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Tag: China

  • Apple and Samsung continued to lose smartphone market share in China during Q2

    Apple and Samsung continued to lose smartphone market share in China during Q2

    Smartphone shipments in China during the second quarter rose 14.9% on a year-over-year basis to 149 million units. Sequentially, shipments rose 2.7%. This growth is not coming from high-end manufacturers like Samsung and Apple. Instead, entry-level handsets and mid-range 4G models are capturing attention from subscribers to the nation’s three major carriers. China Mobile, China Unicom and China Telecom are each offering subsidies on these less expensive models.

    This has resulted in a build up of inventory in the country’s retail channels. During the first two quarters of the year, manufacturers shipped more phones than the number that consumers were buying. As a result, analysts expect an “inventory correction” during the fourth quarter. This should result in manufacturers slowing down shipments of smartphones to retail channels in order to keep inventories lean.

    Digitimes own research has Huawei listed as the top smartphone producer in China with a 14% market share from April through June. The 12.7% share earned by Oppo during the same time period was next, followed by Vivo and Xiaomi with 11.2% and 10.4% of the market, respectively. Apple was fifth with a single digit slice of the pie.

    In an earlier report, Apple was said to have claimed 10.8% of the Chinese smartphone market during the first quarter of this year. That was a decline from the 12% share Apple controlled in the first quarter of 2015. Now in single digit territory, the company is looking at India to provide future growth in iPhone shipments.

    source: Digitimes

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  • Alibaba sales soar on international expansion

    Alibaba sales soar on international expansion

    Alibaba sales have soared in the first quarter of its new fiscal year, with overall revenue growth pushing even higher than last quarter’s stellar result.

    Streaming entertainment and cloud computing boosted the business, driving revenue up 59 per cent in the June quarter to 32.15 billion yuan (US$4.8 billion).

    In a contrast to the last reporting period, it is international that has shown the most growth, with revenues rising by 123 per cent. Although this figure is aided by the consolidation of the Lazada business, it is also the result of some good numbers from AliExpress.

    That said, China retail remains the largest part of the group, accounting for just over 73 per cent of revenues. Here performance was strong, with revenues rising by 49 per cent – partly thanks to a combination of the addition of 11 million more active buyers and higher average transaction values over the prior quarter. A sharp increase in marketing spend by those brands and merchants using Alibaba’s various sites also made a significant contribution to the hike in revenues.

    Alibaba’s role as a facilitator for Western brands wanting to sell into China continues to be the company’s main commercial advantage. Its ability to work closely with those merchants to improve performance will benefit the revenue streams of both parties, as well as creating a more attractive and compelling offer for consumers.

    Despite its success at home, Alibaba has struggled to gain traction in already established markets like the US. While this was once a stated ambition, and perhaps remains a long term goal, it is off the agenda for the short term. This is the correct strategy: chasing lower margin, profit eroding international gains for the sake of vanity makes little sense.

    That said, this does not mean that Alibaba’s international ambitions are entirely on hold – as the latest results show. Tactically, Alibaba has decided to focus on high growth markets where commerce is more embryonic. The acquisition of a controlling interest in Lazada, the Southeast Asian eCommerce group, is testament to this.

    While Lazada has grown into a sizeable business, it has a number of challenges including on the delivery, payment and fulfilment front, where it has struggled to optimise the offering. Alibaba, through its expertise and financial muscle, should be able to remedy this. It will also, over the medium term, strengthen the international brands available making the site more compelling and interesting for shoppers.

    The Lazada model represents the approach Alibaba is likely to take to international growth and expansion, and this will yield good long term results.

    With both international and domestic sales forging ahead, and with new areas like cloud computing making a better contribution, Alibaba is firmly on an upward trajectory.

