China Department Stores Essay Example

China Department Stores Essay China Distribution Trading Issue 61 July 2009 Department stores in China, 2009 IN THIS ISSUE : I. Overview II. Operation modes of department stores in China III. Developments of market players IV. Challenges V. Recent developments VI. Conclusion 10 11 19 †¢ 6 †¢ 2 4 Overview †¢ †¢ Department stores in China have enjoyed many years of boom, achieving a compound annual growth rate of 30% between 2003 and 2008. Sales momentum 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 etc. 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 tend to have wider national footprints and they mainly target the country’s high-income class. Domestic department stores operators mainly focus on regional markets. Challenges †¢ Department stores operators in China are often said to be acting like landlords – renting floor space to concessionaires or tenants and paying little attention to differentiation and brand management. Undifferentiated players have resorted to price competition to boost sales, hurting companies’ same-store-sales growth and eroding their margins. Other formats such as specialty 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. We will write a custom essay sample on China Department Stores specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on China Department Stores specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on China Department Stores specifically for you FOR ONLY $16.38 $13.9/page Hire Writer There is growing attention to transform merchandising practices. Export-oriented manufacturers pay growing attention to domestic market brings new potential for department store operators to expand merchandise mix. Department stores operators are grasping attention in the capital market. Many department stores operators have embarked on real estate strategies. Some department stores have explored the â€Å"click-and-mortar† model. Government encourages department stores players to enhance service levels and improve operation environment through awarding players with quality services. Li Fung Research Centre 13/F, LiFung Centre 2 On Ping Street Shatin, Hong Kong Tel: (852) 2635 5563 Fax: (852) 2635 1598 E-mail: [emailprotected] com http://www. lifunggroup. com/ †¢ †¢ †¢ †¢ Li Fung Research Centre Member of the Li Fung Group China Distribution Trading Issue 61 July 2009 Department stores in China, 2009 Department stores have long been one of the major ret ailing channels in China; they are the chief distribution channel for discretionary consumption items such as branded apparel, cosmetics, jewelry and watches, etc. In the eyes of many Chinese consumers, shopping in department stores represent quality lifestyle and status. For years, many consumer brands have viewed department stores as their top-of-choice in building their recognition in China. As Chinese consumers become growingly affluent, department stores in China has enjoyed years of rapid development in recent years. However, growth momentum of China’s department stores sales has slowed towards the end of 2008; dampened consumer spirits amid global financial crisis, increasingly fierce competition and immature management mindsets all pose challenges to China’s department stores operators. These have prompted department stores operators in China to evolve to stay competitive. Over the past few months in 2009, as China’s economy begins to demonstrate stabilized growth, sales momentum of department stores has picked up again. We believe, long-term prospect for department store sector in China is rosy, as consumption plays a bigger role in the Chinese economy. I. Overview Department stores1 have been one of the most important retail channels in China with an established history longer than other retailing channels such as supermarkets, hypermarkets, convenience stores and shopping malls. They are an important sales channel for discretionary consumption items such as branded apparel, jewelry, cosmetics and watches, etc, many of them targeting the country’s higher-income groups. Thanks to the increasing affluence and urbanization, department stores in China have enjoyed many years of boom. According to the National Bureau of Statistics of China (NBS), the total sales value of department stores was 180. 