Depart­ment stores face new com­pe­ti­tion

China Daily (Canada) - - NEWSCAPSULE -

The 2014 out­look for depart­ment stores in China is “neg­a­tive’’ de­spite an an­tic­i­pated mild ac­cel­er­a­tion in sales growth, as stiff com­pe­ti­tion and cus­tomers drawn to other sales chan­nels will con­tinue to chal­lenge the sec­tor’s re­cov­ery, ac­cord­ing to a re­port by Fitch Rat­ings,

“In gen­eral, op­er­a­tors with less ma­ture store net­works, strong re­gional mar­ket po­si­tions and big­ger ex­po­sure to lower-tier cities will likely fare bet­ter over the next 12 to 18 months,” said Michelle Leong, an an­a­lyst with Fitch Rat­ings.

This year has been a chal­leng­ing one for depart­ment store op­er­a­tors, with weaker-thanex­pected rev­enue growth com­pounded by higher op­er­at­ing ex­penses, which hurt earn­ings of most op­er­a­tors and pushed back delever­ag­ing.

Depart­ment stores’ credit qual­ity will con­tinue to di­verge over the next few years as rents rise and com­pe­ti­tion from In­ter­net re­tail­ers and shop­ping malls in­creases.

To stay com­pet­i­tive, depart­ment stores are shift­ing their fo­cus to the mid- and high-end mar­ket seg­ments, and in­creas­ing their store sizes. (Photo 3)

ZHANG JIANSONG / XIN­HUA

Chi­nese ice­breaker Xue­long, or Snow Dragon, ar­rives at the Zhong­shan Sta­tion on Dec 2 on the coun­try’s 30th ex­pe­di­tion to Antarc­tica, which be­gan on Nov 7.

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