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Future Of Department Stores Department Stores, large retail stores selling many different kinds of merchandise arranged in separate departments. Such stores are found in nearly every important city in the world, and the large department stores often contain more than 100 separate departments. The two major categories of merchandise sold in department stores generally are apparel and home furnishings. Besides making many diverse items available for purchase in one place, department stores offer numerous services, including delivery and mailing of purchases; credit service, usually in the form of charge accounts; and fashion shows. The organization of a modern department store is often complex because of the large number of goods and services provided. Typically, the operation of a store is conducted through five principal divisions: the merchandising division, responsible for the buying and pricing of merchandise.
The sales promotion division, in control of advertising, display, public relations, and other related matters. The personnel division, which supervises employment and the training and welfare of employees. The operations division, responsible for customer and selling services, for deliveries, and for the receiving, marking, and maintenance of merchandise. The finance and control division, which deals with accounting, customer credit, expense control, and other financial and budgetary matters. Within these five divisions are many subdivisions. The heads, or managers, of the five principal divisions are responsible to the general manager (Di Pasquale).
Some stores find it practicable to lease certain areas within the premises to outside concerns, which then run their own departments under the name of the department store. This arrangement is most frequently used for such specialized goods or services as millinery, photographic supplies, shoe repair, and beauty salons. Although some department stores were outgrowths of general stores, most originated as dry-goods stores. The first dry-goods store to become a department store was the Bon Marche, established in Paris in 1838. By the 1860 s it resembled the modern department store in size, organization, and administration.
Printemps, established in 1885, also in Paris, was probably the first store to be opened as a department store. In the U. S. the trend toward the transformation of dry-goods stores into department stores began in the 1860 s and 70 s. R.
H. Macy & Company, Inc. , in New York City, John Wanamaker in Philadelphia, Marshall Field in Chicago, and Jordan Marsh Company in Boston were among the first to be reorganized as department stores during this period (Di Pasquale). Among the innovations that characterized the operations of the early department stores were the clearly marked prices on merchandise; the system of reimbursement for or exchange of returned goods; and the sale of ready-made apparel for men. These innovations, successful from the first in attracting customers, were continued and improved on not only by department stores but by most specialty stores as well. Various economic and social changes that took place in the U. S.
during the last few decades of the 19 th century ensured the success of the U. S. department store. Particularly noteworthy were the large concentrations of the population in urban centers; the growth of a large and relatively prosperous middle class susceptible to the appeals of increased advertising; the introduction of mass methods of manufacture; the improved methods of transporting large quantities of goods to markets; and the development of certain mechanical aids useful in conducting commercial operations, for example, telephones, billing machines, and electric lighting (Eppli).
The monetary value of department store sales increased steadily during the first half of the 20 th century. In 1929 U. S. department stores sold more than $ 4 billion worth of merchandise, an amount equal to 9 percent of the total retail sales in the U. S. In 1935 the department store proportion of all retail sales amounted to 12 percent, but it declined steadily to 6 percent of total national retail sales in the middle 1950 s.
By the late 1980 s, however, because of aggressive merchandising practices, such as establishing branches in the suburbs and in large shopping centers, the stores increased their sales to more than $ 150 billion per year, or over 10 percent of total retail sales (Eppli). During the last decades the changing character of competition in retailing has challenged traditional department stores. Supermarkets added non grocery items; variety stores expanded their merchandise offerings tremendously; and many discount houses increased the scope of their merchandise offerings and became self-service. There seems to be more and more discussion about department stores and their impact on society arising in press. Due to the fact that these stores are relatively new, people still tend to be a bit skeptical about them. However, nobody can deny the fact that department stores are very successful not only in pioneer countries (US and UK), but also in European countries, where department stores have been introduced just a couple of years ago (Reed).
Society should be most properly viewed as four major groups: consumers, cities, retailers and real estate companies. Before we point out every groups benefits, we will first discuss the advantages for the economy in general shortly. At the end of the paper we will make a summary and reach a conclusion: department stores are a new generation of stores which are not only very desirable in the social point of view, but also are a demand of time. Department stores are very desirable for the economy in general. They bring significant amounts of tax money in local and national budgets, reduce vacancy of land and other resources. Department stores create many job places at all levels and counteract with other participants of economic process such as construction firms, delivery companies, advertisement agents etc.
When talking about consumers, it is good to know of some new trends in shopping and shopping behavior that seem to appear lately. These trends are primarily based on demographic and behavioral changes. Looking at the demographic changes, we can see two main trends: the number of elderly people, who have both very strong purchasing power and lots of time for shopping, is increasing. The priority for them is quality and service, the price comes second. Another major trend is the growing appearance of 1 - 2 -person households, and which have a lot of money and not so much time. Efficient shopping therefore is a priority for them.
Talking about the changes in consumer behavior, we can say that there are two main groups of shoppers: run-shopper and fun-shoppers. For the first category convenience, comfort and easy reach are the most important. For the latter, personal needs or wants are more important, not to mention that the consumer really demands to have choice and be able to compare. In addition, the consumers are overall better informed and more critical about the goods and services they want. Their demand is variety of shops, flexibility, and fun-element. Cheaper price is always a plus too.
Considering the explanation above, we can see that the existing variety of shops can hardly satisfy the modern shopper who seeks convenience, easy reach, enjoyment and spending the least possible time and money when shopping. Department stores is a combination of all these characteristics in one. In this store all goods and services are just under one roof. The run-shopper can easily find his stuff and can do all the shopping at one time. The fun-shopper can do his shopping, have something to eat and go on, still being able to compare the goods and services he wants. Moreover, department stores are cheaper.