1 billion yuan in 2007; the 2008 full-year sales value is yet released but the China Chain Store and Franchise Association (CCFA) and Deloitte estimate the value to reach 219. billion yuan, representing a compound annual growth rate of 30% between 2003 and 2008 (see Exhibit 1). Exhibit 1: Total sales value of department stores, 2003 2008 * Estimated value by Deloitte Source: National Bureau of Statistics of China, China Chain Store and Franchise Association and Deloitte 1 Department stores are stores with sales area between 6,000 and 20,000 m2, usually multi-stor ey, selling wide range of merchandises with emphasis on clothing and accessories, footwear, cosmetics, household items and home appliances etc. Special counters and open shelves are the chief sales formats. Li Fung Research Centre Member of the Li Fung Group 2 China Distribution Trading Issue 61 July 2009 However, department store sector has witnessed some challenges over the past year. Amid the global financial crisis, retail sales growth in China has decelerated towards the end of 2008 and sales of discretionary items are more negatively impacted. According to the CCFA, discretionary and luxury retailers were under greater pressure than previous years. Sales momentum for department stores has deteriorated as consumers cut back on discretionary and luxury spending. Exhibit 2 demonstrates the key statistics of different format retailers. As shall be seen, daily transactions for department stores have registered negative growth of 5. 2% in 2008; the decline is the second biggest among other formats. Average ticket consumption also recorded slow growth of only 1. 5% in 2008. In 1Q09, according to CCFA and Deloitte, both sales revenue and profit for department stores was down by about 5% yoy. Exhibit 2: Key statistics of different format retailers, 2008 Sales revenue (million Retail format Hypermarkets Supermarkets Department stores Convenience stores Home electronics retailers Pharmacies 501. 64 37. 06 2. 0 7. 1 729 1,724 -7. 8 -3. 8 1,901. 0 48. 2 2. 3 1. 3 10. 8 23. 1. 0 -0. 7 yuan) 212. 90 72. 42 883. 97 4. 73 yoy growth (%) 12. 4 11. 3 11. 1 12. 3 Number of Daily transactions 10,059 4,554 10,839 758 yoy growth (%) 1. 0 6. 5 -5. 2 -2. 7 Average ticket consumption (yuan) 58. 1 43. 6 226. 4 16. 2 yoy growth (%) 11. 6 4. 5 1. 5 11. 1 Gross margin (%) 12. 9 12. 9 14. 1 16. 4 yoy growth (%) 0. 3 0. 9 0. 3 0. 0 Source: Ch ina Chain Store and Franchise Association and Deloitte The China Commerce Association for General Merchandise (CCAGM) conducted a research study on 60 major department stores operators in China; in 2008, average sales revenue of major department stores operators in China was up by 15. % yoy to 183. 74 billion yuan; the growth was lower than that of 2007 (17. 8%). 86. 7% of the department stores recorded sales growth in 2008. The CCAGM also surveyed 205 of its member enterprises earlier and Exhibit 3 demonstrates some sales statistics of its member enterprises in the department store sector. Exhibit 3: Performance of the 205 membership enterprises of CCAGM, 2002-2007 2007 Sales income growth (% yoy) Sales margin (%) Sales margin growth (% yoy) 17. 8 8. 5 21. 7 2006 13. 7 8. 4 19. 5 2005 18. 0 7. 4 10. 1 2004 12. 7 8. 9. 9 2003 42. 9 7. 7 26. 0 2002 10. 8 8. 2 4. 1 Source: China Commerce Association for General Merchandise (CCAGM) Li Fung Research Centre Member of the Li Fung Group 3 China Distribution Trading Issue 61 July 2009 Despite poorer sales performance at the end of last year, growth momentum of department stores in China is showing some recent signs of picking up. With huge government initiatives to boost domestic consumption, the total retail sales of consumer goods grew by 15. 0% in the first half of 2009, according to the NBS. Consumer confidence in China is picking up as well. Department stores in China have undoubtedly benefited from China’s resilient retail sales growth; experts believe that growth in second half of 2009 will be even stronger. II. Operation modes of department stores in China Compared with many department stores operators in developed economies, which pay huge attention to differentiation and brand-building, department stores operators in China are often said to be acting like landlords – renting their floor space to concessionaires or tenants and paying little attention o differentiation. 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 etc; and commissions from concessionaire sales are the predominant source of income. For instance, more than 70% of the revenue of Hong Kong-listed department stores operators such as Intime Department S tore ( (see Exhibit 4). Exhibit 4: Revenue breakdown of department store operations from selected companies, 2008 New World Intime Commissions from concessionaire sales Sale of goods direct sale Rental income Management fee income from the operation of department stores Source: Financial reports from respective companies ) and Golden Eagle Department Store ( ), come from the commissions on concessionaire sales Golden Eagle 71. 64% 26. 79% 1. 51% 0. 07% Department Store 68. 30% 15. 07% 5. 51% 11. 11% Parkson 56. 78% 37. 93% 4. 33% 0. 95% 70. 02% 23. 41% 4. 93% 1. 