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.

573,780 thoughts on “Department Store Industry”

  1. Ok9 là thương hiệu đứng đầu trong lĩnh vực cá cược trực tuyến, trở thành sự lựa chọn đáng tin cậy cho những fan hâm mộ thể thao.

  2. 69VN là sân chơi cá cược trực tuyến số 1 trên thị trường. Với đa dạng các hình thức khác nhau như: thể thao, casino, bắn cá, xổ số…

  3. Lode88 cung cấp các siêu phẩm như lô đề 3 miền, lotto, keno trả thưởng 1:99 chắc chắn sẽ giúp người chơi có được cơ hội đổi đời.

  4. 789Win tự hào là nền tảng cá cược trực tuyến hàng đầu với đa dạng trò chơi như thể thao, casino online, đá gà, nổ hũ, và bắn cá.

  5. OK9 mang đến những thông tin mới nhất, nhanh nhất về các trận đấu thể thao, lịch thi đấu cùng những hình ảnh thể thao ấn tượng nhất.

  7. Xoso66 là điểm đến hấp dẫn cho dân cược đam mê lô đề, xổ số, keno… cùng nhiều trò đổi thưởng trực tuyến khác.

  8. Gamebai luôn là sân chơi được đông đảo thành viên yêu thích và lựa chọn mỗi khi tham gia vào các nền tảng trực tuyến. Tỷ lệ thưởng hấp dẫn cùng hàng loạt tựa game đặc sắc nhất sẽ là điểm cuốn hút bạn không ngừng.

  10. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog, I will keep visiting this blog very often 무료스포츠중계

  12. Great job, I was doing a google search and your site came up for homes for sale in Altamonte Springs, FL but anyway, I have enjoyed reading it, keep it up! togel macau

  15. MoviesJoy is a free streaming website where people can watch movies and TV shows online. It offers a wide range of content, including the latest releases, without needing an account. However, since it’s a free site, it might display ads, and the content may not always be legally hosted.
    Read also:https://moviesjoymedia.com/

  17. It’s a good shame you don’t contain a give money button! I’d definitely give money for this fantastic webpage! That i suppose for the time being i’ll be satisfied bookmarking together with including an individual’s Feed that will my best Msn balance. That i appearance forward that will recent messages and definitely will share the web site utilizing my best Facebook or twitter team: ) bandar toto macau

  19. I know your expertise on this. I must say we should have an online discussion on this. Writing only comments will close the discussion straight away! And will restrict the benefits from this information. torzon market

  22. Our Best Models in Delhi combine intelligence and charisma effortlessly, ensuring every professional engagement is truly exceptional. Whether they’re engaging in insightful conversations or adding a touch of elegance to sophisticated settings, these models bring a level of refinement that enhances every interaction.

  25. You may find my love story very filmy but this is the truth of my love story. I had never seen him, nor had I ever dreamed of going abroad. I just wanted to move ahead, but my parents wanted to get me married. One day I got angry and said that if you people are so upset with me, then get me married. But there is no place else in India where I can never meet you people. As soon as I said yes, the very next day an aunt came to our house with my relation and that too from abroad. I too angrily said yes, without knowing anything about the boy and without seeing anything and I did not even consider it right to see the photo.

    connaught place escorts

    When mother and father took the matter further, they found out that the boy was a doctor in Holland. Next week a call came from the boys. I was very scared that the boy was a doctor, completely different from me. I was a doctor of journalism and his mind was not compatible and I said yes without looking at it. Hadn’t even thought that he was black-white or lame, but what now? Now that I had already put my head in the mortar, there was no need to be afraid of the pestles. I spoke on the phone first to the boy’s mother, then to the boy. When he said hello on the phone for the first time, it was as if he had me under his control. I didn’t even listen to what she said next, as soon as I heard her voice the fear in my mind vanished and I fell in love with her at that very moment. Then for six months we used to talk only on phone or email but neither of us had seen each other till now. When he came to India with his brother in May, the date of our engagement was fixed. Then, a day before the engagement, I saw him but due to shyness and hesitation, I could not say anything. It seemed as if he had understood my feelings then, so he first talked to my brother and then to me. Our love affair, which started with that one phone call, continues today even after ten years of our marriage. Today we have two lovely daughters and even today we understand each other without saying anything. Perhaps both of our birthdays are on the same day, not February, that is why till now we believe that perhaps God has made us to live together even after being born in two different countries on the same day. Yes, and what I told my mother about moving away from my father has come true, now I am able to meet my parents only occasionally… but I have got so much love from my husband and in-laws that my parents That the absence is not felt much.

  26. This is a great article thanks for sharing this informative information. I will visit your blog regularly for some latest post. I will visit your blog regularly for Some latest post. Prijs thuisbatterij

  27. She left without saying anything…
    I love a girl very much since 2003. I loved her very much in my heart. I thought maybe she didn’t want me. Thinking this, I did not confess to her. I just thought that it doesn’t matter that she doesn’t want me. Then I started feeling that if I have some feelings for her then I should tell her. The only thing that will happen is that she will refuse. If you don’t tell him, you will regret it for the rest of your life.

    And then one day I gathered courage and told him. There was no limit to my happiness when she said yes. I was very surprised that she also loved me. Our love story started from that very day. Everything went well for five years. I wanted to marry her and I didn’t see any problem.

    mahipalpur call girls service

    Suddenly one day I was told that her mother had fixed her marriage with a boy living in Dubai. He did not even protest against this, because that boy was very rich. And my love story ended. I still pray that wherever he is, he should be happy.

  28. wow, great, I was wondering how to cure acne naturally. and found your site by google, learned a lot, now i’m a bit clear. I’ve bookmark your site and also add rss. keep us updated. Thuisbatterij België

  32. As they continue to grow and adapt, one thing is clear: TechyComp is here to make your digital experience smoother, more efficient, and ultimately, more enjoyable.techycomp

  35. I really loved reading your blog. It was very well authored and easy to understand. Unlike other blogs I have read which are really not that good.Thanks alot! Chape

  36. Actually I read it yesterday but I had some thoughts about it and today I wanted to read it again because it is very well written. EPS

  40. This is a great article thanks for sharing this informative information. I will visit your blog regularly for some latest post. I will visit your blog regularly for Some latest post. Warmtepomp installeren

Comments are closed.