Because of the great volume of sales, department stores retailers can afford to reduce prices and offer special deals to his customers (Guy). Due to the size and scale of carried products, department stores are located outside of the city. Therefore the retailers can afford to invest in infrastructure and have a lot of space for parking. Customers are offered a good, and more importantly, free access by car. Parking is a bottleneck in the inner city, but department stores solve this problem for their shoppers. Opponents of the department stores always talk about the bad influence that the department stores have on the inner city stores, because the customers and income is being pulled away.
However, this argument fails to consider many things. First of all, inner cities have a strong domestic function, which will never be chased away by department store. Secondly, besides the stores, cities have got canals, markets, churches, alleys and many other characteristics that department stores cannot offer. Finally, things like factory outlet centers, non-store-retailing, department stores and e-commerce fortify the power of the inner city as a shopping, entertainment and meeting place. Another very often heard contra argument is vacancy.
It is used in the context that department stores are a big rival for the stores in town for which it becomes more and more difficult to exist. In reality, department stores actually take away the pressure of the city centers. With the appearance of the department stores, the rent prices are falling. The city gets its incubation environment back, which implies that starting companies also get the space to make their start. These companies normally do not have enough capital to start a shop in the center, but now they have a chance.
Furthermore, department stores contribute greatly to the among-cities competition by having a strong regional pulling power, which is good for the competition power of each city. Department stores can therefore be more correctly seen as a big impulse instead of a rival for the city. The arguments against department stores sound even more inappropriate if thought about retailers. A department store is an optimal solution for a retailer who seeks to fill in consumers demand, get the highest possible profits, and reduce risk. Why? The answer is simple.
First of all, as proved above, the consumer demand for new kind of store really exists. Secondly, if situated clever, the department store can draw many customers, therefore make significant profits. As mentioned above, department stores are located outside of the city, which makes rents 5 - 7 times less than for the comparable buildings in the city center. This means that a retailer not only saves money, but also greatly reduces risk on his investment. Finally, when organizing a big scale business, which department stores is, a retailer has a good chance of expanding it on all levels. The argument becomes even more powerful if we consider that there are not so many department stores in countries like the Netherlands, therefore it is still a very open opportunity (Garreau).
Guy (1994) argues that retail property constitutes an important part of the countrys built environment. Therefore, we can see that real estate companies are directly connected with the development of department stores. For a real estate developer an investment in a warehouse type building, which require, might be not such a risky one, and here is an explanation to that (Rothman). First of all, the land price in the area where a department store wants to be situated (outside the city) is not so high as in the city. Second of all, the construction of a department store does not usually require expensive materials (as it would for construction of offices, for example).
Furthermore, it will not be a problem to find new tenants, because the building can be easily transferred from a department store into another usage building (storage place, exhibition arena, etc. ). Again, developing buildings for lease or sale to department stores still is a very, very open opportunity for real estate companies. Finally, because the development of department stores expansion phase, there still exists a big lack of information. Real estate companies can use this and take advantage of the market not being transparent. One should also not forget that as the number of department stores grows, and they get more and more recognized by consumers, the buildings they occupy will also appreciate in value very much.
In this paper, it was attempted to prove why department stores are desirable for the society, and why they can be viewed as a new kind of store, a demand of time. Based on the used sources and our own conclusions, we showed how the four groups (consumers, city, retailers and real estate companies) benefit from the appearance of department stores. Consumers of all income levels, age groups, shopping motivations enjoy convenience, easy reach, discount prices and free parking that department stores have to offer. Cities get massive impulse from department stores, which speeds up their development more in order to bare the competition. Department stores are a very open opportunity for retailers who want to establish a long term, big-scale, high-profit business that has great potential to expend (Garreau). For real estate companies an investment in buildings that will serve department stores is promising to be a worthy one.
The benefits like reduction of unemployment, regeneration of environment and reduction of the pressure off the cities may even outweigh the purposes when thought about the economy in general. Naturally, like everything new, department stores are still being treated with some skepticism and antitrust. Nevertheless, it is certain that time will put everything on its places and we will all be able to enjoy the benefits of department stores in a very near future (Griffith). If department stores continue to invest appropriately in each component of success. It can be done through maximizing national nameplates with new and improved stores, as well as through integration with e-commerce and catalog channels, and with the cachet of high-visibility events such as the Thanksgiving Day Parade, Christmas Fares, etc. They should also support and strengthen their regional store brands in a manner that fully capitalizes on more localized market opportunities (Guy).
Their private brand program should be further developed with new concepts, collections, line extensions and marketing support as customer demand drives us to differentiate our assortments with distinct merchandise that delivers ever-more value for the money. Prospects for new full-line stores in the most promising regional malls and lifestyle centers, as well as more focused strip center locations to fill gaps in larger markets and serve smaller markets, are among the future opportunities we will pursue, along with unique urban stores in selected locations (Cohen). Sources: Cohen, N. , French find flair for a new mode, Financial Times, August 4, 2000 Di Pasquale, D. and W.
C. Weapon, Urban Economics and Real Estate Markets, Prentice Hall, 1996 Eppli, M. and J. D. Benjamin, The Evolution of Shopping Center Research: A Review and Analysis, The Journal of Real Estate Research 9, 1994 Garreau, J. , Edge City, Life on the New Frontier, Doubleday, New York, 1990, Boston. Griffith, V. , Urban reality begins to catch up with the American shopping mall, Financial Times, October 15, 1999 Guy, C. (1994) The retail development process location: location, property and planning, Routledge, London, 1994 Reed, J. , Europe's hypermarkets rush to set up shop in Poland, Financial Times, December 15, 2000 Rothman, D. , Department stores: Past and Future, Routledge, London, 1994
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Research essay sample on Future Of Department Stores