64% Concessionaire sales Under concessionaire arrangements, concessionaires are permitted to establish sales counters in designated areas with their own sales personnel and sell their branded merchandise. Department stores charge concessionaires a turnover commission, usually at a percentage of their total sales proceeds (see Exhibit 5). Usually there is a minimum commission based on the minimum turnover target, regardless of whether such target is achieved. Sales amount received from the concessionaire sales is first collected by the department store and later paid to the concessionaires after deducting relevant expenses, fees and commissions. Average payment settlement period ( ) for department stores is 45-60 days, while some can last for 90 days, according to Hong Kong Trade Development Council (HKTDC). For some smaller brands, payment settlement with department stores operators can pose cash flow pressure. Li Fung Research Centre Member of the Li Fung Group 4 China Distribution Trading Issue 61 July 2009 Exhibit 5: Average commission rate for different categories in department stores Product Category Clothes, shoes and leather goods Jewelry Gold Cosmetics Source: Hong Kong Trade Development Council Commission rate (Department Store: Concessionaire) 30:70 15:85 8:92 25:75 Generally, concessionaires are responsible for employing their own staff, but department stores operators often devise sets of detailed guidelines and rules of conduct in relation to the employment, assessment and training of the staff. Structured induction and training programs are offered to new recruits and staff in new stores in order to ensure service quality of department stores. Concessionaire arrangement allows department stores operators to lower inventory risk, as in the case of merchandise direct sales and the development of own store brands would involve. Merchandise direct sales Under direct sales arrangements, department stores purchase merchandise from suppliers and resell them in stores (e. g. merchandise at supermarket and home appliance sections). Those items are usually standardized with higher brand recognition, which are easier for operators to manage. Rental income from store tenants Some department stores also lease designated areas to operators of businesses that are complementary to the shopping experience at department stores, including restaurants, pharmacies and beauty salons etc. in order to offer onsumers an â€Å"one-stop shopping† experience. Fierce competition for floor space in department stores in China According to HKTDC, department stores operators usually require concessionaires to pay an average annual guarantee fee of 30,000 yuan to 80,000 yuan as the minimum entrance fee. There are many other miscellaneous fees to gain a place in department stores, which include advertising fee, promotion fee and ma nagement fee, etc. Concessionaires may also be requested to pay for renovation or move to other locations according to policies of department stores. Typically, brands with good market reputation and proven sales track record would have higher chance to secure a place in department stores. For brands that are new to China or lesser known in the market, entry is more difficult. One chief reason behind the so-called landlord phenomena is fierce competition for sales space in China; as brands rush to build their prominence, many department stores operators in China have little incentives to differentiate from competitors. The concessionaire agreements and supply agreements are typically reviewed every year. Department stores have right to terminate a concessionaire arrangement if the concessionaire does not perform well (e. g. , fail to meet its pre-agreed sales target for three consecutive months); thus department stores operators have lower risks in securing their income. Indeed, some consider differentiation, say nurturing their own store brands, costly and would not wish to take the risks such as bearing inventories. Li Fung Research Centre Member of the Li Fung Group 5 China Distribution Trading Issue 61 July 2009 III. Developments of market players The CCFA has released the ranking of â€Å"the top 100 retail chain operators in 2008† (the Top 100s) earlier this year. Among the Top 100s, there are 23 enterprises chiefly operating the department store format. With a 10% increase in number of stores, their sales value was up by 21% yoy in 2008. Selected enterprises are listed in Exhibit 6. Exhibit 6: Selected department stores operators among the Top 100s in China, 2008 Ranking among the Top 100s 3 5 11 Enterprise Bailian Group Co. , Ltd. Dalian Dashang Group Co. , Ltd. Chongqing Commerce (Group) Ltd. f which: ChongQing Department Store Co. , Ltd. : 14 15 20 Hefei Department Store Group Co. , Ltd. Shandong Commercial Group Corporation ( Limited 21 23 27 28 Wuhan Zhongbai Group Co. , Ltd. Liqun Group Shareholding Co. , Ltd. Changchun Eurasia Group Co. , Ltd. Beijing Wangfujing Department Store (Group) Co. , Ltd. 30 Parkson Retail Group Ltd. 10,691 18. 7 40 -2. 4 14,240 13,869 12,130 12,000** 25. 1 13. 3 21. 3 13. 2 630 866 1 8 17 10. 5 3. 1 63. 6 6. 3 ) 14,800** 5. 7 33 6. 5 New World Department Store China 19,400 18,716 23. 8 34. 8 125 164 26. 3 69. Chinese Mainland Chinese Mainland Hong Kong Chinese Mainland Chinese Mainland Chinese Mainland Chinese Mainland Malaysia Sales value* (million yuan) 94,329 62,555 26,255 8,236 yoy growth (%) 8. 