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.

34,723 thoughts on “Department Store Industry”

  2. J88 luôn là những thông tin được nhiều người chơi tìm kiếm. Bởi lẽ, đây là một trong những sân chơi thế hệ mới nhưng lại sở hữu cộng đồng thành viên lớn mạnh. Vậy sự thành công đó của nhà cái là nhờ vào những yếu tố nào? Xem ngay bên dưới để có cái nhìn tổng quát hơn về thương hiệu.

  3. J88 luôn là những thông tin được nhiều người chơi tìm kiếm. Bởi lẽ, đây là một trong những sân chơi thế hệ mới nhưng lại sở hữu cộng đồng thành viên lớn mạnh.

  4. Một địa chỉ đang được nhiều game thủ yêu thích phải kể đến Lucky88. Giới thiệu tổng quát về nhà cái được đánh giá là uy tín hàng đầu.
    #lucky88 #lucky88casino #nhacailucky88 #lucky88center

  14. EPL중계 MLB중계 NBA중계 토트넘중계 스포츠중계 무료스포츠중계 빠른스포츠중계 해외축구중계 해외스포츠중계 메이저리그중계 프리미어리그중계 실시간중계 스포츠분석사이트 세리에a중계 스포츠분석 분데스리가중계 실시간tv중계 고화질해축구중계 무료해축중계 UFC중계 무료중계 고화질중계 실시간중계 느바중계 해축중계 k리그중계 kbo중계 npb중계 nhl중계 하키중계 배구중계 nfl중계 보는곳 쪽티비 어시스트티비 JJOKTV77 .JJTV27 ASSI2 무료스포츠중계

  15. PERSONALITY DEVELOPMENT
    Setting goals: Establishing clear, achievable goals provides direction and motivation for personal development. Setting both short-term and long-term goals helps in measuring progress and staying focused.

    Healthy habits: Adopting a healthy lifestyle, including physical exercise, proper nutrition, adequate sleep, and stress management, contributes to overall well-being and personal growth.
    https://www.sevenmentor.com/best-personality-development-and-soft-skills-training-courses-in-pune.php

    Seeking feedback: Being open to feedback and constructive criticism helps in identifying areas for improvement and growth.

    Remember, personality development is a unique journey for each person and involves continuous effort, self-reflection, and a willingness to evolve.

  18. I needed to thank you for this incredible read!! I unquestionably adored each and every piece of it. I have you bookmarked your site to look at the new stuff you post.
    floral new york

  21. Incredible Article it its truly instructive and inventive update us as often as possible with new upgrades. its was truly important. much obliged.  buy teacher shirts

  22. I’m constantly searching on the internet for posts that will help me. Too much is clearly to learn about this. I believe you created good quality items in Functions also. Keep working, congrats!
    flowers cart

  24. Going to graduate school was a positive decision for me. I enjoyed the coursework, the presentations, the fellow students, and the professors. And since my company reimbursed 100% of the tuition, the only cost that I had to pay on my own was for books and supplies. Otherwise, I received a free master’s degree. All that I had to invest was my time. آیسان اسلامی

  25. Enhance your study material by including the JEE Mains Mock Test Free Online 2024 for free at Mockers. You can gain mastery over exam preparation and be a step closer to your aspirations of becoming an engineer. So, attempt the online mock test series of JEE Main at our website prepared specially for you by our team of experts.
    JEE Mains Mock Test Free Online 2024

  28. Promptly this kind of extraordinary internet site must unquestionably become identified inside of every one of the web site a lot of people, as a result of meticulous posts or perhaps critiques or perhaps comments
    159.223.54.3

  30. Your blog is too much amazing. I have found with ease what I was looking. Moreover, the content quality is awesome. Thanks for the nudge
    ion177

  31. Great to be here in your article or post, whatever, I figure I ought to likewise buckle down for my own site like I see some great and refreshed working in your site
    hoki177

  32. Thanks for sharing this insightful piece on personal finance. It’s refreshing to see someone emphasizing the importance of budgeting and saving
    raya999

  33. This is my most memorable visit to your web diary! We are a gathering of workers and new exercises in a similar forte. Site gave us supportive information to work
    beton888

  34. This is my most memorable visit to your web diary! We are a gathering of workers and new exercises in a similar forte. Site gave us supportive information to work
    shiokambing2

  35. An intriguing discussion is worth comment. I think that you simply really should write much more on this topic, it could possibly not be a taboo subject but normally folks aren’t enough to speak on such topics. To the next
    senopati4d

  36. I will understand this. I’ll make certain to return. gratitude for sharing. and furthermore This article gives the light in which we can notice the truth. this is extremely decent one and gives indepth data
    plaza4d2

  37. Efficiently written information. It will be profitable to anybody who utilizes it, counting me. Keep up the good work. For certain I will review out more posts day in and day out
    pandawa4d

  38. Swiftly this web site can unquestionably become popular between almost all blogging and site-building folks, due to its meticulous posts or perhaps critiques
    balak7

  39. Much obliged to you since you have been willing to impart data to us. we will constantly see the value in all you have done here since I realize you are extremely worried about our
    pasopati4d

  40. May88 đang là địa chỉ giải trí cá cược được hàng triệu game thủ tin tưởng. Không chỉ vậy, sân chơi này còn được nhiều chuyên gia đánh giá cao.
    #may88 #may88casino #nhacaimay88 #may880com

  41. Normally I do not read post on blogs, however I wish to say that this write-up pressured me to check out. Your writing style is amazing. Thanks, very nice article
    jago177

  42. I can’t imagine focusing long enough to research; much less write this kind of article. You’ve outdone yourself with this material. This is great content
    king177

  43. Someone Sometimes with visits your blog regularly and recommended it in my experience to read as well. The way of writing is excellent and also the content is top-notch. Thanks for that insight you provide the readers
    159.223.54.3

  44. It again has the opinion absolutely applicable. Most of less significant characteristics are established throughout a large number of log coaching. I really like the coating an abundance
    128.199.102.199

  45. All one-of-a-type website online owners should take study: that is what outstanding articles appear like! I can’t wait to have a look at more of your paintings! Not handiest is it appealing, but it is also properly-written. If you’ll respond with a hyperlink for your Facebook, I might be extraordinarily grateful
    128.199.164.189

  46. I’m impressed, I have to admit. Genuinely rarely should i encounter a blog that’s both educative and entertaining, and without a doubt, you’ve got hit the nail for the head. Your thought is outstanding; the problem is a thing that there are not enough everyone is speaking intelligently about. My business is happy i found this in my hunt for some thing regarding this
    159.223.45.166

  47. I found your blog website on google and verify a couple of of your early posts. Continue to maintain up the very good operate. I simply further up your RSS feed to my MSN Information Reader. Looking for forward to studying more from you in a while!? I am typically to blogging and i actually respect your content. The article has really peaks my interest. I’m going to bookmark your website and keep checking for brand spanking new information
    167.172.79.69

  48. I found your blog website on google and verify a couple of of your early posts. Continue to maintain up the very good operate. I simply further up your RSS feed to my MSN Information Reader. Looking for forward to studying more from you in a while!? I am typically to blogging and i actually respect your content. The article has really peaks my interest. I’m going to bookmark your website and keep checking for brand spanking new information.
    boostview.org

  49. When it comes to finding companionship in Lahore, many people turn to call girls as a way to fulfill their needs. Call girls lahore
    offer a range of services, from simple companionship to more intimate encounters. However, it’s important to approach this topic with caution and understanding, as there are many factors to consider when engaging with call girls in Lahore.

Leave a Reply

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