Another traditional department store that has been in business for 16 years has closed.
New World Department Store Chengdu recently announced that due to the adjustment of the company's business strategy, it will officially cease operations after the store closes on March 20, 2022.
This is not the first time New World Department Store has closed its stores.
The Beijing News reporter learned that in recent years, the group's physical stores have closed stores in many cities, involving Shanghai, Wuhan, Shenyang, etc.
According to the data, New World Department Store Group lost HK$484 million and HK$229 million in net profit in fiscal year 2020 and fiscal year 2021, respectively.
Facing continuous losses, closing stores or helpless actions.
Regarding the closure of the New World Department Store Chengdu store, whether it is facing losses, and future plans, on February 22, a reporter from the Beijing News called the store, but as of press time, the call was not connected.
In recent years, the traditional department stores collectively faced the dilemma of survival. Many old department stores closed one after another, and transformation and upgrading became the way out.
It is worth noting that in 2018, New World Department Store Chengdu also underwent major adjustments and renovations.
Regarding the continuous closure of traditional department stores, experts believe that "the feeling is difficult to match the old business format" is one of the factors for the decline of many old department stores, and it is recommended that traditional department stores undergo fundamental transformation.
New World Department Store has closed many stores in the past 10 years
On February 17, the WeChat official account of New World Department Store Chengdu Store announced that due to the adjustment of the company's business strategy, after careful research and decision by the management, New World Department Store Chengdu Store will officially cease operations after closing on March 20, 2022.
New World Department Store Chengdu Store opened in 2006. It is one of the first Hong Kong-owned department store companies to enter Chengdu. It has been in operation for 16 years.
It is understood that the New World Department Store Chengdu Store is located in the Yanshikou business district, the core business district of Chengdu, with a total floor area of about 30,000 square meters.
The Yanshikou business district used to be a well-known local business district in Chengdu. With the continuous updating and upgrading of the Chunxi Road-Daci Temple business district, the popularity of the Yanshikou business district has gradually declined.
The most direct manifestation is that the old department stores that have been operating for many years have closed their stores one after another.
Among them, in February 2016, the Tianfu store of Moore Department Store, which had been operating in this business district for 14 years, closed; in October 2016, the Beijing Hualian Yanshikou store, which had been operating for 15 years, closed.
A reporter from the Beijing News saw from the public comments that many netizens started the "memories killing" of the major department stores in the business district one after another. .
In fact, this is not the first time that New World Department Store has closed its stores.
The Beijing News reporter learned that in 2013, the Taizhou store of New World Department Store closed; in 2014, the Qiaokou store of Wuhan New World Department Store closed; in 2017, the Dalian store of New World Department Store closed; in 2018, Yancheng New World Department Store, Wuhan New World Department Store Hanyang Store and Shenyang New World Department Store Zhonghua Road Store closed.
In 2019, New World Department Store closed its stores in Wuhan, Shanghai, Anshan and other cities one after another.
According to the 2021 financial report of New World Department Store, as of June 30, 2021, New World Department Store operates 21 "New World" brand department stores in mainland China and 8 department stores and shopping centers named after "Paris Spring" in Shanghai. A total of 29 physical stores.
After the closing of the Chengdu store of New World Department Store, the number of its stores dropped to 28.
According to public reports, there were more than 43 stores in its heyday, a reduction of 35%.
Losses for two consecutive fiscal years
Behind the successive store closures is the decline in the performance of New World Department Store.
According to the financial report, the profit of New World Department Store in fiscal year 2014 was 521 million Hong Kong dollars, a year-on-year decrease of 18.85%, and the profit of the following year decreased by 86.6%.
In the past two years, the performance of New World Department Store has fallen into a state of loss. Its net profit in fiscal year 2020 and fiscal year 2021 lost 484 million Hong Kong dollars and 229 million Hong Kong dollars respectively.
Regarding the changes in fiscal year 2021 performance, NWDS said that due to the normalization of epidemic prevention and control and the intermittent rebound of the epidemic, the recovery of offline consumption was relatively slow.
At the same time, its liquidity is also at risk.
The financial report data shows that as of June 30, 2021, the group's current liabilities exceeded its current assets by approximately HK$2.368 billion, compared with 2.348 billion yuan in 2020.
In order to make up for its performance and obtain cash flow, the New World Department continues to sell assets.
According to the financial report of New World Department Store, the loss in fiscal year 2021 narrowed, partly due to the closure of stores and the sale of property, plant and equipment.
In order to maintain its long-term competitiveness and advantages in the market, NWDS is also seeking vitality, including continuous expansion and optimization of its self-operated e-commerce platform "New Flash Shopping", and intelligent and digital transformation of supermarket and convenience store businesses.
New World Department Store has also expanded its own business in recent years, including LOL original life concept stores and N+ series of its own brands.
In addition, NWDS also implements store classification management and adopts a business strategy of one store, one policy.
In addition, the New World Department Store Chengdu store has also been adjusted and renovated before.
According to public reports, in August 2018, the store completed the first large-scale adjustment and renovation after its opening, 60% of the space was optimized for layout, and 50% of the brands were replaced.
The closure is less than 4 years after the adjustment.
Old-fashioned department stores are in urgent need of a complete transformation
In recent years, traditional department stores have entered a period of adjustment, and upgrades and renovations, "trend of store closures" have become popular words.
There are also many old department store brands closed, such as Guangzhou Wangfujing Department Store and Beijing Hualian Commercial Building.
Among them, on September 30, 2021, the last Hualian Commercial Building in Beijing announced the closure of the store for renovation, and CapitaMall Wangjing will take back the operation rights of the 1st to 3rd floors of Hualian Commercial Building.
In October 2021, the 20-year-old Xinhualian Commercial Building located in Ningbo Tianyi Business District will be closed.
On November 30, 2021, due to the expiration of the shopping mall property lease contract, Guangzhou Wangfujing Department Store, which has a history of 25 years and carries the memory of a generation, will be closed.
Some people in the industry believe that traditional department stores have closed stores one after another, and the deeper reason is the trend decline and decline of traditional department stores.
In addition, many old department stores have been renovated and upgraded, including Beijing Changan Shopping Center, Scitech Shopping Center, Dongan Market, etc.
Lai Yang, a researcher at the Beijing Institute of Finance and Trade and a member of the Expert Committee of the China Chamber of Commerce, once introduced in an interview with a reporter from the Beijing News that in fact, this type of department store business has grown from the prosperity of the past to the loss of consumer value now, which is an inevitable trend. , quite a lot of department stores need to make a fundamental change.
Lai Yang said, "When the transition is difficult, closing the store to stop the loss may be a last resort, and this choice is often gradually expanded from first-tier cities."
It is worth noting that the Chengdu Store of New World Department Store has previously undergone large-scale adjustments and renovations, but it has not changed the outcome of its closure.
Some people in the industry believe that traditional business should undergo a complete transformation in terms of environment, business format, branding, and marketing, get rid of the original thinking and model of department stores, and pay attention to satisfying the lifestyle and aesthetics of Generation Z consumers.
Beijing News reporter Zhang Jie