3 24. 6 18. 4 18. 3 Number of stores* 6,418 150 294 115 yoy growth (%) -0. 6 3. 4 11. 8 16. 2 Place of origin Chinese Mainland Chinese Mainland Chinese Mainland Chinese Mainland * Value includes other formats of the department store operators ** Estimated value Source: China Chain Store and Franchise Association (CCFA) Li Fung Research Centre Member of the Li Fung Group 6 China Distribution Trading Issue 61 July 2009 The competitive landscape for department stores in China is highly fragmented with no significant market leader. For example, the Dalian Dashang Group ( ), a very strong department store player in northern China with 52 department stores in China in 2008, accounted for less than 1% of the total number of department stores in China, according to Euromonitor. In China, many department stores do not operate as chains but as single-store independents. Chain operation for department stores is not as popular as other retail formats such as supermarkets and hypermarkets. Indeed, many layers are active in restricted localities only. Foreign players tend to have wider national footprints; targeting the country’s high income class China approved the setting up of the first department store by foreign enterprises in 1992. Shanghai No. 1 Yaohan ( ) from Japan was the first foreign player setting foot in China. Over the past decade, foreign players have been expanding ag gressively in China. With better management expertise, most foreign department stores target China’s higher-income consumers. Today, a number of them have already developed an extensive national network. Different from most domestic counterparts, foreign players tend to have wider national footprints. Exhibit 7 demonstrates the store network of selected foreign players. Today, a number of foreign department stores operators have built their market recognition in China and are battling locals for market share. Hong Kong-based New World Department Store is an example. Having a national coverage of 17 cities, the operator has pursued the expansion strategies of â€Å"multiple presences in a single city† and â€Å"radiation cities† in order to dig deeper into the market. Today the department store operator has built their recognition successfully in cities such as Shenyang and Wuhan. The rationale behind such strategy is to build a critical mass in these cities so that it could expand its influence more easily. This also paves the way for the operator’s further expansion into nearby cities or provinces. Exhibit 7: Store locations of selected foreign department stores operators in China, as of July 2009 Department stores operators Parkson Retail Group Ltd. Place of origin Malaysia Store locations Anshan, Beijing, Chengdu, Chongqing, Dalian, Guiyang, Harbin, Hefei, Kuming, Mianyang, Nanchang, Nanning, Qingdao, Shanghai, Shantou, Shenyang, Taiyuan, Tianjin, Urmuqi, Wuxi, Xi’an, Yangzhou, Yantai, Yueyang, Zhengzhou, Zunyi New World Department Store China Ltd. Hong Kong Anshan, Beijing, Changsha, Chengdu, Chongqing, Dalian, Harbin, Kunming, Lanzhou, Nanjing, Ningbo, Shanghai, Shenyang, Taizhou, Tianjin, Wuhan, Wuxi Aeon Group Far Eastern Group Isetan Co. Ltd Japan Taiwan Japan Beijing, Dongguan, Foshan, Guangzhou, Huizhou, Qingdao, Shenzhen, Yantai, Zhongshan, Zhuhai Beijing, Chengdu, Chongqing, Dalian, Shanghai, Tianjin Chengdu, Shanghai, Shenyang, Tianjin Li Fung Research Centre Member of the Li Fung Group 7 China Distribution Trading Issue 61 July 2009 Department stores operators Ito Yokado Lippo Group The Store Corp. Shin Kong Mitsukoshi Lotte Group Lifestyle International Holdings Ltd. Source: Company websites Place of origi n Japan Indonesia Malaysia Taiwan Korea Hong Kong Store locations Beijing, Chengdu Tianjin, Chengdu Jiaxing Beijing Beijing Shanghai The global financial turmoil has brought unprecedented challenges to consumer markets in many developed economies; while some foreign operators are becoming more conservative in their respective capital expenditure (for instance, Barneys New York Inc has shelved plans for expansion in Beijing), some others with stronger capital strength are accelerating expansion in emerging markets such as China to counter the depression in their home markets. For instance, the UK-based Marks Spencer has made its debut in China by opening a flagship store in Shanghai in October 2008. The Store Corp. ), one of the largest department stores operators in Malaysia, also announced their ) planned to invest US$42. 