Department stores face new competition
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)
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.