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.

46,091 thoughts on “Department Store Industry”

  2. I’m pretty impressed with the topics you cover on this website. I appreciate you supplying this useful information. Good day.Best Printer Repair Service in Dubai | 045864033

  12. Wonderful article it is very impressive and full of knowledge content i really like it thanks to posting it and i am also sharing my post Click Here

  13. Wonderful article it is very impressive and full of knowledge content i really like it thanks to posting it and i am also sharing my post Click Here

  16. Sabyasachi – Buy Sabyasachi lehenga, Sabyasachi Sarees, Sharara Set & more online at panache haute couture. Shop from the latest Sabyasachi collection online now and give a dreamy start to your second inning of life. You will receive on-time delivery at your doorstep sabyasachi bridal lehenga

  18. Sandblasting is also known as Abrasive Blasting. Primarily, sandblasting is a procedure of by forcibly propelling a stream of sandblasting material against a surface. The sandblasting operation is done under high pressure to smoothen a rough surface, shape to eradicate its contaminants. There are various variants of sandblasting process like bead blasting, shot blasting, and Soda Blasting, however, if you are in search of the best and powerful Sandblasting Machinery contact Quality Spare Center for the best of machinery and sandblast materials.

  19. Unique in the truest sense of the word, this remarkable residence reaches out over four floors, featuring elegant design details at every turn.

  21. Escorts Service Bangalore provide By AshikaSoni. Here you get all type of Female Escort Call Girls at very affordable rate. We are offering College girl Escorts, models, celebrity escorts, housewife escorts, Russian escorts and Much more. Our Services is open 24/7.

  25. Betflik ทางเข้าเว็บหลัก เว็บตรง สมัครสมาชิก Betflix เข้าสู่ระบบ เว็บตรง รับเครดิตฟรี ทันที ไม่ติดเงื่อนไข betflix เครดิตฟรี ระบบใหม่ล่าสุด ฝาก-ถอน AUTO ทั้งเว็บ.

  28. A credit score is a numerical representation of an individual’s creditworthiness, which indicates the likelihood of that person repaying borrowed money or meeting their financial obligations. It is a crucial factor considered by lenders, banks, and financial institutions when determining whether to grant credit, such as loans, credit cards, or mortgages, and at what terms.

    Free cibil score
    https://www.piramalfinance.com/creditreport/user/creditPage

  29. Kênh bóng đá trực tuyến Xoi-lac.tv ✔️ nguồn link trực tiếp bóng đá Xoilac TV full HD. Phát sóng trực tuyến Xôi Lạc TV tructiepbongda không quảng cáo. 
    #Xoilac #XoilacTV #tructiepbongda #XoilacTVOffical #Xoilac_TV

  32. A financial adviser, also known as a financial planner or consultant, is a professional who provides expert guidance and advice on various aspects of personal finance. They help individuals and families make informed decisions about managing their money, achieving financial goals, and planning for the future.

    financial advisers near me
    https://partnership.sjp.co.uk/partner/christianselley

  33. Actually I read it yesterday but I had some thoughts about it and today I wanted to read it again because it is very well written. roro 4d

  34. CoinCRED, a popular exchange that has already amassed a user base of approximately
    two lakhs, has come up with its pro version, known as CoinCRED Pro. CoinCRED’s impressive
    user base in less time and its amazing features are a testament to the trust and confidence
    that users have in this brand, and we expect CoinCRED Pro to attract even more users in the
    coming months.CoinCRED pro promises to be a more advanced and sophisticated trading platform,
    offering a wide range of trading pairs, with listing at low prices when compared with other
    exchanges in the market. With its-user friendly interfaces and advanced trading options,
    CoinCRED Pro is poised to become a leading player in the world of cryptocurrency trading.

  35. Scalp massage is a therapeutic technique that involves the manipulation and stimulation of the scalp, typically using the hands or specialized tools. It is a popular practice in many cultures and is known for its relaxation and stress-relief benefits.

    頭皮マッサージ 知識
    https://hankei5m.com

  37. Link Xoilac-TV.net chính thức✔️ Địa chỉ phát sóng trực tiếp bóng đá miễn phí hôm nay. Xem bóng đá trực tuyến tại Xôi Lạc TV cùng bình luận viên quen thuộc. 

  38. If you ever happen to be in the crypto trading industry, then you must be aware of the popularity of these crypto wallets i.e. Coinbase wallet and MetaMask wallet. But, what if you have to choose one between the two?
    MetaMask vs Coinbase wallet

  40. An electric wheelchair, also known as a power wheelchair, is a mobility device designed to assist individuals with limited mobility in navigating their surroundings. Unlike manual wheelchairs that require physical effort to propel, electric wheelchairs are powered by electric motors, allowing users to move more easily and independently.

    Electric Wheelchair Lightweight
    https://electricwheelchair.com.my/product-category/electric-wheelchair/

  43. एक समाज क्या है? आज की दुनिया में, यह एक बहुत ही महत्वपूर्ण शब्द है जो हमारे जीवन को परिभाषित करता है। यह वह जगह है जहां लोग अपने परिवार और दोस्तों के साथ रहते और काम करते हैं। समाज को एक ऐसे संगठन के रूप में देखा जा सकता है जहां लोगों को एक वर्ग में बांटा जाता है, लेकिन उन्हें कुछ चीजें जैसे स्थान या सामान साझा करना पड़ता है। एक समाज के अपने नियम भी होते हैं जिनका उन्हें पालन करना चाहिए; इनमें कानून या रीति-रिवाज शामिल हो सकते हैं। समाज को व्यक्तियों के समूह के रूप में भी देखा जा सकता है

  44. ZeekStudio is a digital agency that helps businesses establish and improve their online presence. They provide a range of services, including web design, web development, and digital marketing, to help businesses achieve their goals in the digital space.

    One of ZeekStudio’s main services is creating custom-designed websites that look great and are user-friendly. They work closely with their clients to understand their brand identity and target audience and create a website that meets their specific needs. They use modern design trends and technologies to ensure the website stands out from the competition.

    ZeekStudio also offers web development services, which involve building websites and web applications that are secure and scalable. They use various programming languages and technologies to create websites that function seamlessly and can handle high traffic volumes.

  45. Cenforce 100 (Sildenafil Citrate Red Viagra) is an after being released in 1998, Cenforce (Sildenafil Citrate) became the very popular remedy for erectile disorder subjects. Cenforce (Sildenafil Citrate pills) is a fast-performing Tablets which can last up to four weeks. It functions well for the male in any Era, any manner of simply how lengthy the character has been having rely turning into and Keeping an erection.

    https://www.powpills.com/product/cenforce-100-mg/

Leave a Reply

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