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.

45,429 thoughts on “Department Store Industry”

  1. Vin777 là nhà cái cá cược trực tuyến có đầy đủ các đánh giá uy tín, chất lượng. Tải ngay ứng dụng Vin777 để trải nghiệm tất cả các sản phẩm: Thể Thao, Bắn Cá, Đá Gà, Xổ Số,…
    #vin777 #nhacaivin777 #vin777casino #vin777guru

  5. Great post i must say and thanks for the information. Education is definitely a sticky subject. However, is still among the leading topics of our time. I appreciate your post and look forward to more home cleaning new york 物理補習

  6. Outstanding effort! Your effort and creativity can be seen in this work.
    Spotify Ad Blocker
    Spotify ad blocker is the ultimate solution that allows you to enjoy your favorite tunes without those disturbing ads interrupting your music streaming experience on Spotify, So it’s time to say goodbye to those annoying ads that break the rhythm of your playlists.

  7. NewzProz – Explore a universe of varied perspectives! Our blogging platform provides interesting information on a wide range of subjects, including science, culture, technology, and lifestyle. Discover knowledgeable viewpoints, perceptive essays, and provocative writings written by committed authors. With our extensive selection of engaging blogs, join the discussion and expand your perspective.

  8. newzproz

    NewzProz – Explore a universe of varied perspectives! Our blogging platform provides interesting information on a wide range of subjects, including science, culture, technology, and lifestyle. Discover knowledgeable viewpoints, perceptive essays, and provocative writings written by committed authors. With our extensive selection of engaging blogs, join the discussion and expand your perspective.

  9. Great job! Your effort and creativity shine through in this work. Keep up the good work, and I look forward to seeing more from you in the future.
    Anabel Gomez Lopez tamales

    Anabel Gomez Lopez tamales committed a cruel crime of selling human flesh on Mexican streets and she confessed her crimes of killing so many people. Most of her victims were young women. After her heinous and cruel crime she was sentenced for 25 years of prison.

  11. MailsDaddy EDB to PST Converter is the best software that easily migrates Exchange EDB files to PST. This is the best professional tool that gives 100% accurate results in less time. You don’t need to wait for a long time like the manual method. Without losing the hierarchy of the file it converts EDB files to Outlook PST. Plus, this software provides multiple export options including EDB to PST, Office 365, EML, HTML, etc.
    Visit: EDB to PST Converter

  15. OKVIP xây dựng tầm nhìn, sứ mệnh rõ ràng, cung cấp thông tin hữu ích cho người dùng và xác định tiêu chí hoạt động cụ thể tạo hướng đi vững vàng.

  16. Welcome to uaw news, your ultimate source for a diverse range of information! At UAW News, we are committed to bringing you the latest updates and insights across various domains, ensuring you stay well-informed in today’s fast-paced world.

  18. A beauty salon is a place where people go to get various beauty treatments and services to enhance their physical appearance. The salon typically offers services such as hair styling, manicures, pedicures, facials, massages, waxing, makeup application, and other related services.

    美容室 ショートカット
    https://agape-hair.com

  19. Social Media Marketing Course in Dubai teach you how to use social media platforms to market your business or brand. They cover topics such as creating a social media strategy, developing engaging content, and running social media ads.
    Social media and marketing courses can help you learn the skills you need to be a successful social media marketer. They can also help you improve your understanding of how social media works and how it can be used to achieve your marketing goals.

  21. mtcgame : MTCGame is a digital gaming platform where you can purchase various game keys, in-game items, and virtual currencies. It offers a wide range of gaming-related products and services.

  22. Nice information, valuable and excellent design, as share good stuff with good ideas and concepts, lots of great information and inspiration, both of which I need, thanks to offer such a helpful information here. calgary maids

  23. You have beautifully Explained. And if you’re on the lookout for a gym near Gaur City, Fitness Xpress sounds like the perfect solution. It’s not just any gym nearby; it’s a dedicated space to work towards your fitness goals with expert guidance. I can’t wait to check it out.
    https://www.fitnessxpressindia.com/gym/gaurcity

  25. I am overwhelmed by your post with such a nice topic. Usually I visit your blogs and get updated through the information you include but today’s blog would be the most appreciable. Well done! saiwa

  26. If you are thinking of enjoying the New Year with Pune Independent Escorts then our agency is offering huge discounts for you. Here you will find all types of women, from high profile to housewives. Pune girls will together make your New Year party better and leave you completely satisfied. Our agency also provides private hotels at every location.
    https://www.nehatondon.in

  28. Com esta extensão Teleparty, você pode reunir amigos e familiares em uma noite de cinema virtual e criar um lembrete especial com funções adicionais como bate-papo, chamadas de áudio e vídeo. Esta é a melhor extensão que lhe permite desfrutar de todos os seus últimos programas com os seus amigos e familiares.