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  • Report: Chinese Shoppers Make 40 Percent of Luxury Purchases Abroad

    Report: Chinese Shoppers Make 40 Percent of Luxury Purchases Abroad

    Chinese travelers are spending billions of dollars abroad, but where exactly are they making their luxury goods purchases? A recent report titled “Who Buys Where: Decrypting Cross-Border Luxury Demand Flows” by digital direct marketing services provider ContactLab and Exane BNP Paribas Research maps out spending patterns by tourists from all over the globe based on three years of data. ContactLab’s research ranks Chinese travelers second in terms of the proportion of spenders who buy luxury goods abroad, finding that 40 percent of Chinese consumers’ luxury spending occurred overseas in the first part of this year.

    chart

    While Chinese consumers spend most of their budget on luxury items abroad, this year, overseas spending dropped 5 percent, but rose 5 percent domestically. ContactLab attributes this to price corrections by major luxury brands on the mainland. For example, last year, Chanel lowered its mainland China prices to encourage Chinese shoppers to purchase there, and deter daigou sellers from benefiting from purchasing cheaper goods abroad.

    How much Chinese spend abroad may provide some insight into exactly who these consumers are. The value of purchases Chinese travelers make in “European Heritage” countries, the United States, and Japan is significantly lower than it is in China—by 20 to 30 percent. ContactLab says this suggests big spenders in these countries are “aspirational first-time buyers.”

    However, despite individual purchases being lower overall, Chinese luxury spending in Europe “appeared to be rising” in the first four months of 2016 compared to the same period two years before, according to the report. This was the case even factoring in the Paris terrorist attacks in late 2015. The increase takes place “possibly because our data includes also a portion of daigou spend (eg Chinese students in Europe whose visas don’t allow tax free refunds, and which are therefore not captured by Global Blue statistics),” said ContactLab senior advisor Marco Pozzi. “If this is what we see in the wake of the November terrorist attacks, then 2H16 could reasonably expected to be even more positive.” It’s still worth noting that since the release of the report last month, there have been further attacks in Europe and numerous luxury brands have reported that they are feeling the repercussions of waning Chinese tourists in light of security concerns.

    In Asia, Chinese tourist luxury spending has also gone up in the last few years in Japan and Korea. In Japan’s case, Chinese travelers make up the majority of the luxury purchases, even though inbound tourists only make up about 5 to 15 percent of sales in the country overall.

    The report also confirms known trends in Hong Kong and Macau’s luxury retail industry. This year, Chinese consumers have done almost the same amount of luxury shopping in Japan, Taiwan, Singapore, and Korea combined as they have done in Hong Kong and Macau. Chinese tourists went from spending 70 percent of their luxury goods budget in Hong Kong in the first four months of 2014 to spending 35 percent in the same period this year. Hong Kong’s luxury retail industry has been struggling with the absence of Chinese tourists and developers are being forced to find alternatives to high-end stores to attract shoppers. This month was the first in over a year where Hong Kong finally experienced a rebound in tourists from the mainland.

  • Mainland China retail sales growth slows in July

    Mainland China retail sales growth slows in July

    Mainland China’s retail sales growth slowed sharply in July, statistics showed Friday, missing expectations in a disappointing sign for the world’s second-largest economy as the mainland China authorities look to consumer demand to push growth.

    Retail sales rose 10.2 percent in the month, the National Bureau of Statistics (NBS) said, a marked slowdown from June’s 10.6 percent increase and below the median forecast of 10.5 percent in a Bloomberg News poll of economists.

    Beijing is looking to retool the economy from a reliance on investment spending and exports to one driven more by consumer demand, but the transition is proving bumpy and gross domestic product growth is slowing.

    China is a key driver of the world economy but grew at its slowest rate in a quarter of a century last year, and has decelerated further since then.

    Industrial output in the Asian giant rose 6.0 percent in July over the year before, the NBS said, while fixed asset investment (FAI), a gauge of infrastructure spending, rose 8.1 percent in the first seven months of the year.

    Those figures also missed expectations of 6.2 percent and 8.9 percent respectively.

    Analysts were disappointed. Zhao Yang of Nomura called the figures an “across-the-board slowdown” that showed more weakness than expected. The investment figures were consistent with a deep contraction in imports that “points to sluggish domestic investment demand.”

    Looking ahead, factory output will face further downward pressures due to efforts to cut overcapacity, analysts with ANZ Research said in a note.