3 million to expansion plan in China. Japanese department store giant Takashimaya ( launch its first store in Shanghai in 2012. Domestic department stores operators mainly focus on regional markets With stronger local knowledge and connections as well as longer history, domestic operators tend to have stronger footholds in their respective cities of origin (see Exhibit 8). For instance, Dalian Dashang ( Eurasia ( ) and Changchun ) are very successful regional big names in northeast China. Besides, the fact that many domestic layers have already occupied prime locations gives them natural advantage. Nonetheless, when compared to their foreign counterparts, domestic enterprises tend to be more reluctant to expand to other regions, partly due to concerns over regional differences in consumer culture. Li Fung Research Centre Member of the Li Fung Group 8 China Distribution Trading Issue 61 July 2009 Exhibit 8: Department store locations of selected domestic department stores operators in China, as of July 2009 Company Intime Department Store (Group), Co. , Ltd. Golden Eagle Retail Group Ltd. Beijing Wangfujing Department Store (Group) Co. Ltd. Store locations Beijing, Ezhou, Hangzhou, Jinhua, Ningbo, Wenzhou, Wuhan, Xi’an, Xiangfan, Xianning, Zhoushan Huaian, Kunmin g, Nanjing, Nantong, Suzhou, Taizhou, Yancheng, Yangzhou, Xi’an, Xuzhou Baotou, Beijing, Changsha, Chengdu, Chongqing, Guangzhou, Hohhot, Kunming, Luoyang, Nanning, Taiyuan, Urumqi, Wuhan, Xining, Xuzhou Dalian Dashang Group Co. , Ltd. Dalian and 4 other cities in Liaoning, Daqing and 3 other cities in Heilongjiang, Yanji in Jilin, Kaifeng and 3 others cities in Henan, Chengdu and Zigong in Sichuan, Qingdao Maoye International Holdings Ltd. Beijing Xidan Department Store Co. , Ltd. Fujian Dongbai Group Co. , Ltd. Changchun Eurasia Group Co. , Ltd. Hangzhou Jiebai Group Co. , Ltd. Chengshang Group Co. , Ltd. Shandong Yinzuo Co. , Ltd. Hefei Department Store Group Co. , Ltd. Zhongnan Commercial (Group) Co. , Ltd. Wuhan Zhongbai Group Co. , Ltd. Guangzhou Friendship Group Co. , Ltd. Guangzhou Grandbuy Co. , Ltd. Source: Company websites Chongqing, Shenzhen, Wuxi, Zhuhai Beijing, Chengdu, Lanzhou, Xining, Urmuqi Fuzhou Changchun Hangzhou Chengdu, Mianyang Dongying, Jinan, Zibo Bengbu, Bozhou, Hefei, Huainan, Huangshan, Lu’an, Tong Ling Wuhan Wuhan Guangzhou, Nanning Guangzhou, Zhaoqing, Zhanjiang, Hengyang Li Fung Research Centre Member of the Li Fung Group 9 China Distribution Trading Issue 61 July 2009 A number of domestic players have received huge local government support with their state-owned background. For instance, Nanning Department Store Co. , Ltd. ( ) and Guangzhou Grandbuy are both state-owned. There have been sayings that state-owned department stores are often run less efficiently; these years, though, some have strived hard to improve their operations. For instance, Guangzhou Grandbuy has adopted the Stockholder Rights Plan in 2008, hoping to increase management’s incentives. Indeed, some industry experts believe that a number of state-owned department stores would find themselves hard to survive if they do not upgrade themselves. IV. Challenges As mentioned, department stores in China have witnessed some challenges over the past year. Besides macroeconomic slowdown, there are some other factors hindering the growth of department stores in China. First of which is that many department store players in China have immature operation and management mindsets. Due to the huge market demand of department store floor space in China, many operators have been quite passive in their operation strategy and do not feel the need to differentiate from the rest. Unlike in some developed markets, where many department stores operators have paid huge attention to brand management, such as through unique product assortment and developing private labels to enhance shopping experiences, department stores in China are often said to be acting like â€Å"landlords†. Commission and rental income are the major revenue sources for many. Few department stores have focused on differentiation and brand building. Besides, heavy initial capital outlays, lack of experience in sourcing, long nurturing period for own store brands are also common concerns. In recent years, many department stores in China have frequently reviewed and reshuffled their merchandise portfolio to improve their income. However, the problem of having highly similar brand and tenant mix is still very common. The fact that the market is crowded with a large number of undifferentiated players has made many resorted to price competition to boost sales, especially during more difficult times. Last year, many players have held aggressive promotional activities (e. g. buy-200-get-100 campaigns, anniversary sales events, issuing coupons) to attract footfalls. Discount-driven promotions are hurting companies’ same-store-sales growth and eroding their margins. On the other hand, competition from other format retailers is not to be ignored. According to the NBS, the share of department stores has dropped from 14% in 2003 to 10. 