  29. Vin777 tự hào sở hữu hơn 10 triệu thành viên trực tuyến khắp Châu Á. Chúng tôi cung cấp tất cả những trò chơi phù hợp với mọi lứa tuổi và sở thích của người dùng khi sử dụng Casino Online. Nhà cái thường xuyên tặng nhiều phần thưởng và khuyến mãi Hot cho các thành viên của mình.
    GG site: https://sites.google.com/view/vin777care/

  30. A Korean restaurant is a dining establishment that specializes in serving traditional Korean cuisine. These restaurants often feature a variety of dishes that highlight the flavors and ingredients unique to Korean cooking.

    韓国料理 名古屋市
    https://meishinkan-nagoya.com

  31. Ginkgo Retail introduces its International Multi Sale Channel Software, a powerful tool facilitating seamless expansion into global markets. This sophisticated software transcends borders, offering effortless integration across diverse international platforms. With intuitive features and centralized management, it simplifies operations while unlocking unparalleled outreach opportunities worldwide. Our software ensures a cohesive presence across continents, enabling businesses to scale and thrive on a global scale. Embrace a world of possibilities with Ginkgo Retail’s International Multi Sale Channel Software, your gateway to effortless international sales management and growth.

  33. This particular papers fabulous, and My spouse and i enjoy each of the perform that you have placed into this. I’m sure that you will be making a really useful place. I has been additionally pleased. Good perform! Valuation Bangor

  35. New88 – là nhà cái hàng đầu Châu Á, đây là địa chỉ được rất nhiều anh em săn đón đón xuyên suốt năm 2023, dự kiến năm 2024 sẽ là năm bùng nổ của nhà cái này.
    #new88 #nhacainew88 #new88casino #new889me
    – Google Site: https://sites.google.com/view/new889me/

  37. MB66 là một trong những tổ chức uy tín hàng đầu thế giới được cấp phép cá cược trực tuyến. Chúng tôi chuyển cung cấp các sảnh game trực tuyến như: Cá độ thể thao, Baccarat, Blackjack
    #mb66 #nhacaimb66 #mb66casino #mb66sudio

  38. MB66 là một trong những tổ chức uy tín hàng đầu thế giới được cấp phép cá cược trực tuyến. Chúng tôi chuyên cung cấp các sảnh game trực tuyến như: Cá độ thể thao, Baccarat, Blackjack, Roulette, Sicbo,…
    – Website: https://mb66.studio/

  39. Miami Real Estate Market Analysis 2023
    The Miami real estate market is expected to offer a vibrant and varied environment in 2023. The city’s real estate market is still thriving and provides a variety of choices for investors and homeowners alike.Miami’s pre-construction industry is still thriving, with a wide range of creative and interesting projects.Even if the downtown condo market is balanced, investors continue to be drawn to it because of its natural charm.There is still a strong demand for freehold homes, as seen by the frequent multiple bids that they receive.Immigrants and overseas students find Miami appealing, which fuels a persistent demand for housing.Choosing condominiums that are still under construction in 2023 is a good option if you want reasonable price, lots of customization options, and no problems with resale.For those looking to invest in Miami’s thriving potential, the real estate market presents an appealing environment given the city’s continued growth and allure.
    https://preconstruction.info/miami

  43. 123B, địa chỉ cá cược trực tuyến hàng đầu, chuyên phục vụ đa dạng các trò chơi như xổ số lô đề, thể thao, nổ hủ bắn cá, và đá gà thomo. Với sự đánh giá cao từ cộng đồng cược thủ, 123B là tên tuổi nổi bật trong ngành công nghiệp giải trí trực tuyến.#123b #123app #nha-cai-123b 
    GG Site: https://sites.google.com/view/123bapptop

  44. Such a strikingly essential article.I fundamentally wish to offer an animal continue for the standard information you have impeccable here on this post. 存倉

  49. The Snowflake training in Hyderabad is known for being the best Snowflake training in Hyderabad. Based on the market requirements, we provide you with a quality snowflake course in Hyderabad. This course is designed to train our learners with effective and essential skills in Snowflake Our practical-oriented training will help you to get a marketable job and increase your career opportunities in SQL. snowflake course in Hyderabad

  50. The React training in Hyderabad is known for being the best React training in Hyderabad. Based on the market requirements, we provide you with a quality React course in Hyderabad. This course is designed to train our learners with effective and essential skills in Snowflake Our practical-oriented training will help you to get a marketable job and increase your career opportunities in React React course in Hyderabad

Leave a Reply

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