    Industrial production “may further dampen” this quarter, they added, as a result of flooding around the Yangtze River and suspended factory production in Zhejiang province, one of China’s most developed areas, due to a forthcoming G-20 summit in Hangzhou.

    Unswervingly Advance

    The NBS said in a statement China’s economy was “basically steady” in July but said that “serious disasters” from flooding and high temperatures in some parts of the country caused some indicators to slow.

    “However, overall economic development kept performing in a proper range with steady pace, as a result of stable employment and prices, deepened supply-side structural reform and accumulated new impetus,” it said.

    China should “unswervingly advance” supply-side structural reform and expand aggregate demand, it added.

    NBS spokesman Sheng Laiyun said it was “reasonable” for FAI growth to fall long-term as the economy shifts away from traditional heavy industries toward the service sector, which does not require as intensive investment.

    “The trend is good,” Sheng told a news conference. “Even though economic growth dropped slightly, the economy is stable and making steady progress, and the steady trend toward improvement has not changed.”

    Sheng acknowledged, however, that China faces “downward pressure” from weak global demand as Beijing carries out a marathon effort to nurture consumer-driven growth and reduce reliance on trade and investment.

  • China Telecom taps Nokia to expand 4G coverage

    China Telecom taps Nokia to expand 4G coverage

    China Telecom has contracted Nokia to enhance the operator’s 4G coverage and capacity to meet growing subscriber demand.

    The companies have signed an agreement to expand the deployment of 4G in 19 provinces nationwide, which will include preparing China Telecom’s network for the planned launch of VoLTE services next year.

    Nokia will provide equipment including its Flexi MultiRadio base stations for the deployment, as well as project management, network design and installation and hardware and software maintenance services.

    The agreement covers the provinces of Shanghai, Jiangsu, Shandong, Zhejiang, Hunan, Hubei, Guangxi, Fujian, Jiangxi, Shaanxi, Heilongjiang, Hebei, Henan, Sichuan, Anhui, Liaoning, Guizhou, Xinjiang and Inner Mongolia.

    China Telecom added 31 million 4G users during the first six months of 2016 alone, taking its total to 90 million from an overall mobile subscriber base of nearly 207 million.

    Last year 4G traffic meanwhile grew more than sixfold, and is expected to account for more than 90% of the operator’s total mobile data traffic by 2017.

    “This agreement with China Telecom builds on our long history of collaboration. Our deep-rooted knowledge of the Chinese market will enable China Telecom to meet the demands of an ever-growing and dynamic 4G subscriber base,” Nokia Networks China head Mike Wang said.

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  • China’s Alibaba Q1 revenue leaps 59%, best since IPO

    China’s Alibaba Q1 revenue leaps 59%, best since IPO

    Chinese e-commerce giant Alibaba saw revenues leap 59 percent year-on-year for the quarter ended in June, it said Thursday, its strongest growth since it listed on the New York Stock Exchange in 2014.

    Revenue for the company, seen as a proxy for China’s increasingly crucial consumer sector, reached 32.15 billion yuan ($4.83 billion) in the June quarter, it said in a statement.

    Alibaba is China’s dominant player in online commerce, with its Taobao platform estimated to hold more than 90 percent of the consumer-to-consumer market, and its Tmall platform is believed to have over half of business-to-consumer transactions.

    But according to the company net income plunged 77 percent year-on-year to $1.08 billion in the quarter, the first of its financial year.

    Still, Alibaba’s chief financial officer Maggie Wu described the results as “excellent”.

    “The 59 percent revenue growth for the company overall and the 49 percent revenue growth of our China retail marketplaces represent the highest growth rates we’ve achieved since our IPO,” she said in the statement.

    The company’s gross merchandise volume (GMV) — a measure of value for online sales — rose 24 percent year-on-year to $126 billion in the June quarter, the statement said, matching the growth of the previous three months.

    The company, often compared to eBay or Amazon of the United States, has expanded outside its core e-commerce business, in sectors ranging from sports to entertainment.

    “Our results show the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment,” Alibaba chief executive officer Daniel Zhang said in the statement.