14% in 2007. Specialty stores, in particular, are posing great challenges to department stores as they offer brand owners more flexibility in operations – e. . , brand owners can have more say in product ranges and offerings, store layout designs, thus can better deliver their brand message across. Indeed, Chinese consumers also growingly favor specialty stores as they usually deliver more unique shopping experiences and offer better service levels. Last but not least, many department stores operators have embarked on rapid expansion over t he past years; retail cannibalization has hurt many retailers’ profit margins. Competition is the fiercest in the eastern coastal regions. As a result, many have slowed down their store expansion and put more focus on enhancing same store sales performance, say revamping old stores. Li Fung Research Centre Member of the Li Fung Group 10 China Distribution Trading Issue 61 July 2009 V. Recent developments 1. Lower-tier cities as the expansion focus In view of fierce competition in first-tier cities, many department stores are eyeing the opportunities in China’s lower-tier cities. Indeed, according to AT Kearney, middle class population in China’s second- and third-tier cities will account for 75% of the country’s total in 2017. Although consumers in lower-tier cities are currently much less affluent than those in first-tier cities, their consumption power is growing fast. In view of this, many department stores operators are viewing lower-tier cities as their major expansion focus. For example, Dashang Group has opened new department stores in Kaifeng, Xinyang and Xinxiang in 2008, all of which are lower-tier cities in Henan province; Guangzhou Grandbuy also planned to expand into lower-tier cities including Jieyang and Huizhou in Guangdong province and Chengdu in Sichuan province during 2009. Nonetheless, China is known to be a heterogeneous marketplace and adaptation to local tastes is the key for success. There are already many regional players with strongholds in local markets and have already occupied stores in better locations, making new entries challenging. For instance, Intime Department Store, a successful player in Hangzhou, faced fierce competition with local players when expanding into both Beijing and Wuhan. Beijing Wangfujing Department Store ( ) also quitted Nanning in 2008 after three years of operation. . Department stores operators focus on upgrading and differentiation The department store sector in China is crowded with many undifferentiated players. Today, a growing number of department stores operators are beginning to reinvent themselves in order to differentiate from rivals. Some department stores now adjust merchandise mix more frequently at each local store by monitoring consumer preferences, consumption patterns, spending power and level of comp etition. Some others also seek to â€Å"rebrand† to target specific segments. For example, New World Department Store has embarked on a new dual-concept stores initiative to â€Å"rebrand† its stores to â€Å"Fashion Gallery† or â€Å"Living Gallery† stores. â€Å"Fashion Gallery† focuses on the concept of â€Å"mix-and-match† with the introduction of exclusive private label brands and trendy products; while â€Å"Living Gallery† will introduce more leisure elements with 30% of gross floor area dedicated to dining and leisure services. On the other hand, some operators have upgraded their shop floors to attract more established brands. This is particularly true for the lower floors of the department stores; many operators hope to ride the consumer upgrade trend in China and attract more luxury brands to take up their space has been rising. Many department stores operators have also strived hard to improve customer loyalty, say, expanding VIP customer base. Some have collaborated with banks to issue co-branded credit cards. Credit card co-launched by New World Department Stores and Bank of Communications Co. , Ltd is a case in point. Holders of VIP membership cards and cobranded credit cards can enjoy discounts with their purchases. VIP customers can also accumulate gift points and exchange for selected merchandise in stores. Li Fung Research Centre Member of the Li Fung Group 11 China Distribution Trading Issue 61 July 2009 3. Growing attention to transform merchandising practices As Chinese consumers become more sophisticated, more and more are looking for unique shopping experience. There is growing attention for department stores operators to improve merchandise mix and assortment such as through launching private label brands or increase direct merchandising. For example, Intime Department Store has collaborated with Shenzhen Espresso ( ) to exclusively launch its Justin Time female fashion brand in 2007. The entry of Marks Spencer in 2008 also introduces Chinese consumers the concept of buying private label products. Some department stores operators in China, such as Vans Department Store ( ), are learning from their foreign counterparts and have started training their own merchandisers to bring consumers more exciting merchandise portfolio. However, the nurture period, capital outlays, and inventory risks are still some major concerns. It is believed that more and more department stores operators will experiment with new merchandising practices, but the transformation will be gradual. 