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.

30,769 thoughts on “Department Store Industry”

  2. Unlock the World of Civil Engineering Brilliance at Grademiner.co! From bearing designs to impedance functions, we’ve got it all covered. Our civil engineering assignment help expert are here to sprinkle your homework with answers that shine. Experience the magic of seamless assistance – because at Grademiner.co, we turn challenges into triumphs!

  5. Signboard production is the process of creating and manufacturing various types of signage for businesses, organizations, and individuals. This involves designing and printing signs that can be used for advertising, wayfinding, branding, promotions, and information dissemination.

    埼玉県 看板製作
    https://jetsign.net

  6. Being overwhelmed with academic pressure and a busy schedule, when I connect with experts in Canada, I received excellent nursing Assignment Help for the academic project. The assignment prepared by experts is really well done with well-researched content from authentic sources. The experts are well knowledgeable and experienced to tackle nursing assignment difficulties and are able to provide simple and easier solutions on time. The guidance of experts adds value to the assignment and helps to manage the schedule easily.

  9. Crypto recovery refers to the process of recovering lost or inaccessible digital assets, such as cryptocurrency. It can occur in various scenarios, including lost passwords or private keys, accidental deletion, hardware failure, or even theft.

    Crypto recovery services
    https://brokercomplaintalert.com

  10. 888.movie ดูหนังออนไลน์ 4k พากย์ไทย ซับไทย ดูหนังออนไลน์ฟรี เราได้รวบรวมหนังหลากหลายรูปแบบ ทุกประเภท ไม่ว่าจะเป็น ดูหนังใหม่ออนไลน์ หนังใหม่ 2023 https://888.movie/

  11. The boardwalk is a bustling pedestrian promenade where you can find a variety of street performers, vendors, Venice Beaches
    and shops. It’s a great place for people-watching and soaking in the eclectic atmosphere.

  13. A music school is an educational institution that offers a wide range of music programs and lessons to aspiring musicians of all ages and skill levels. These schools provide structured curriculum and training in various musical instruments, voice, music theory, composition, and performance.

    さいたま市 音楽教室
    https://nagano-music-class.com

  20. Chào mừng đến với thiên đường giải trí 188Bet fan, không chỉ là một kênh cá cược, mà là ngôi nhà của những trải nghiệm giải trí đẳng cấp, là nơi thể hiện niềm đam mê của bản thân . Với hơn 10 năm xây dựng và phát triển, 188Bet fan không chỉ là một thương hiệu, mà là một cộng đồng toàn cầu của những người yêu thể thao và sự may rủi. Hãy bước chân vào thế giới đỉnh cao của giải trí và cá cược cùng 188Bet – nơi thể hiện niềm đam mê đẳng cấp! #188bet #188betfan #188betlink #nhacai188bet GG Site: https://sites.google.com/view/188betfan/
     

  22. Play Fa88 cổng trò chơi điện tử hấp dẫn nhất năm 2023. Đến với Play fa88 bạn sẽ được trãi nghiệm cảm giác thành tỷ phú! Fa88 có nhiều ưu đãi, sự kiện hỗ trợ người mới trên con đường làm giàu của mình.#fa88 #fa88com #gamebaifa88

  25. Metamask Login We are endeavoring to work on the security of Metamask Login ceaselessly. As a piece of this work, future updates might result in a constrained logout and will occasionally expect you to enter your secret phrase to open your Metamask Wallet Login. You can in any case utilize biometrics to login in the wake of signing in with your secret key.

  30. It’s really great. Your blogs are informative and useful keep sharing such good knowledge through your blogs. There is something you might be interested in. Check out our Winter training in Noida as well. If you are having trouble finding Java Training in noida. Thus, don’t hesitate any longer and use our services.

  32. 888.movie เว็บดูหนังฟรี หนังใหม่เต็มเรื่อง 2023 ท่านสามารถเลือกดูหนังได้หลากหลายรูปแบบ ไม่ว่าจะเป็นหนังจาก Netflix, WeTV, IQIYi, Disney+, HBO, Amazon Prime เรามีให้คุณดูฟรี ไม่ต้องเสียค่าบริการรายเดือน ไม่ต้องสมัครเป็นสมาชิกให้ยุ่งยาก เข้ามาแล้วเซิทชื่อหนังที่คุณต้องการแล้วเลือกดูได้เลย https://888.movie/

  33. Undeniably consider that which you stated. Your favorite justification seemed to be at the web the simplest factor to take into account of. I say to you, I certainly get annoyed even as other folks consider concerns that they plainly do not recognize about. You controlled to hit the nail upon the highest and also outlined out the entire thing with no need side-effects , folks could take a signal. Will likely be again to get more. Thank you Packers and Movers Pune

  39. In this heartwarming blog, “From Generation to Generation,” we invite you to delve into the cherished story behind Grandma and our Disc Golf Hand Dirt Bags. Discover the magic of a family tradition that has been passed down through the years, leaving a legacy of love, laughter, and a shared passion for the great outdoors. Divorce Lawyers Stafford VA

  40. Thanks for sharing nice information with us. i like your post and all you share with us is uptodate and quite informative, i would like to bookmark the page so i can come here again to read you, as you have done a wonderful job. Vietnami belépési vízum

  42. Continuously use insurance, and ensure you know your accomplice’s STI status. Assuming you’re going to be engaging in any kind of sexual movement, being safe is significant. Follow us on Call girls Islamabad

  44. Trịnh Nhật Khánh sinh ngày 18/9/1985 tại Vĩnh Long, ông xuất thân trong một gia đình có ba mẹ làm nông. Sau khi tốt nghiệp THPT với loại Giỏi, vị CEO này của ae888 đã đậu vào trường đại học Bách Khoa TP.HCM với chuyên ngành Khoa học máy tính.
    #tacgiaae888 #authorae888 #ae888 #ae888one

  47. Thank you for sharing this insightful article. I found the points you raised to be thought-provoking and informative. Your perspective on this topic is quite refreshing and has broadened my understanding. I appreciate the depth of your analysis and the clarity with which you present your ideas. Looking forward to reading more of your work in the future!
    Call Girls in Durgapura

  48. At Goodwill Spa Chennai, our focus is on providing fast, easy, and reliable services that meet the highest standards of quality. We ensure that our therapists are not only skilled but also possess a deep understanding of the human body and its response to different female to male massage techniques. This allows us to target the vital areas, alleviate muscle tension, and provide an overall sense of well-being to our clients.

  49. At Goodwill Spa Chennai, our focus is on providing fast, easy, and reliable services that meet the highest standards of quality. We ensure that our therapists are not only skilled but also possess a deep understanding of the human body and its response to different female to male massage techniques. This allows us to target the vital areas, alleviate muscle tension, and provide an overall sense of well-being to our clients.

Leave a Reply

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