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  • Hugo Boss China plans to cull more stores

    Hugo Boss China plans to cull more stores

    The cull of Hugo Boss China stores will continue after a first round downsizing helped the German retailer’s bottom line.

    Hugo Boss revealed its quarterly operating profit on Friday, beating forecasts and giving incoming CEO Mark Langer a mandate for his tough strategy to return to profit growth.

    In March the company said it would close about 20 of its 145 stores in Greater China. Now, Langer says another 20 will follow over the next 18 months.

    “To return to profitable growth again in the medium term, we have made decisions that are painful to begin with,” Langer said. “The market environment will remain difficult for the foreseeable future.”

    Hugo Boss earnings fell 13 per cent to 108 million euros (US$120 million) in the second quarter on sales down 4 per cent to euro 622 million. Net profit has hit by 57 million in extraordinary items, largely costs relating to closing stores.

    Langer’s strategy to improve Hugo Boss’ earnings includes renegotiating rents, shutting stores and refocusing marketing spending on its core menswear range rather than womenswear, a category his predecessor diversified into.

    He also plans to sell the brand in high-quality stores in the US market, to try to reduce discounting.

    Hugo Boss’ share price rose 6 per cent on Friday after the results were revealed and some analysts are now recommending investors buy the stock.

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  • China July vehicle sales rose 23 pct y/y – China Passenger Car Association

    China July vehicle sales rose 23 pct y/y – China Passenger Car Association

    Passenger vehicle sales in China to retail customers rose 23 percent in July from a year earlier, the China Passenger Car Association (CPCA) said on Tuesday.

    Auto retail sales totaled 1.6 million vehicles, CPCA said in a statement on its website. For January-July, passenger car sales rose 11 percent versus the same period in 2015, it said.

    The China Association of Automobile Manufacturers, whose statistics are generally viewed as the benchmark for the industry, is due to report wholesale data for July on Friday.

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  • Asian stocks mostly up despite weak economic news from China

    Asian stocks mostly up despite weak economic news from China

    Asian shares traded in positive territory Tuesday as gains in commodity stocks helped offset weakness overnight in U.S. markets.

    The Nikkei Stock Average NIK, +0.69% rose 0.2% with the S&P/ASX 200 XJO, +0.27% up 0.2% and Korea’s Kospi SEU, +0.62% up 0.3%. Hong Kong’s Hang Seng Index HSI,-0.28% was down 0.1% while the Shanghai Composite SHCOMP, +0.65% was flat.

    Traders sent U.S. oil prices up 2.9% to $43.02 a barrel following news that the Organization of the Petroleum Exporting Countries planned to hold informal talks in September that could lead to production cuts.

  • China National Service Corp opens Shanghai downtown duty free store

    China National Service Corp opens Shanghai downtown duty free store

    State-owned China National Service Corporation (CNSC) opened its ambitious Shanghai downtown duty free store on 8 August. The corporation aims to invest heavily in the burgeoning downtown duty free sector in China.

    The store opening attracted thousands of shoppers on opening day. It houses an initial 100 brands from the region and worldwide over two floors, with more to come in the next three months, according to local reports. Categories on offer includes watches & jewellery, beauty, confectionery, toys, gifts and special sections dedicated to Korean and Japanese items,

    According to reports from Shanghai, the leading brands sold on day one were Estée Lauder, La Mer and MAC.

    The reports said that year one sales should hit around 400 million Yuan (US$60 million).

    CNSC said it planned to improve its retail systems and service processes, as well as its customer capacity.

    Landmark day: The new CNSC store opens in Shanghai (Phoho: Duty Free Expert)

    Landmark day: The new CNSC store opens in Shanghai (Photos: Duty Free Expert)

    Large crowds gathered in anticipation of the new store's unveiling

    Large crowds gathered in anticipation of the new store’s unveiling

  • H&M Hong Kong recognised as top employer

    H&M Hong Kong recognised as top employer

    Fashion retailer H&M Hong Kong has received Asia’s Best Employer Brand Award at a ceremony hosted by the Employer Branding Institute, World HRD Congress and Stars of the Industry Group.

