Department stores struggle against competition from Internet vendors

Liu Qing, a 37-year-old shop assistant, yawned over her counter selling cosmetics during the lunch hour on a Tuesday in September in a department store in East Nanjing Road, one of the busiest retail streets in Shanghai. It had been three hours since she started working at 10 am, but she hadn't had a single customer.

Various stores in East Nanjing Road. It's a story of fading glory for traditional stores in downtown Shanghai as non-core retail areas attract many customers, especially young people. Usually they cannot afford apartments in downtown areas and choose to live in suburban areas so commercial complexes on their doorsteps are obviously a more convenient choice than stores in city centers. [Photo/China Daily]

Like Liu, a veteran in the industry with more than 20 years of selling various products ranging from makeup and stationery to shoes, salespeople in downtown department stores, especially in State-owned retail businesses in high streets, are struggling amid increasingly fierce competition from online stores and commercial complexes in not so prestigious locations.

Liu says nowadays young customers tend to go to online shops or buy things in department stores with more entertainment facilities.

"My daughter never visits my store. She says it's old-fashioned, without a proper restaurant or cinema and there is nothing much to attract here," said Liu.

The retail market in Shanghai is experiencing significant changes, according to Qi Xiaozhai, a researcher with Shanghai Commercial Economic Research Center.

Non-core retail areas are attracting many customers, especially young people. Usually they cannot afford apartments in downtown areas and choose to live in suburban areas so commercial complexes on their doorsteps are obviously a more convenient choice than stores in city centers, said Qi.

Just a stone's throw away, Spring Department Store in Hongkou district, which has been operating for 16 years in the region, recently suspended its operations for a refurbishment. The 8,000 square meter shopping mall has been struggling for survival because of a sharply declining number of customers. It may provide other services after re-opening, according to an announcement.

New department stores or fashion brands are more inclined to choose to open in non-core retail areas, according to the latest report on retail property by Knight Frank, a property services firm.

In the second quarter of 2012, three shopping centers opened in Shanghai, all of which are located in non-core areas, the report said.

With e-commerce and modern department stores changing the face of consumer behavior, traditional department stores are gradually losing their status. In the second quarter of this year, the First Department Store moved out of Huaihai Road, with BMW 4S taking its place. Meanwhile, the market for modern department stores and specialized stores remains positive.

New moves

Marks & Spencer opened three stores in Shanghai during the second quarter of the year. With Best Buy gone from its Zhongshan Park outlet, American furniture manufacturer and retailer Ashley filled the space and Gloria Department Store will open soon in Mega Plaza. Metro opened its Jiading New City store on June 29, while Decathlon opened its 10th sports outlet in Qibao Town, Minhang district.