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.

341,293 thoughts on “Department Store Industry”

  8. Welcome to MarvelBet, where the thrill of India’s finest online casino and sports betting adventures awaits you. Our platform is a haven for enthusiasts seeking top-tier entertainment in the realm of gambling and live sports events. 

  9. NBET là một trong những nhà cái hàng đầu tại Việt Nam và châu Á. Với danh tiếng và dịch vụ chất lượng.

  10. MB66 là là cái cá cược trực tuyến uy tín hàng đầu hiện nay. Cung cấp đa dạng các sản phẩm cá cược cùng nhiều khuyến mãi cực khủng.

  11. I simply couldn’t depart your site prior to suggesting that I actually loved the usual info an individual supply for your visitors? Is gonna be back frequently to investigate cross-check new posts. banca show

  12. MB66 là nhà cái trực tuyến uy tín hàng đầu hiện nay. Cung cấp đa dạng các sản phẩm cùng nhiều khuyến mãi cực khủng.
    #mb66 #nhacaimb66 #mb66art

  14. W88.fish trang chính thức của W88 tại Việt Nam, đảm bảo link vào W88 luôn hoạt động trên cả di động và máy tính. Đăng ký ngay tại W88 và nhận 90.000 đồng miễn phí. Nhà cái này không chỉ mạnh mẽ về kinh tế ở Việt Nam và Châu Á mà còn tài trợ cho CLB Ngoại Hạng Anh như Burnley cho mùa giải 2024/2025. Điều này chứng tỏ cam kết với cộng đồng yêu thể thao và giải trí 

  15. W88.fish trang chính thức của W88 tại Việt Nam, đảm bảo link vào W88 luôn hoạt động trên cả di động và máy tính. Đăng ký ngay tại W88 và nhận 90.000 đồng miễn phí.

  16. To set up your WiFi router, you must log in to it first. So, for the Netgear router login, use your default IP address, and username & password. Therefore, access the login page using the IP address & admin credentials for web interface sign-up. If you face any login issues, connect with our expert team without any hesitation.

  19. https://kubet.pw/ KUBET – KU. Chơi lô đề, Xóc đĩa, Bóng đá Online. Đăng ký tài khoản KUBET ngay hôm nay để nhận ưu đãi 588k. Link chính thức KU BET tại Việt Nam

  20. New88 là nhà cái nổi bật trên thị trường cá cược trực tuyến hiện nay, với một kho game khổng lồ và chất lượng, thu hút được rất nhiều cược thủ tham gia.

  22. New88 là nhà cái nổi bật trên thị trường  trực tuyến hiện nay, với một kho game khổng lồ và chất lượng, thu hút được rất nhiều cược thủ tham gia.
     

  24. konohatoto78 login
    adalah tempat terbaik untuk pecinta judi online. Dengan status resmi dan terpercaya, pelayanan terbaik 24 jam nonstop, pilihan pembayaran lengkap, dan beragamnya pilihan permainan, kami berkomitmen untuk memberikan pengalaman berjudi yang tak terlupakan kepada Anda. Jangan ragu untuk bergabung dengan kami dan mulai petualangan judi Anda hari ini!

  25. osgb adana çevre illerde ortak sağlık ve güvenlik birimi olarak pek çok uygulama, işlem, raporlama ve analizi yapmaktadır. Siz de detaylı bilgi almak ve başvuru yapmak için bizimle iletişime geçebilirsiniz.

  27. S666 | S666.mx | Trang chính thức nhà cái S666, là nhà cái lô đề hàng đầu thị trường cá cược Châu Á hiện nay. Cung cấp đa dạng các sản phẩm và dịch vụ về cá cược bóng đá,…

  28. Phạm Hùng – CEO kiêm nhà sáng lập ra thương hiệu giải trí và truyền thông Hi88. Anh được xem là gương mặt tiêu biểu dám nghĩ dám làm.

  29. S666 | S666.mx | Trang chính thức nhà cái S666, là nhà cái lô đề hàng đầu thị trường cá cược Châu Á hiện nay. 

  30. Phạm Hùng – CEO kiêm nhà sáng lập ra thương hiệu giải trí và truyền thông Hi88. Anh được xem là gương mặt tiêu biểu dám nghĩ dám làm. #phamhung #ceophamhung #ceohi88vip

  32. This really even a very good put up that i in fact really enjoyed perusing. It is not necessarily regular that i include the option to ascertain a specific thing. go88

  34. Kudos to each participant—your varied perspectives are the heartbeat of this thriving forum. Eh-mazing academic support awaits! Elevate your grades with the finestassignment help in Canada. Our assignment writing service is your passport to success! #StudentLife.

  37. kompozisyon örnekleri : Kompozisyon, bir konu hakkında düşüncelerimizi yazılı olarak ifade etme sanatıdır. Öğrenciler genellikle okulda kompozisyon yazarak düşünce yazma becerilerini geliştirirler. Bir kompozisyon genellikle giriş, gelişme ve sonuç bölümlerinden oluşur. Giriş bölümünde konu tanıtılır, gelişme bölümünde konu detaylandırılır ve sonuç bölümünde ise konu hakkında genel bir değerlendirme yapılır. Etkili bir kompozisyon yazmak için, konu hakkında yeterli bilgiye sahip olmak ve düşünceleri açık ve anlaşılır bir şekilde ifade etmek önemlidir.

  39. The True Adblocker Chrome Extension is an essential browser enhancement that transforms your online experience by effectively removing all unwanted ads and empowers you to take control of your browsing domain which provides a clean and distraction-free online journey.

  41. I am glad to locate your recognized method for composing the post. Presently you make it simple for me to comprehend and actualize the idea. Much obliged to you for the post.  佐敦補習

  42. Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with extra information? It is extremely helpful for me. judi slot garuda999 pro

  43. I greatly appreciate the valuable information you have shared with us. Please continue to provide us with amazing information and articles, and keep us updated. I look forward to reading more from you in the future!

    are you planning to Business setup in Dubai? Bizex is a well-known business setup consultancy based in Dubai, with a focus on helping entrepreneurs and businesses establish a strong presence in the region.

    See this also: UAE Golden Visa!

  45. slot gacor
    slot somebody/something in. to manage to find a position, a time or an opportunity for somebody/something. I can slot you in between 3 and 4. We slotted in some extra lessons before the exam.
    https://www.jtaer.com/

  46. Cukup bermain dengan minimal deposit saja pun Anda sudah bisa mendapatkan kemenangan yang besar, sering juga situs Bimaspin membagikan berbagai macam bonus dan hadiah spesial lainnya. Sudah banyak yang membuktikan slot games kami dan membawa kemenangan yang besar. Kapan saja Anda membutuhkan bantuan kami akan bersedia untuk membantu Anda.

  47. W88 không chỉ là nhà cái cá cược hàng đầu Châu Á mà còn là đỉnh cao của công nghệ giải trí. Với trải nghiệm cá cược đa dạng từ thể thao đến casino trực tuyến, slots, P2P và xổ số, chúng tôi cam kết mang đến dịch vụ hàng đầu.#w88

Leave a Reply

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