    Presented at the Pan Pacific Singapore, the award recognises organisations in Asia for excellence in building their brand as an employer of choice.

    The jury for the seventh edition of the award – leaders, researchers and academicians – judged companies for their development initiatives, employee hiring, training and retention practices, and HR innovation.

    Vivian Chen, Marketing Director of H&M Greater China, accepted the award on behalf of H&M (Photo credit - ASIA BEST EMPLOYER BRAND AWARDS)

    “I am thankful that H&M’s effort to provide a fun, creative and dynamic workplace is being recognised,” says H&M greater China manager Magnus Olsson. “People are our success, and we are committed to being a good employer.”

    He says H&M’s corporate culture is based on a range of values: believing in people, being one team, constantly improving, being straightforward and open-minded, encouraging an entrepreneurial spirit, keeping it simple and being cost-conscious.

  • Michael Kors Asia outperforms US

    Michael Kors Asia outperforms US

    Michael Kors Asia sales are showing healthy growth – at the same time as same-store figures are falling heavily in its US home market.

    Michael Kors has kicked off its new financial year with a weak set of numbers this week.

    Total revenue was virtually flat, just 0.2 per cent higher than during the same period last year., and driven by the opening of new stores which helped push overall retail sales up by 7.6 per cent. That offset a dismal comparable sales decline of 7.4 per cent.

    Michael Kors Asia has been a growth spot, with revenues rising by 74.5 per cent – although this is flattered by the acquisition of the company’s Greater China licensee.

    However, even on an underlying basis, the region is in positive territory, again thanks to the more favorable brand perception from consumers.

    In the US, one of the key issues is that interest in the brand appears to have peaked. This is evident from Conlumino’s brand tracking, which shows that while Michael Kors is not viewed unfavorably by consumers, it is not enjoying the resurgence that Coach has managed to engineer. This domestic woe is evident in the North American numbers which tumbled by 5 per cent, a sequentially worse performance than the previous quarter.

    The worsening of North American results is partly attributable to the stronger dollar which has likely weakened tourist sales at key flagships in the US, and Michael Kors is affected more than Coach in this respect, as it relies more on tourist spend at its larger stores. Nevertheless, given the investment being put into the new digital flagships – such as the one at 520 Broadway in New York – such an outcome is disappointing.

    The numbers from Europe were somewhat better with a 3.3 per cent increase in revenue over last year. Here, the MK brand is less ubiquitous and the company’s new stores, such as the one recently opened on London’s Regent St, are generating good trade in a way that the stores in North America are failing to do. Given that the company has several further European digital flagship stores in the pipeline for this fall, it looks likely that Europe will continue to deliver respectable sales growth across this fiscal year.

    Wholesale decline

    In the continuation of a theme we have seen across many luxury brands, wholesale revenue has decreased – falling by 7 per cent. Some of this is down to the company’s own actions to reduce exposure to channels that do not reflect its brand image, and some is down to the generally weaker traffic to malls across North America which has affected a number of outlets and stores that sell Michael Kors product.

    Looking ahead, while international sales will grow this year, the increase will be offset by continued pressures in North America. As such, revenues will likely be flat which will create pressure on the bottom line given all of the investments the brand is making.

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  • Jollibee sales strongest in years

    Jollibee sales strongest in years

    Jollibee Foods Corp (JFC) has reported that its system-wide sales grew by 15.1 per cent in the second quarter compared to sales for the same period of 2015.

    For the first half of the year, sales of the Philippines’ largest foodservice company grew by 14.9 per cent to Php71 billion, while revenues grew 13.7 per cent to Php54 billion, compared with the first half of 2015. In the same period, profits rose by 14.8 per cent to Php3.1 billion from Php2.7 billion.

    JFC CEO Ernesto Tanmantiong said the Philippine business, which accounts for at least 80 per cent of the company’s worldwide sales, has been experiencing its strongest organic growth in many years.

    Tanmantiong said all brands performed ‘very well’ and he attributes the record growth to continued improvement in product quality and value offering supported by focused marketing campaigns, store expansion and renovation, low inflation rate, healthy growth of the country’s economy and election-related spending.

