a virtual platform where players can play slot machine games using their desktop or mobile devices. These games usually involve spinning reels with various symbols, and the objective is to match up the symbols to win prizes.

    slot online gacor
    https://157.245.35.76/

  2. Master your software testing skills by enrolling for an Advance Software Testing Course in Pune with one of the best Software Testing Institute and be prepared for any questions or task that you may come across while testing advance applications.
    Software Testing Classes in Pune

  3. We may draw the conclusion that Bitso is a simple platform to start your cryptocurrency trading activity with. The exchange has made an effort to adhere to every requirement to guarantee that none of its users will encounter any difficulties. This does not, however, imply that the team has neglected the security aspect. Instead, the team that was working on it made an effort to assemble all the components of the most cutting-edge technology to form an impenetrable security wall. Additionally, you can get in touch with the support staff for any assistance.

  4. Wow, how can you write this? You’re so smart. Aren’t you a genius? It’s awesome. It’s so much fun that I’ll come back to watch it’ I’m just looking forward to your posting again메이저사이트 and I felt responsible for receiving this warm energy and sharing it with many people

  5. Terima kasih untuk informasi yang sangat baik. Menurut EVA-HR, Sistem Recruitment adalah suatu rangkaian proses dan metode yang digunakan oleh perusahaan atau organisasi dalam recruitment program untuk mengelola dan melibatkan berbagai tahapan dalam proses perekrutan karyawan baru.

  12. Program manufaktur adalah solusi perangkat lunak yang membantu bisnis dalam mengatur dan mengelola proses produksi mereka secara lebih efisien. Dengan menggunakan program manufaktur yang tepat, bisnis dapat memaksimalkan efektivitas proses produksi mereka, meningkatkan produktivitas, dan mengurangi biaya produksi secara signifikan

  13. Apartment renovations Gold Coast are in high demand as more people seek to upgrade their living spaces. With the help of experienced professionals, Apartment renovations Gold Coast owners can transform their spaces into modern, functional, and stylish homes. Renovations can include upgrading kitchens, bathrooms, and living areas, as well as adding new features like balconies and outdoor entertainment areas. A well-executed renovation project can significantly enhance an apartment’s value and appeal, making it a worthwhile investment.

  14. Qatar Airways is renowned for its opulent service and cutting-edge aircraft. The airline offers service to several locations across the world, including Warsaw, Poland. The Qatar Airways office in Warsaw is normally situated in a business building, providing clients with a formal and warm environment.

  17. Terima kasih untuk informasi yang sangat baik. Menurut EVA-HR, Recruitment Software adalah aplikasi atau sistem yang digunakan oleh perusahaan atau organisasi untuk membantu dalam proses perekrutan karyawan baru.

  19. I am impressed. I don’t think Ive met anyone who knows as much about this subject as you do. You are truly well informed and very intelligent. You wrote something that people could understand and made the subject intriguing for everyone. Really, great blog you have got here. Asus Zenfone Flash Tool

  22. It’s important to remember your Metamask password as it is the only way to access your wallet. You can also enable two-factor authentication for added security.US-based crypto exchange. Trade Bitcoin (BTC), Ethereum (ETH), and more for USD, EUR, and GBP. MetaMask chrome extension

  23. It’s important to remember your Metamask password as it is the only way to access your wallet. You can also enable two-factor authentication for added security.US-based crypto exchange. Trade Bitcoin (BTC), Ethereum (ETH), and more for USD, EUR, and GBP. Metamask login with password

  27. Hii my name is Jimmy Andrew i am from the technical team if you are facing a problem to setup hp printer then you can visit our site 123.hp.com here you can find every solution related to hp printer.
    https://l-123hp.com/

  28. Hello, everyone! My name is Michael. I am a printer expert and I have expertise in dealing with canon printer issues.If you ever suffer any kind of technical glitches while printing, then connect with canon printer support. I will be happy to assist you.

  31. Welcome to Goa Darling, your ultimate destination for unforgettable Goa holidays. Our expert team of travel professionals specializes in creating customised Goa holiday packages that cater to your every need and desire. Our packages include everything from accommodation to transportation, sightseeing tours, and water activities. So, what are you waiting for? Book Goa holiday packages today and embark on a journey of a lifetime. Our Group tour packages for Goa are specially designed to offer you the best of everything, including comfort, luxury, and adventure. Contact us now to know more about our exciting packages and start planning your dream Goa vacation today!

  33. Looking for the Best IPTV provider in USA that offers a wide range of Desi IPTV channels? Look no further than Hind IPTV! Our Indian IPTV subscription service offers an unparalleled selection of channels, from news and entertainment to sports and music, all in stunning high definition. With Hind IPTV, you can enjoy the best of both worlds: the convenience of streaming your favourite channels online and the reliability of traditional cable TV. So why wait? Sign up today and start streaming your favourite IPTV channels with ease!

  34. Direct web slots, PG SLOT the easiest direct web slots right now Supports all operating systems The minimum bet starts at 1 baht, unlimited withdrawals, and an automatic system. that can be played anywhere Support for playing via mobile Both Android and iOS systems

  35. Website 4x4pgok.com a comprehensive online slots website that is ready to serve in full system at the moment, a new website that is ready to serve entertainment. and offer online games That is full of charm that is overwhelming for everyone to make money with games that are easy to play, easy to break bonuses and have a variety of games to choose from

  36. I was looking for another article by chance and found your article baccaratcommunity I am writing on this topic, so I think it will help a lot. I leave my blog address below. Please visit once.

  37. Best IPTV Solutions is the premier provider of Indian IPTV service in the market. As the top Indian IPTV provider, we offer a vast array of Hindi IPTV channels, catering to the entertainment needs of our customers across the globe. Our team of experts works tirelessly to ensure that our customers get the best value for their money, with affordable pricing plans and exceptional customer service. So why wait? Sign up for Best IPTV Solutions today and experience high-quality streaming, uninterrupted service, and a vast array of entertainment options, all in one place!

  39. Trustworthy Home services, is a one-stop solution for all your AC related needs in Delhi. We understand the importance of having a fully functional air conditioning system in the sweltering heat of Delhi, which is why we offer top-notch AC services and AC Installation in Delhi. We prioritise customer satisfaction above all else, which is why we ensure that all our services are affordable, efficient, and reliable. With our AC services in Delhi, you can rest assured that your AC system is in safe hands.

  42. Telecafe is the ultimate destination for anyone seeking to connect with interesting individuals in Australia. With our innovative phone chat and chat lines, you can meet women from all walks of life and embark on an exciting journey of Aussie dating. Our platform is designed to help you discover meaningful connections with people who share your interests and values. Whether you’re looking for a casual chat or a long-term relationship, Telecafe has got you covered. With our easy-to-use interface and 24/7 support, you can be sure that you’ll never miss an opportunity to connect with someone special.

  46. Vidalista 40 Tablets treat the genuine issues of erectile dysfunction in men. These tablets are secure, to utilize and incredibly fix impotence and diseases related to PDE5 inhibitors. These oral drugs are effectively used in nursing for ED issues in men ensuring structure, for a longer time period.

  48. Thanks so much for writing this post! I found it really inspiring and it’s given me a lot to think about. I’m looking forward to reading more of your content in the future. Jasa SEO terbaik di Denpasar Bali Bali SEO Daily

Leave a Reply

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