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.

35,896 thoughts on “Department Store Industry”

  4. Finding a reliable Dermatologist in Manchester in the USA can be challenging, but Derm Solution makes it easy. With their expertise and commitment to exceptional care, they’re your go-to for all your skincare needs. Trust Derm Solution for top-notch dermatological services right here in the USA. services to ensure your skin receives the best treatment possible. Trust Derm Solution for expert care and exceptional results right here in the USA.

  5. Hi, I am Arzoo Kanak from Chandigarh, I understand that every person has unique desires and fantasies. That’s why I’m offering a wide range of services to ensure that your experience with me in bed is memorable. Your satisfaction is our first priority, plus we have a diverse collection of beautiful girls to spend a romantic night with you. https://www.arzookanak.in

  6. Sky88 là một thương hiệu cá cược hàng đầu đến từ châu Âu, được biết đến với sự uy tín và chất lượng vượt trội, đặc biệt là trong cộng đồng cược thủ Việt Nam. Được thành lập với trụ sở chính tại thành phố Calverley Leeds, thuộc vùng Yorkshire, Humber của Vương Quốc Anh, Sky88 đã nhanh chóng mở rộng và khẳng định vị thế của mình trên thị trường cá cược châu Á, mang lại sự lựa chọn tin cậy và phong phú cho người chơi.

  11. This is my first time i visit here. I found so many interesting stuff in your blog especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here! keep up the good work workshop on DISC

  12. MKSport là sự lựa chọn hoàn hảo cho những ai yêu thích cá cược thể thao và trực tuyến. Với nhiều loại hình cược phong phú và tỷ lệ cạnh tranh, MKSport luôn mang đến cơ hội chiến thắng lớn cho người chơi. Hệ thống bảo mật cao cùng đội ngũ hỗ trợ 24/7 đảm bảo rằng bạn sẽ có những trải nghiệm an toàn và thú vị khi tham gia tại. #nhacaimksport #mksport7

  15. Hey what a brilliant post I have come across and believe me I have been searching out for this similar kind of post for past a week and hardly came across this. Thank you very much and will look for more postings from you. antique firearms auctions

  16. I know this is one of the most meaningful information for me. And I’m animated reading your article. But should remark on some general things, the website style is perfect; the articles are great. Thanks for the ton of tangible and attainable help. a course in miracles

  20. regentplay is a premier onlinecasino that offers a luxurious gaming experience, featuring a vast selection of top-tier games and exclusive bonuses.

  21. HR is the field of recruiting and managing all the staff of an organization. HR assignments can be difficult for scholars. Global Assignment Help offers the best HR assignment help at an affordable price. Assignments are written by qualified writers with proper research and plagiarism- and AI-free content. They are delivered on time and expertly proofread before delivery.

  26. Discover our comprehensive SAP course online designed to equip you with essential skills in SAP ERP, BI, HANA, and more. Whether you’re new to SAP or looking to deepen your expertise, our interactive modules and expert instructors ensure a transformative learning experience. Join our online SAP course today and propel your career in enterprise software solutions!
    (https://feligrat.com/sap-training-online/)

  27. Master SAP ABAP with our specialized online training program. From foundational concepts to advanced programming techniques, our courses cover everything you need to excel in Advanced Business Application Programming. Enroll in our SAP ABAP training online and gain hands-on experience to succeed in enterprise software development
    (https://feligrat.com/sap-abap-training-online/)

  28. Explore SAP courses in Mumbai, a hub of business and opportunity. Whether you’re starting your SAP journey or seeking advanced specialization, Mumbai offers diverse training options with practical, industry-focused curriculum. Enroll in a SAP course in Mumbai today and leverage the city’s dynamic business environment to advance your career in SAP
    (https://feligrat.com/sap-training-in-mumbai/)

  29. Hey what a brilliant post I have come across and believe me I have been searching out for this similar kind of post for past a week and hardly came across this. Thank you very much and will look for more postings from you. Infrared Sauna Therapy

  30. The Assignment Desk delivers top-notch history dissertation help, offering plagiarism-free content with a built-in Grammar Checker. Their expert guidance ensures your dissertation meets high standards, boosting your academic performance. Trust the Assignment Desk for dependable and effective dissertation writing support, guaranteeing excellent results and peace of mind.

