How to break the traditional department store industry
In recent years, due to the impact of the epidemic and the impact of new business formats, the living space of the once glorious department store has been squeezed.
But on the other hand, when the online traffic dividend has peaked and the offline consumption experience is returning, some department stores are restructuring their underlying business logic, strengthening their links with consumers and the outside world, and better adapting to new consumption demands. The way to upgrade.
revenue under pressure
The department store industry plays an important role in the improvement of consumption quality.
The "2021-2022 China Department Store Retail Industry Development Report" released by the China Department Store Business Association shows that there are currently about 8,000 department stores across the country.
The reporter sorted out the revenue of 6 department store companies in the past five years and showed that the revenue of most department store businesses will decline in 2020, and it will pick up in 2021.
Take Wangfujing and Chongqing Department Stores as examples. In 2019, the department store revenues of Wangfujing and Chongqing Department Stores reached 17.625 billion yuan and 12.737 billion yuan respectively, and in 2020 they will be 5.628 billion yuan and 2.209 billion yuan.
In 2021, the revenues of the two companies will both rise, achieving revenues of 7.109 billion yuan and 2.419 billion yuan respectively.
Looking at the industry, the data performance is also the same.
The "Report" shows that in 2021, the department store industry will rank first in the retail industry with a year-on-year growth rate of 10.9% in sales, showing a strong momentum of recovery.
"The average sales scale of the department store industry in 2022 will be 70% to 80% of that in 2021, but there is a large differentiation among enterprises. Some enterprises with better experience and higher positioning, as well as enterprises with department store-based multi-format development, sales will be flat or even slightly Better than 2021." Talking about the operation of the department store industry in 2022, Yang Qingsong, secretary-general of the China Department Store Business Association, said.
Jiang Han, a senior researcher at Pangoal Institute, said: "The overall development of the department store industry in 2022 will be relatively stable. Some regions will be affected to some extent, but the overall stable situation has not changed."
Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Joint Business School, analyzed: "The reduction in offline activities has affected the performance of the offline department store retail industry. However, the online e-commerce retail industry has not been affected. Therefore, although the overall retail industry has declined slightly, the decline is not large, and the overall development trend remains stable."
seeking a breakthrough
Is the current revenue situation of department stores only caused by the epidemic?
Pan Helin said: "The short-term factor is the epidemic. The offline model that the department store retail industry relies on has not changed, and the epidemic has restricted people's travel frequency, and epidemic prevention and disinfecting have also increased the operating costs of the department store retail industry. However, the long-term factor is still business. Changes in the pattern. The offline department store retail industry is gradually being replaced by service-oriented business circles, and online e-commerce is eroding the already limited share of the department store retail industry.”
Yang Qingsong believes that there are three main reasons for the plight of department store companies: one is the impact of the epidemic, which directly affects passenger flow; the other is competition diversion, including online diversion, shopping malls and outlets, etc. The latter two divert the passenger flow of some department stores due to their larger size and better experience; the third is the change of consumers, who pay more attention to convenience, experience and pursuit of high cost performance. There must be a gap.
Based on the current situation, how should department stores transform and break through?
The person in charge of Intime Department Store said that under the new normal of consumption, the most important thing for retail enterprises is to make three links: one is the link with consumers, the second is the link with internal employees and shopping guides, and the third is the link with digitalization.
"The core of transformation is to focus on consumer needs, provide personalized and experiential services, and provide cost-effective products." Yang Qingsong suggested that department stores should strengthen digital construction, deploy online channels, and realize omni-channel marketing; at the same time, they should improve Commodity strength, including clearer and differentiated market positioning of stores, closer cooperation with brand owners, and the realization of online and offline price parity, etc.; in addition, customer experience should be enhanced, including the deployment of experience formats such as children's catering, and improvement of customer experience. Service level; Finally, the department store industry should focus on building corporate IP, especially the leading department store companies that deal in fashion and quality products, need to have a well-known IP to enhance the company's influence among consumers.
Pan Helin suggested that the department store industry can try to use the real-time delivery platform to transform offline business into an online and offline model, so as to make operations more flexible.
It is worth noting that while relying on online platforms to expand customer base in the future, the department store industry can shift its operational focus to building a stable supply chain to ensure product quality and improve product cost performance.
In addition, you can also consider combining more experience-oriented service industries to transform the business district.
Accelerate digitization
Among the many transformation paths of the department store industry, embracing the Internet and accelerating digital deployment have become a major trend.
Including Yintai Department Store, Chongqing Department Store, Wangfujing, etc., have already made plans in terms of digitization.
The person in charge of Intime Department Store told the reporter that in recent years, Intime Department Store has been reconstructing the underlying logic of business through digitalization, and has explored a new transformation path.
As early as 2019, Intime Department Store will 100% cloudify its core systems, including membership system, transaction system, marketing system, database, etc., and become a department store completely built on the cloud.
Since then, Intime Department Store, which runs on Alibaba Cloud, has further scaled up its new retail capabilities through cloud computing and digital technology.
Chongqing Department Store introduced in its 2022 semi-annual report that in terms of department store formats, the company continues to optimize and expand its operating channels such as cloud shopping mall, cloud shopping live broadcast, coupon platform, corporate WeChat, private domain communities, and public domain drainage, increasing stickiness. , Increase and repurchase.
In addition, Chongqing Department Store is also strengthening its multi-channel and multi-touch drainage strategies such as live streaming on online platforms, content operations, micro-enterprise distribution, and instant sales of popular products, and increasing the use of digital tools such as precision marketing and online cash registers to improve online sales. Passenger flow conversion, enhance the quality of online operations.
Wangfujing also stated in the 2022 semi-annual report that the self-operated business will strive to expand sales through the development of multi-channel sales, using various forms such as small programs, online shopping malls, live streaming, employee private domain customer group sales, etc., to digest the impact caused by the epidemic. Inventory goods, improve capital turnover.
The "Report" shows that 85.4% of department store retailers have carried out online business, with varying levels of application, but facing new business demands, they are all facing digital transformation in deep-water areas.
With the impact of the epidemic on the one hand and the impact of multiple retail formats on the other, traditional department stores are facing constant challenges, but they are also breaking through in the digital transformation.
Industry experts said that as a business format that provides fashion and quality consumption, department stores are an indispensable retail format regardless of the development stage and market conditions.
In particular, the people's willingness to pursue a high-quality life is now increasing, and the demand for fashionable, high-quality and personalized goods and services is huge.
Looking forward to the future, Yang Qingsong told reporters: "With the gradual optimization of epidemic prevention and control, consumers' demand for optional consumption will definitely increase significantly. It is expected that the growth rate of department stores in 2023 is expected to increase." Pan Helin also said that in 2023 The department store retail industry will usher in a recovery in 2020.
On the one hand, the optimization of epidemic prevention and control policies can maximize the release of consumption vitality, and passenger flow will gradually recover; on the other hand, the transformation of online and offline models and business districts will inject new vitality into the department store retail industry, and companies that follow the trend will gain new opportunities. growth drivers.