The Dilemma Of Department Stores Under The Representation Of Retail Commercial Real Estate

The 2014 results of Wanda Group, the leader of China's retail and commercial real estate, showed that Wanda Department stores had 24 new stores, totaling 99, earning 25 billion 600 million yuan, an increase of 65.3% over the same period last year, exceeding the annual profit target.

However, in the high-speed expansion of Wanda Plaza, various problems in the operation of its shops are also emerging.

The rising rate of debt and the decline of performance are the operating predicament of some Wanda Plaza. The large number of outdoor shops that have been sold are vacant.

Among them, the "Pedestrian Street" product Street "Golden Street" is more known by the industry as "doing a dead Street".

Not long ago, a half moon reporter drove to Shanghai Wanda Plaza, Baoshan, and found that most of the outdoor pedestrian streets were empty, and there were notices on the glass doors and windows. Sometimes customers could hardly see them.

In the Wanda Plaza, Jiangqiao, Shanghai, some shops were closed for 6 days. After several renovation and several resumption of business, there was still no lasting operation. At least half of the 100 "Golden Street" shops were vacant.

In fact, the cold wave of China's department stores is not overnight.

Since 2012, there have been many cases of department stores' withdrawal or closing in China's retail market: in March 2012, the department store moved out of Chaoyang Joy City in Beijing; in February 2013 and April, Guang Bai Department Store pulled out from Chengdu Fuli Tian Hui Mall and Wuhan Wu Shang Mo; and Parkson closed many stores in China in 2013.

According to statistics, as of January 1, 2015, the number of famous department stores in China was 20.

Department stores seem to be at the crossroads of development.

Relative

The entry threshold of online shopping platform is relatively low.

And the cost of personnel and other links is relatively low. Low price has become the main means of online shopping to attract consumers.

Under the impact, many physical shops have become the "fitting rooms" for online shopping.

In addition, in recent years, property rents and staff expenses have been increased.

Sustained growth, coupled with weak sales growth, increased pressure on domestic department stores and squeezed profit margins.

According to the sample survey by World Bank Richard Henry, the average annual compound growth of rentals and staff expenses in sample department stores was 14% and 18.5% respectively from 2011 to 2014, while the average annual compound income growth of the same period was only 8.8%.

Some shops renew their contracts and rent rises by 30% or even higher, which further reduces the profit margins of department stores.

Traditional department stores are facing such problems as economic growth deceleration, intensified channel competition, pformation of retail mode and rising operating costs. In addition, the existing hardware and business models of shopping malls also restrict the further development of department stores in the new business environment to a certain extent.

The head of a large department store in Shanghai admits that in today's rich society, consumers' shopping needs are increasingly diversified and experiential. Today, the limited operating area restricts the further development of traditional department stores objectively.

Traditional department stores have limited display and display space, poor display windows, and poor shopping environment.

Wu Yiyi, director of the Business Services Department of the world bank, said that in the internal and external stranded businesses, the department stores had been promoting the flow of people and expanding sales through continuous discount sales promotion.

However, frequent discounts make the profit margin of department stores narrowed further and fall into a vicious circle.