China Department Stores

LI & FUNG RESEARCH CENTRE chinaw ar Distribution & Trading Issue 61 July 2009 plane section stores in China, 2009 IN THIS ISSUE : I. Overview II. Operation modes of department stores in China III. Developments of grocery store players IV. Challenges V. juvenile developments VI. Conclusion 10 11 19 6 2 4 Overview Department stores in China have enjoyed many years of boom, achieving a compound yearbook growth rate of 30% between 2003 and 2008. Sales neural impulse for department stores has deteriorated towards the end of 2008 as consumer cut back on discretionary and luxury spending; but there are recent signs of picking-up growth. Operation modes of department stores in China Department stores operators in China generate revenue from 1) commissions on concessionaire sales, 2) merchandise direct sales, 3) rental income from store tenants, and 4) management fee and so forth Commissions from concessionaire sales are the predominant source of income. Developments of market players The competitive landscape for department stores in China is highly fragmented with no significant market leader. Foreign players persist to have wider national footprints and they mainly target the countrys high-income class. Domestic department stores operators mainly focus on regional markets.

Challenges Department stores operators in China are often state to be acting like landlords renting floor set to concessionaires or tenants and paying little attention to differentiation and tick off management. Undifferentiated players have resorted to price competition to boost sales, pain in the ass companies same-store-sales growth and eroding their margins. Other formats such as military strength stores and retail cannibalization are posing great challenges to department stores. Recent developments Lower-tier cities are the expansion focus. Department store operators focus on upgrading and differentiation. There is growing attention to transform merchandising practices.... If you urgency to get a full essay, order it on our website: Orderessay

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