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| Updated
- October 30, 2009 |
DESCRIPTION
This new report covers the department store retail sector across China, looking at the key listed retail groups active in the sector, and the changing fortunes of department stores as China's consumer market rapidly develops. |
PRICE
£1,100 |
EXTRACT FROM
INTRODUCTION
'...Despite vociferous complaints by many leading department store retailers about weakening sales, the sector is actually performing very well, and sales growth in the sector has outstripped growth in both total retail sales and sales in the supermarkets/hypermarkets sector.
What many of the department stores are really complaining about is weakening profits due to increased competition. This competition comes both from the increased number of department stores that have opened up in China’s cities, but also from the rising strength of specialist retailers, particularly in the clothing sectors, such as sportswear, outdoor wear, mid-range fashion, cosmetics and electronics and appliances. This growth in competition from the specialist stores has resulted in a more recent decline in significance of the department stores sector since 2008, dropping back below 30% of total retail sales.
The growth in competition is hurting many department stores that had relied upon a continuation of the status quo in the market, and which had therefore failed to adapt to a rapidly changing competitive landscape. This has meant that many key department stores have not improved their efficiency, or invested back into keeping their stores current and refreshed in order to maintain customer appeal, and have therefore lost customers to newer and more exciting retail concepts coming into the market to compete on core product lines.
This has made it harder for many to maintain profitability, even though sales revenues have continued to grow, as, in order to reinvigorate consumer interest in their stores, and push shopper footfall figures into their stores, they have had to run high discount sales over longer periods. This has not only hit short-term profits, but as consumers have become used to the lower prices, due to the extended nature of the discount periods, so they have found it harder to stop giving discounts, or end sales promotion periods.
This failure to control marketing campaigns has meant that profits have remained low at many stores, and revenues have only been maintained at many key outlets due to the retailers squeezing their suppliers and concessions for more “service” and “management” fees to have their products in these stores. However, the exclusivity of many of these department stores is being challenged by the specialist retailers, and it is now becoming increasingly hard for the department stores to continue to justify these fees, which will most likely mean that they either become more efficient retailers, and improve their core business profits, or they will face falling revenues due to suppliers not agreeing to additional fees, because they can increasingly get better deals elsewhere.
Things are looking bright for Hong Kong-listed department store retailers. The five Hong Kong-listed retailers Maoye, Golden Eagle, Parkson, Intime and New World Department Store were able to record slightly higher net profit than their 28 China-listed peers in 2008, reflecting the higher profitability of the department stores listed on the Hong Kong Stock Exchange.
Although the total net profit generated by the five Hong Kong-listed department stores fell to RMB1,245.85m in the first half of 2009, they were still able to generate 70.63% of the total net profit produced by the 28 China-listed department store retailers without having their bottom line substantially propped up by profit generated from supermarket, hypermarket, real estate and other businesses. ...' |
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