    Sales growth in the Philippines accelerated to 17.9 per cent in the second quarter, with brands growing in double digits.

    “Our business abroad had mixed performance. Southeast Asia grew by 37 per cent, led by Singapore with 56 per cent and Vietnam with 49 per cent. The Middle East rose by 17 per cent and the US increased by 11 per cent. China’s sales decreased by 5.7 per cent due to competitive pressure on Yonghe King, our largest brand there,” said Tanmantiong.

    “We look forward to a strong recovery of our Yonghe King business in the months ahead with the launch of new products with high value and taste scores supported by strong marketing campaigns and continuously building  a significant business in the People’s Republic of China and other parts  of the world.”

    JFC CFO Ysmael Baysa said:  “We look forward to continued strong profit growth while preparing for likely higher inflation rate in 2017 in the Philippines and other parts of the world and improving the profitability of our joint venture businesses.”

    JFC has a 50 per cent  interest in the following joint ventures with the number of stores indicated: Highlands Coffee (Vietnam, Philippines) 131, Pho 24 (Vietnam, Indonesia, Cambodia, Korea and Australia) 32, 12 Hotpot (China) 20, others 8; and a 40 per cent interest in Smashburger that has 366 outlets, mostly in the US.

    As of June 30, JFC was operating 2528 restaurant outlets in the country: Jollibee 939, Chowking 457, Greenwich 237, Red Ribbon 378, Mang Inasal 455 and Burger King 62. Abroad, it had 655 stores: Yonghe King (China) 321, Hong Zhuang Yuan (China) 40, San Pin Wang (China) 59, Dunkin’ Donuts (China) 4, Jollibee 151 (US 33, Vietnam 79, Brunei 14, Saudi Arabia 10, Qatar 2, Kuwait 4, Hong Kong 1, Singapore 4,  Bahrain 1 and UAE 3), Red Ribbon in the US 33, Chowking 44 (US 16, UAE 20, Qatar 4, Oman 2, Kuwait 1 and Saudi Arabia 1), Jinja Bar (US) 3.

    The JFC Group has 3183 stores worldwide.

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  • Sainsbury’s taps into China’s love of British products through Tmall

    Sainsbury’s taps into China’s love of British products through Tmall

    The move comes after the British retailer trialled the web marketplace for less than a year and claimed the test was a success. It will now sell over 100 own-label products across four categories—British breakfast, drinks, organic and baby—on Tmall, and has plans to add further ranges later this year.

    With online Chinese sales dominated by key promotional sales events, Sainsbury’s was the only international retailer to be given a “Super Brand Day” on Tmall during the annual 8.8 Tmall Global Shopping Festival on August 8.

    “Many customers want to replicate tastes and occasions that they have enjoyed or heard about through international travel. Products to make a British breakfast and English afternoon tea have therefore proved hits,” said John Rogers, chief financial officer of Sainsbury’s,

    Rogers added that granola, tea, shortbread and UHT milk have been among the sales channel’s top-selling lines to date.

    “Our trial with Tmall has enabled us to learn a lot about China’s huge digital market, including the importance of sales events such as Singles’ Day and 8.8,” he added..

    “Alibaba’s expertise in the rapidly growing Chinese digital consumer market will be a huge asset to us as we grow and develop our business in China.”

    Amee Chande, Alibaba’s managing director in Britain and Ireland, said that a famous British brand like Sainsbury’s was “a key addition to our ecosystem” as it built brand awareness, directly engaged a new audience and met the evolving food demands of Chinese consumers.

    “Our collaboration is introducing the large and growing Chinese consumer class to a new range of products to enhance their daily lives,” said Chande.

     

     

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  • Chinese retail real estate crushed

    Chinese retail real estate crushed

    One of the under discussed aspects of rising real estate prices is the attendant rising rents amid a brick-and-mortar retail slowdown. In 2015, the top 100 chain stores saw sales growth of only 4.3 percent.

    Locally, in Beijing the smaller mom-and-pop retail shops as well as national chains are being forced out by high rents, as rental agreements expire and the minimum increases are at least 100 percent. Mix in shifting consumer behavior, particularly the popularity of online shopping, and it is a brutal environment for the least efficient retailers.