4. Export-oriented manufacturers pay growing attention to domestic market brings new potential for department stores operators to expand merchandise mix As China’s exports shrink amid global economic woes, the domestic market is winning the attention of many exportoriented manufacturers. For the first time ever, China’s largest trade exhibition Canton Fair, which traditionally targets only overseas buyers, held a session targeting domestic retailers in end-April this year. Department stores operators in China such as Beijing Wangfujing Department Store and Dalian Dashang Group attended the fair. The made-to-export products, which are usually with higher quality as they need to comply with western quality standards, are reportedly to be very wellreceived. Many believe

Daisy- Okeefe essays

Daisy- O'keefe essays The art object I chose was Yellow Hickory Leaves with Daisy, by Georgia OKeeffe. I saw this piece at the Art Institute of Chicago. I was drawn to this piece of art because of the delicate nature. My initial feeling is one of femininity. OKeeffes lines have very feminine curves, the layers, folds and depths make me feel like she could have painted a nude woman and portrayed the same message. Notice the small but very vivid daisy in the lowest central point. I chose this piece because I saw it as the essence of femininity. The softness of the yellow leaves and the brightness of the white daisy made me feel peaceful. The small green lines around the edge of the ovules of the flower bring to light the veins in the leaves which give the piece continuation. When I compare my thoughts on this piece, the relationship between the flower and the leaves relate directly to the anatomy of a woman. The anatomy of a flower is much like that of a woman. It carries pollen and produces seeds. The female part of a flower is called a pistil. The pistil is made up of three parts which are the stigma, style, and ovary. The stigma traps and holds the pollen. The style is a tube like structure that holds up the stigma and leads down to the ovary that contains the ovules that become the seeds. This is suggestive of the reproductive system of a human female. This piece portrays the complexity and the tenderness of a woman. The many layers and depths of the leaves are reminiscent of a womans strength. Yet the softness of her lines and curves in the flower and leaves describe the gentle and affectionate side of a woman. OKeeffes philosophy about flowers was to paint what she saw. Ill paint what I see what the flower is to me but Ill paint it big... I will make even busy New Yorkers take time to see what I see of flowers (Thomson, 21). She spent her very early ye...

Recommendation and Implementation plan Essay Example | Topics and Well Written Essays - 500 words - 1

Recommendation and Implementation plan - Essay Example tablished by Market Research that the Customer buying is influenced by Quality of the Diamond, Retailers Goodwill in the market, knowledge and honesty of the Salesperson and recommendation of family and friends, in that order. Perception of Brands is curiously absent from the customer’s perspective and a strategy needs to be devised as a unique selling point (USP) of Canadian ArcticTM. Diamonds are expensive products and it is recommended that Market Segmentation is done for the US market where the company wishes to market it product. It has been observed that there are four kinds of potential buyers in the market viz., Baby Boomers (37-55 years/78 million), Generation X (25-36 years/45 million), Generation Y (18-24/71 million) Gifters, Self Gifters, and Retailers. Of these the Baby Boomers are wealthy and lovers of luxuries but demand value for money. As opposed to this the Gen X and Y spend less on luxuries but are impulsive spenders. The Gifters are casual buyers and the Retailers buy for mostly promoting their own private brands. Next emphasis should be placed on the areas where marketing efforts should be concentrated. It has been observed that maximum sales take place in California and New York with Texas a distant third. The number of outlets also follows the same pattern. It is therefore desirable to concentrate more on these areas as they will provide the maximum turnover. In these territories, particularly in the high exposure retail showrooms, the company should participate in Trade shows and offer retailer and salesperson promotion kits. They should also get celebrity sponsors to endorse the product for value effect. Similarly advertisements should be carried in glossy and glamour magazines which have high percentage of circulation among the wealthier population. Strategic Marketing Plans will not be of much use unless there is a solid implementation process in place. It is imperative that the amount of $ 300,000 is well spent. It has been seen