  31. I am really loving the theme/design of your web site. Do you ever run into any browser compatibility problems? A few of my blog readers have complained about my website not working correctly in Explorer but looks great in Chrome. Do you have any tips to help fix this issue? Pinterest downloader

  32. Considering a SAP course in Pune? Pune’s vibrant IT landscape offers excellent opportunities for SAP training, catering to individuals at various career stages. Whether you’re starting your SAP journey or looking to deepen your expertise in modules like ERP, BI, or HANA, Pune’s institutes provide comprehensive courses with practical, hands-on learning experiences. Join a SAP course in Pune to leverage the city’s dynamic tech ecosystem and propel your career in enterprise software solutions.
    (https://feligrat.com/sap-training-in-pune/)

  33. Great article! The information you shared here is really useful. I particularly like the product featured in this article. Hope for more content like this! Get information about Top SEO Companies in Delhi at Top SEO Companies in Delhi here.

  34. Excellent website you got It is hard to find quality works like yours these days, this is really great and useful information. I’m glad you shared this useful information.
    Visit My website just click Link :- Escort Service in Hyderabad

  35. BIngun karena terlalu banyak situs slot online yang tidak jelas coba kunjungi sobat777 yang pasti akan memberikan yang terbaik untuk anda

  39. Sumclub là cổng game uy tín tại Việt Nam, nổi bật với đa dạng trò chơi bài đổi thưởng như Tiến Lên, Phỏm và Liêng. Với giao diện thân thiện và hệ thống bảo mật cao, Sum Club cam kết mang đến trải nghiệm giải trí an toàn và hấp dẫn cho người chơi. Hãy tham gia SumClub để tận hưởng các chương trình khuyến mãi và sự kiện hấp dẫn!
    #sumclub #sumclubwin #conggamesumclub #dangnhapsumclub #dangkysumclub

  40. منتجات النخبة تتميز عن غيرها بالجودة، السعر، النظافة و الطعم

    إليك نظرة عامة على ما نقدمه:
    https://mynkp.com/

  41. U888 là một trong những nhà cái hợp pháp truyền thống nhất Châu Á. Đây cũng là thương hiệu được ưa chuộng nhất hiện nay tại thị trường Việt Nam.#u888, #nhacaiu888, #tragchuu888, #dangnhapu888, #dangkyu888

  45. Extremely helpful post. This is my first time i visit here. I discovered such a large number of intriguing stuff in your blog particularly its exchange. Truly its extraordinary article. Keep it up. casinoslotsvibes

  47. HerbActif

    Bienvenue chez HerbActif, votre destination incontournable pour des soins de beauté naturels et efficaces. Nous sommes fiers de vous offrir une gamme exceptionnelle de produits cosmètiques naturels pour chouchouter vos cheveux, votre peau et votre visage avec des ingrédients naturels de la plus haute qualité.

    Gamme de soins des cheveux
    Nos produits capillaires sont conçus pour répondre à tous vos besoins, qu’il s’agisse de renforcer vos cheveux, de stimuler leur croissance ou de les hydrater en profondeur. Découvrez nos shampoings et après-shampoings naturels, nos masques capillaires revitalisants, et nos sérums nourrissants. Chaque formule est enrichie d’ingrédients biologiques pour garantir des cheveux sains, brillants et revitalisés.

    Poudres naturelles
    Nos poudres naturelles sont des trésors de la nature, parfaits pour des soins polyvalents. Utilisez nos poudres d’argile, de plantes ou d’épices pour créer des masques capillaires, des soins du visage ou des exfoliants corporels. Elles sont idéales pour purifier, apaiser et revitaliser votre peau et vos cheveux.

    Huiles végétales
    Nous proposons une large sélection d’huiles végétales pures et biologiques, telles que l’huile d’argan, l’huile de jojoba, et l’huile de coco. Ces huiles précieuses sont riches en nutriments essentiels, parfaites pour hydrater, nourrir et protéger votre peau et vos cheveux. Utilisez-les comme soins quotidiens ou en massages pour profiter de leurs bienfaits naturels.

    Gamme soin du visage
    Prenez soin de votre visage avec notre gamme dédiée aux soins du visage. Nos nettoyants doux, toniques rafraîchissants, sérums concentrés et crèmes hydratantes sont formulés pour tous les types de peau. Enrichis d’extraits de plantes, d’huiles essentielles et de vitamines, nos produits favorisent une peau éclatante, lisse et visiblement rajeunie.

    Chez HerbActif, nous croyons en la puissance de la nature pour révéler votre beauté intérieure et extérieure. Explorez nos collections et laissez-vous séduire par nos produits naturels et bienfaisants. Faites de chaque jour un moment de bien-être et de beauté naturelle.

    Rendez nous Visit Sur :
    https://www.herbactif.com/

  50. Thank you for your site post. Velupe and I happen to be saving for just a new book on this subject and your article has made us all to save money. Your opinions really responded all our issues. In fact, above what we had thought of ahead of the time we came across your great blog. I no longer nurture doubts including a troubled mind because you totally attended to each of our needs here. Thanks transfer porto seguro corumbau

Leave a Reply

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