    A reporter for the Beijing Evening News heads to Xinjiekou Beida Street to see the impact on the ground.

    Yesterday afternoon, just the beginning of autumn (Liqiu August 7-22) of Beijing is still hot. From Jishuitan subway station out along Xinjiekou North Main Street South a rough count shows about ten small stores at least half with the words “sale”, “clearance” and even more than one “contract expiration” two or three family has to pull the shutter doors, completely closed shop closed state. The old familiar clothes shop has been replaced by a shop selling steamed buns and meat patties. A clothing store retreated from higher rental shops along the street to the alley inside, to attract customers it has a “Grand Sale” promotion red sign hanging.

    Contact by telephone sublease front of the store, correspondent to turn to a store owner. He told reporters that although the lease is to expire in April next year, but because of the difficult business environment, ready to move up, “mainly rents are too high.” The owner said, Xinjiekou traffic here also, but his rented storefront upper and lower rent would more than 1.5 million yuan a year, an average of 129,000 yuan a month, plus the prior renovation costs, operation stress is too great. Now the shop is handbags sale, sell a single inexpensive earn more than twenty yuan, the most expensive also more than fifty yuan. Even under the most expensive 50 yuan terms, without considering other costs, the shop must to sell 2580 each month to pay the rent. The boss said, in order to share the rent pressure, a lot of shops in this street are sharing the rent two- and three-ways.

    Chain stores are feeling the pressure as well:

    In fact, more than street shops closed tide appears, district located in Daphne, Metersbonwe, Ning [ -0.73% ] , Jeanswest and other brand shoes and apparel shops are also rapidly reduced stores. According to Daphne released the first half of 2016, a profit warning report shows only the first half of this year, Daphne net off store 450, including 400 direct sales stores and 50 franchise stores. Once all the rage Metersbonwe business situation is not optimistic about 2013 sales stores and franchise also has nearly 5000, the end of 2015 has been remaining 3700, store sales decreased by about a quarter. Jeanswest in the past 4 years has closed 1012 stores, at the end of 2015 had only 2249 retail stores.

    In the micro-channel circle of friends spread a worldwide brick-and-mortar retail death list, it is revealing physical retail bleak. According to this list were killed in the first half 2016, a second-tier cities major retail companies closed shop more than eighty percent. China Chain hundred reports China Chain Store & Franchise Association released statistics also show that in 2015 the chain of hundred sales volume of 2.1 trillion yuan, an increase of only 4.3%, the lowest ever one. Department stores even have negative growth of -0.7%.

    China Chain Store & Franchise Association, the relevant responsible person said, “This year the store is really a life and death to the moment”, but specialty stores, convenience stores have achieved double-digit growth.

    Entity is not fully closed shop because of the impact of the electricity supplier, there are real weak economic growth, labor costs, rental costs, taxes, weak profits and other reasons. In the late 1990s, chains began a large expansion, rental contracts generally expired in 10 to 15 years, these contracts are now expiring and the rent is at least doubling, some low-margin supermarkets, department stores have been unable to renew the lease.

    Another issue is the failure to embrace changes in the market:

    Beijing Zhi future starting from Consulting Group founder Li pointed out that the impact of the electricity supplier, rent increases, etc. are one of the most direct reason. But more than the rent, labor, electricity providers more powerful impact, and is continuing under the influence of these factors, changes in consumer spending habits occurred. More important reason is consumer behavior, consciousness, the pursuit of consumer convenience, reliance on technology and the like. On the other hand, traditional commercial aspects of the transition moves more slowly. Department stores these years has been to break, suffer not found the right ways, not kept pace with changes in consumers.

    Li Zhi said that from the domestic and international experience, the current transformation of department stores there are two main directions. On the one hand is to break through the high-end direction, shrinking front, the focus is more on the line, service requirements are relatively high business forms; in the other direction is toward a more pluralistic, more inclusive development, to provide similar shopping mall such a large, integrated leisure experience scenes business forms.