Traditional Department Stores Competitive in China

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Last updated at: (Beijing Time) Saturday, October 26, 2002

Traditional Department Stores Competitive in China

Undergoing some difficulty in their development in recent years, traditional department stores in China will be able to co-exist with other forms of retail shops,experts said.

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Undergoing some difficulty in their development in recent years, traditional department stores in China will be able to co-exist with other forms of retail shops, experts said.

Zheng Wanhe, general manager of Beijing Wangfujing Department Store Co., Ltd., said that "traditional department stores will not be replaced by the emerging businesses in the retail sector."

He said such businesses do meet certain requirements of shoppers, but extensive customer needs prove that traditional department stores will not be entirely replaced.

Department stores enjoyed a golden age in the first half of 1990s. Statistics show that the number of large department stores with annual sales above 120 million yuan (15 million US dollars) increased from 98 in 1992 to nearly 1,000 in 1997 in major cities.

However, rigid management and the lack of distinction led to high costs and low competitiveness among the department stores. Beginning 1997 the sales at the once thriving stores fell.

On the other hand, new types of supermarkets emerged and started to take a bigger share of the retail market. The average rate of increase in annual sales of China's top 100 chain supermarkets exceeded 50 percent.

Among the country's top 100 retail enterprises, the number of chain shops rose to 33 in 2001. Sales at the Lianhua, the largest chain supermarket in China, topped retail enterprises for three years in a row.

Traditional department stores in China match large foreign retail businesses in decoration, structure and fittings, but they lack good management methods and new ideas, said Huang Guoxiong, a professor of business management with the People's University.

"Large department stores have become competitive again," said Huang, noting that in the long term, department stores will still hold their stand in the retail sector.

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