Where Is The Transformation And Upgrading Of The Department Store Industry Under The Impact Of The Electricity Supplier?

In 2018, the scale growth rate was low and the industry was highly dispersed.

Since the lifting of the ban on goods in China's department stores since 1978, the development of the industry has basically gone through 40 years of ups and downs, and can be divided into 5 stages. At this time, the industry takes the large self-employed department store as the main form, and because of the liberalization of consumption, the competition situation presents a rapid expansion mode; the second stage is a foreign investment invasion stage of 2001-2007 years; while foreign giants have brought strong impact on China's department stores, a large number of domestic retail giants who have successfully upgraded to the outside world have emerged and forced the domestic department store industry to break away from the previous blind expansion and disorderly competition environment. At this time, a large number of department stores are turning from a self operated mode to a more efficient joint mode; the third stage is an economic crisis stage of 2008-2010 years; the fourth stage is an electric shock stage of 2011-2016 years; this stage of electric business shocks + inhibit three consumption, and the department store industry is in a downturn stage; up to now, the domestic department store industry is in the fifth stage, and it is the recovery stage of the industry. The first stage is the barbarous growth stage of 1978-2000 years. With the growth of consumption driven by economic growth and real estate wealth effect, the gradual loss of electricity supplier dividends and the importance of consumers' experience in offline shopping experience have led to the growth of domestic department stores in 2016.

The report on the development of China's department stores in the past 2018-2019 years, released by the Chinese general merchandise business association, shows that in 2018, the four growth rates of supermarkets, department stores, specialized shops and exclusive stores were 6.8%, 3.2%, 6.2% and 1.8% respectively, and the growth of China's department stores continued to slow down. In addition, according to the survey data of China's general merchandise business association, the sales volume of key enterprises in 90 Chinese department stores in 2018 was 745 billion 600 million yuan, up 4.2% from 2017, and the growth rate reached a new low since 2014.

Since the 90s of last century, the retail market of China has formed a buyer's market, and the competition for products has become more and more intense. Department stores have begun to operate in the form of joint operation. The major brands directly stationed in department stores have formed a large area, provincial and multi-level authorized mode of operation, and the general merchandise industry has formed a regional pattern. Nowadays, with the rapid growth of e-commerce sales, department stores are becoming more and more aware of the disadvantages of being confined to one place, and are increasingly eager to move towards the whole country.

Due to the short time that the department store industry in China has changed to the modern management mode, monopolistic retail enterprises with high market position have not yet been formed in the whole country, and the overall market concentration of the industry is still at a low level. The statistics of China's general merchandise business association show that the concentration of the department stores is slightly higher than that of the supermarket industry. However, CR10 remained basically stable, while CR5 showed a slight downward trend. In 2018, it was 14.3% and 8.3%, respectively. The proportion of Wangfujing with the highest market share was 2.5%.

In order to improve the concentration of industries, the giants have been acquiring mergers and acquisitions to integrate their businesses. Especially since 2015, the acquisition of M & A in the department stores has been frequent, and many giants such as the electricity supplier have been transferred under the line, breaking the pattern of slow integration of the department store industry in the past years. At the same time, the overall undervaluation of the industry has brought valuation and integration advantages to small and medium-sized regional department stores such as electricity suppliers, so as to achieve the national layout opportunities.

Business mode is currently based on joint venture, and self employment is expected to gradually improve in the medium and long term.

The rapid development of China's department stores has led the operation mode of our general merchandise into a joint venture mode, with a self run ratio of less than 10%. The short and fast joint mode has made China's department stores achieve a rapid development layout in the past twenty years, and at the same time laid the foreshadowing for today's industry predicament. On the one hand, the mode of joint operation has brought the department stores to the ceiling of gross margin, and the gross margin has always been maintained at around 20%, which has a big gap compared with that in the US and Japan. On the other hand, it has never been able to learn the sensitivity to the consumer market and control the supply chain. How to use digital empowerment to enable department stores to regain their customers' preferences and enhance their self catering stores which are more in line with consumer preferences has gradually become the focus of department stores' development.

Department stores create diversified formats, experiential consumption is the focus of transformation.

With the upgrading of consumption structure, the rise of cost and the rise of electricity providers, department stores have been operating on the original basis to enhance their competitiveness, creating a multi format pattern to meet consumer demand of consumers at different levels. According to the China Department Store Association, more than 7 of department stores are involved in retail business outside department stores, including supermarkets, convenience stores and so on.

In addition, in order to adapt to the development trend of electricity providers and promote their own full channel development, some traditional department stores such as Wangfujing, Maui department store, Chongqing department store, Yintai department store and other self built electronic business platform. Such as the new world pilot launched the "new flash purchase" online shopping mall, organizing outbreaks and preferential online products, placing orders online, picking up goods offline, Bailian, Eurasia and other home provided services. The other part is based on the power line of e-commerce giant, and cooperation with Jingdong's home service platform and hungry life service platform to promote the digitalization of stores, and actively expand the full channel sales with consumers as the core. For example, the development of strategic cooperation between Yintai and Yintai; Tianhong joint Tencent form a full channel mode of "Rainbow scarf APP+ rainbow rainbow WeChat + rainbow scarf PC"; develop fast paying small programs and intelligent parking Mini programs; Tencent and Jingdong share BBK, and the three sides jointly develop intelligent retail and unbounded zero sale.

At this stage, after 95 or 00, the pursuit of omni-directional shopping experience and fashionable lifestyle is increasingly pursued. Many department stores are committed to creating an experiential consumption scene with consumers as the core, introducing elements such as parentage, IP, art, culture, entertainment, catering and technology to create a new experience and stimulate consumption desire.

In recent years, facing the trend of brand homogenization, adding the disadvantages of joint mode, increasing the proportion of featured brands, setting up a buyer's shop and developing proprietary brand have become the focus of the transformation of department stores. In addition, in the new era of consumption, consumers are increasingly demanding the goods and services and pay more attention to the cost performance of goods. Under this trend, traditional department stores actively develop their own brands and form differentiated brand identification.

According to the "2018-2019 China Department Store Development Report" released by the Chinese general merchandise business association, the survey data show that in 2018, 78.7% of the surveyed department stores had implemented self purchase mode. Of the enterprises that carry out self employment, 30.7% of them develop and run their own brands.

Digital transformation promotes store revenue + efficiency, leading edge is expected to expand

Online users have infiltrated dividends, and Internet giants have shifted to the layout line. Since 2015, the cost of new users such as online Alibaba and Jingdong has increased significantly and surpassed its corresponding marginal margin contribution, corresponding to the incremental bonus of online shopping users gradually coming to an end. With ALI and Tencent as the two camps, Internet companies began to turn to strategic investment and cooperation in offline retail channels, including Ali's stake in Yin Tai and Suning, the establishment of box horse fresh, Tencent shares, Jingdong, Yong Hui, BBK, and strategic cooperation with Tianhong shares. Department stores under the same line also experienced 4 years of online impact, and began to establish the development direction of online and offline integration. During the period, including the establishment of the business department of Tianhong, the power to the home business and the rainbow scarf App, Bailian and Ali signed strategic cooperation to discuss big data and Internet applications.