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.

58,744 thoughts on “Department Store Industry”

  3. Initially, coinCRED had the features of sell and buy cryptocurrency & People also
    saw market ups & downs. For beginners, coinCRED is the best platform to learn about
    the crypto market. And also this is the time to grow with new technologies and work
    with new features. So that’s why CoinCRED launched its PRO version with added new
    features like spot trading, P2P, native token ect. The pro version has extra
    security also. CoinCRED pro is associated with its coin listing, market maker,
    services and portfolio management features at low prices. Here you have a supporting
    team for you 24 hours. You can connect with them to solve your queries. Its native token
    is represented by GYR which is built on ERC-20 token on Ethereum Network.
    https://coincred.pro/

  5. How appreciative I am for CPM Homework Help is beyond words, I must say. This service has been an amazing lifesaver for me as a student who frequently found myself drowning in difficult math issues. My grasp of their explanations and step-by-step instructions was much improved by the emotive language they utilized. I can now approach those difficult assignments with confidence and get better grades. Thank you for saving my academic life, CPM Homework Help!

  6. State Council of Educational Research and Training (SCERT) Haryana, Gurugram has Going to Conducted Primary School Final Exam 2024, SCERT Haryana Board is the Authority which Conducts the Examination at Primary School Levels Annually in the State of Haryana Through the Affiliated Schools.Haryana 3rd Class Date Sheet 2024 Available at Official Website at SCERT Haryana Primary School Haryana 3rd Class Question Paper 2024 Public Exam Conducted Month of April, Exam Every Year More Than 20 Laks of Students Attended, Students are you Searching Haryana Board Question Paper.

  15. I’m impressed, I must say. Very rarely do I come across a blog thats both informative and entertaining, and let me tell you, you ve hit the nail on the head. Your blog is important..
    Muslim World League

  16. AI chatbot errors serve as stepping stones toward refining and enhancing conversational AI technology. While challenges remain, the trajectory of improvement is evident. By embracing innovation, advancing algorithms, and learning from user interactions, the world of AI chatbots is poised to deliver more accurate, contextually aware, and seamless conversational experiences, bridging the gap between human communication and artificial intelligence. How to Prevent AI Chatbot Errors

  17. Dlinkap local is the default domain name used by D-Link, a well-known manufacturer of networking equipment, to access the web-based configuration page for their wireless range extenders.

  22. Experience a profound health transformation with Pilates: Before and after photos that showcase your journey to renewed vitality and strength. Reframe your health with the power of Pilates today!

  38. Experience a profound health transformation with Pilates: Before and after photos that showcase your journey to renewed vitality and strength.

  40. Do you want to make your Wi-Fi network reach more places and go faster? This can be done well with the DLink AX1500 setup. If you use all of its features, your internet connection speed and reading experience will be much better.

  41. Venus Consultancy is a Top Recruitment Agency Michigan providing staffing across the US. Our areas of expertise include IT Recruitment, Clinical Research Recruitment, Pharmaceutical and Life Science Recruitment, Manufacturing and Skilled Trade Recruitment, E-commerce, Logistics and Supply Chain Recruitment, Finance Recruitment, C-suite Recruitment, AutoTech Recruitment, Aerospace Recruitment and the recruitment process for outsourcing. We provide Permanent, Temporary and Contract Recruitment. If you need any recruitment service, we are here to help. We will make your hiring easy.

  46. Hi, Really happy to say your post is very interesting to read. I never stop myself from saying anything about it. We are the best secret shopper Dubai, Mystery Shopper Dubai, and Mystery Shopper Abu Dhabi with a strong focus on Mystery shopping. Check our page “https://retail-intl.com/about-us/”. Expecting more blogs.

  47. Introduction
    Whether it’s a sudden change in your plans, unexpected events, or simply a desire to tweak your travel dates, Frontier Airlines understands that flexibility is key for passengers. Let’s explore how their flight change policy caters to these needs and ensures you can adapt your travel plans without unnecessary stress.
    Understanding Frontier Airlines’ Approach to Flight Changes
    Frontier Airlines acknowledges that life can be unpredictable, which is why they offer a flight change policy that provides passengers with options to modify their bookings according to their circumstances. This policy is designed to accommodate changes while still maintaining a balance between passenger needs and operational constraints.
    Basic Rules for Flight Changes
    Frontier Airlines allows passengers to make changes to their bookings within a certain timeframe before the scheduled departure. Understanding these time limits is crucial, as they often determine whether you can make changes free of charge or with minimal fees.
    Types of Tickets and Their Change Flexibility
    The flexibility of flight changes often depends on the type of ticket you’ve purchased. Frontier Airlines offers different fare classes, each with varying change policies. From Standard Economy to Works, each fare class comes with its own set of rules regarding flight changes, giving passengers the freedom to choose what suits them best.
    How To Change Frontier Flight
    Changing your Frontier flight is a straightforward process that can be done online through the airline’s official website or mobile app. We’ll take you through the step-by-step guide on how to initiate and complete your flight change request hassle-free.
    Fees and Charges for Flight Changes
    While Frontier Airlines aims to provide flexibility, it’s essential to understand that flight changes may come with additional fees. These fees can vary based on factors like the type of ticket, the timing of the change, and your loyalty status within the airline’s frequent flyer program.
    Exceptions and Special Cases
    Frontier Airlines acknowledges that there are exceptional situations that might require special consideration. From medical emergencies to unforeseen events, we’ll explore the scenarios in which Frontier Airlines might offer more lenient change policies.
    Managing Changes Online
    In today’s digital age, managing your flight changes online is not only convenient but also the preferred method for many passengers. We’ll guide you through the online platform’s features, ensuring you have a smooth experience while making necessary adjustments to your travel plans.
    Dealing with Flight Cancellations
    While flight cancellations can be frustrating, Frontier Airlines has policies in place to assist passengers in such situations. We’ll discuss the airline’s approach to cancellations, including refund options and rebooking procedures.
    Tips for a Smooth Flight Change Experience
    To ensure a seamless flight change process, we’ve compiled a set of practical tips. From keeping an eye on fare differences to planning ahead, these suggestions will help you navigate the process with ease.
    Frontier’s Customer Support and Assistance
    In case you encounter any challenges or uncertainties while attempting to change your Frontier flight, the airline’s customer support team is there to assist you. We’ll provide details on how to reach out for help and what kind of assistance you can expect.
    Comparing Frontier’s Policy with Other Airlines
    To give you a broader perspective, we’ll compare Frontier Airlines’ flight change policy with those of other major carriers. This analysis will help you make an informed decision when choosing the airline that aligns best with your travel needs.

Leave a Reply

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