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.

36,104 thoughts on “Department Store Industry”

  1.  If someone week i really ashen-haired not actually pretty, whether you will lite grope a present, thought to follow us to displays bursting with ends of the earth considerably? Inside the impeccant previous, sea ever have dried-up, my hubby and i only may very well be with all of you connected thousands of samsara.
    floral shops in nyc

  4. This particular looks for example certainly superb. Most of these slight tips are made using availablility of cosmetic foundation interest. I like to him or her appreciably. coffee grinders

  7. However, if you intend to begin your trading career with a Wallet account, please be fully knowledgeable about cryptocurrencies. Also, for more queries and issues related to this topic please visit the wallet login official website or contact the customer support team.

  8. In the occasion that you’re searching out more vigorous Call girls in Islamabad or housewife Escorts Administration in Islamabad, basically select the principal in class supplier now. Play with our made lady or play with our more enthusiastic warm and alluring darling all are ready for you! Our women are instructed that they see a method for dealing with act with you straightforwardly and clandestinely.

  9. Revenue Management in Action refers to the practical implementation and execution of strategies to optimize and maximize revenue for businesses. This involves dynamic pricing, demand forecasting, and strategic decision-making to enhance profitability. The concept is widely applied in industries such as hospitality, airlines, and retail to effectively manage pricing and inventory based on market dynamics.
    motorcycle accident

  18. The Department Store Industry stands as a retail colossus, seamlessly blending commerce and experience. Immerse yourself in the unique experience of sun-kissed shores against the backdrop of iconic canals, creating a picturesque blend of nature and culture. Beaches in Venice
    beckon, promising a tranquil escape within the embrace of unparalleled Venetian charm.

  19. Thanks for sharing this information. Its dynamic landscape mirrors evolving consumer trends, offering not just products, but a curated journey through the pulse of modern shopping. The sun-kissed shores of Kamari and the hidden gem of Vlychada promise a sensory symphony, where tranquility meets the vibrancy of the Aegean Sea. Santorini Beaches beckon with a blend of mythic beauty and coastal allure, inviting visitors to surrender to the island’s enchanting embrace.

  20. Your article has answered the question I was wondering about! I would like to write a thesis on this subject, but I would like you to give your opinion once 😀 totosite

  22. It’s really great. Thank you for providing a quality article. There is something you might be interested in. Do you know casinosite ? If you have more questions, please come to my site and check it out!

  23. From some point on, I am preparing to build my site while browsing various sites. It is now somewhat completed. If you are interested, please come to play with baccaratsite !!

  24. This post contains true information. Your website is very useful. I admire the valuable advice you make available in your expertly written content. I want to thank you for this informative read Likewise, we do have a Blog related to medical aspirant’s best Medical coaching platform

  25. Really i appreciate the effort you made to share the knowledge. The topic here I found was really effective to the topic which I was researching for a long time. Likewise, we do have a Blog related to medical aspirant’s best Neet ss online coaching

  26. This post contains true information. Your website is very useful. I admire the valuable advice you make available in your expertly written content. I want to thank you for this informative read Likewise, we do have a Blog related to medical aspirant’s best Neet pg online coaching

  28. This post contains true information. Your website is very useful. I admire the valuable advice you make available in your expertly written content. I want to thank you for this informative read Likewise, we do have a Blog related to medical aspirant’s best Medical coaching

  29. Descubra el epítome de la elegancia, el encanto y la emoción con nuestra compañera de élite, una joven rubia deslumbrante con cautivadores ojos color avellana. Originaria de Buenos Aires, es la elección perfecta para quienes anhelan belleza, personalidad y un apetito insaciable por la diversión y la fiesta. Si estás aquí, quieres ver la hermosa Acompañantes Buenos Aires en tu casa. Los perfiles más grandes actualizados diariamente de chicas escorts reales en Argentina

  33. Bangalore Escorts Service offers you the opportunity to find and connect with beautiful women who can provide you with an experience unlike any other. From passionate one-on-one encounters to adventurous group activities, Bangalore escorts are sure to have something that will make your stay in this city truly unforgettable.

  35. Wow, this article is an eye-opener! I never realized the intricacies of revenue management in the department store industry. The examples provided make it so much clearer. Kudos to the author for breaking down complex concepts in a reader-friendly way.disney plus watch party

  36. Wow, this article really opened my eyes to the intricacies of the department store industry! I had no idea revenue management played such a crucial role. Can you delve into how technology has impacted this sector in recent years?
    peacock watch party

  37. It’s really great. Thank you for providing a quality article. There is something you might be interested in. Do you know baccaratcommunity ? If you have more questions, please come to my site and check it out!

  40. The best time to visit Pondicherry is during the winter months, from October to March. The weather is mild and pleasant, making it ideal for exploring the French Quarter, relaxing on the beaches, and enjoying outdoor activities.

  45. We are a Rapidly Expanding Digital Marketing and SEO firm in Hyderabad, India.
    With our innovative framework, we have generated website traffic and search engine results for our customers.
    Your business is our concern. At Digitali360 we aim at catering to your needs by providing best-in-class digital marketing services that elevate your business.
    Digital i360 believes that the story of every Business is Discrete. Our process offers tailored solutions for customers and their brand objectives.
    As a one-stop solution for all digital marketing services, Digital i360 guides you towards significant growth and achieving customer goals. We strive for your brand recognition and offer you the best visibility to increase sales and generate revenue. As marketing magnets, we are committed to designing, developing, and implementing your business.

    SEO-
    Search Engine Optimization (SEO) is vital for enhancing a website’s visibility on search engines like Google.
    SEO seeks to increase organic traffic by strategically adding relevant keywords, optimising meta tags, and
    increasing page speed.High-quality and compelling material, as well as well-structured headers and graphics, all
    help to improve rankings. Creating authoritative backlinks improves a website’s trustworthiness even further. SEO prioritises user experience and relevancy, improving the likelihood of attracting and maintaining important visitors.
    top digital marketing agency in hyderabad

  48. Pay per Click-Elevate your website’s reach through Pay-Per-Click (PPC) advertising.
    Targeted and cost-efficient, PPC places your ads at the forefront of search engine results.
    Craft precise ad content, choose strategic keywords, and set your budget.
    you only pay when users click, ensuring optimal resource allocation.
    Real-time tracking empowers you to fine-tune your campaign for maximum impact.
    Whether you’re launching a startup or expanding an enterprise,
    PPC accelerates your online visibility, delivering swift returns and potential leads.
    Embrace the power of PPC today to amplify your website’s traffic and conversions.

    We are a Rapidly Expanding Digital Marketing and SEO firm in Hyderabad, India.
    With our innovative framework, we have generated website traffic and search engine results for our customers.
    Your business is our concern. At Digitali360 we aim at catering to your needs by providing best-in-class digital marketing services that elevate your business.
    Digital i360 believes that the story of every Business is Discrete. Our process offers tailored solutions for customers and their brand objectives.
    As a one-stop solution for all digital marketing services, Digital i360 guides you towards significant growth and achieving customer goals. We strive for your brand recognition and offer you the best visibility to increase sales and generate revenue. As marketing magnets, we are committed to designing, developing, and implementing your business.

    digital 360

Leave a Reply

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