Is the department store really not working?, Shanghai Pacific Department Store has officially come to an end

On August 31st, the Pacific Department Store Xuhui, which has been with consumers for 30 years, will officially close after closing. It was once the first Pacific department store in Shanghai, documenting the most glorious years of department stores - not only providing a wide range of products, but also being an important destination for shopping during holidays such as the New Year and New Year. Nowadays, it has become the last Pacific department store in Shanghai, and even though the news of closure has led many consumers to rush to the mall to make purchases, the high popularity that can be reproduced cannot hide the regret.

After the news of store closure spread, Pacific Department Store Xuhui Branch experienced a rare influx of customers

Therefore, in some short videos of self media, Pacific Department Store and the land plaza that closed in January this year are often used as examples, as a basis for "physical commerce no longer works" and "Shanghai commerce no longer works".

But is there only one way for department stores to close? When the former business model no longer has high popularity, do department stores really have no opportunities?

Actively seeking change and finding "explosive points"

"Under the new market demand, both department stores and shopping centers need to be adjusted." Zhou Yong, the director of the senior advisory group of Lianshang and a professor at Shanghai Business School, pointed out bluntly that it is not that department stores in Shanghai are in trouble, but that this business model itself urgently needs to be changed. "Single department stores are already a relatively backward business model, and single department stores that only have shopping will eventually be eliminated. Shopping centers that have added functions such as catering and entertainment are also facing increasingly fierce competition, especially in some areas where there is overdevelopment and cluster operation, which requires operators to adapt to the situation."

Previously, Pacific Department Store was a star project in the Xujiahui commercial district

However, there is no equal sign between "department stores and shopping centers need to change" and "the real economy is no longer working". Consumers are there, and their consumption needs are also there. What they need is the explosive point that can meet their needs and arouse their enthusiasm for shopping.

If a "hot spot" is found, department stores also have a chance.

Across from Yuehui Square on Nanjing East Road Pedestrian Street, Bailian ZX Fun Market has become a model of transformation and rebirth for department stores. Before the reopening of its old store in January this year, its storefront was still the historic "Hualian Shopping Mall". Under the impact of the new economy, Hualian Shopping Mall is facing the same dilemma as all department stores: limited in size, only 10000 square meters; Insufficient floor height, unable to achieve spacious and bright shopping center; Traditional business formats, mainly focused on clothing and watches, lack distinctive features... Therefore, Hualian Shopping Mall has also undergone multiple upgrades, but the results have been minimal.

"This time, based on the preferences of the 'Generation Z', the shopping mall has also mustered up courage because there are no similar projects to learn from. However, we feel that there are not enough specialty stores on the pedestrian street that can make young people consume, so we have decided to make a bold adjustment." Hu Ting, the deputy general manager of the mall, said that young people love "Taobao" and the shops for anime products have "small and beautiful" characteristics, which have the opportunity to turn the shortcomings of limited space and floor height in the mall into the advantages of "gathering popularity and creating atmosphere". ".

After adjusting the business format, traditional shopping malls also have the opportunity to usher in new life

Based on this, Hualian Shopping Mall has achieved self subversion in this transformation, no longer following the old investment path of traditional department stores or conventional shopping centers, not seeking "large and comprehensive", but focusing on dimensional culture according to the preferences of "Generation Z". On the one hand, the store logo has been replaced with the easily recognizable "Bailian ZX Creative Fun Field" by young people; On the other hand, a large number of top international and domestic anime brands and traffic IP stores have been introduced, including the first overseas flagship store of Wanda Soul TAMASHII STATIONS, the first MegaHouse experience store in China, the first Wanda VRZone experience store in Shanghai, the first model bear to open an offline shopping mall store, and Blue Moon's doll house. Nowadays, the first and flagship stores here account for 65%.

Bailian ZX Creative Fun Field has gathered a large number of first and flagship stores

At the same time, changing the business model of only selling goods and less interaction in department stores, constantly organizing offline activities: content co creation on the first floor screen, themed concerts on weekends and holidays, singing and dancing at home, BJD markets, etc. These activities designed around the social needs of young people greatly increase the attractiveness of shopping malls to consumers - because only by coming offline can one experience participation.

The mall also intentionally left a large area on the first floor for flash mobs. For a limited area of shopping mall, this area can be described as a precious commodity, but the mall feels it is necessary: "Flash" can bring consumers a common and fresh feeling, maintaining the freshness of shopping mall shopping. At the same time, new IPs, especially local IPs in China, can face consumers directly here, listen to market voices, and help more IPs grow.

Bailian ZX Creative Fun Field will leave the atrium blank, providing space for various offline interactive activities

After a complete transformation, Bailian ZX Chuangqu Chang still has the "shell" of a department store, but the consumer experience is completely different from before, and the customer flow and sales are renewed: during the trial operation period, the daily passenger flow of the mall exceeded 15000 people, and now it remains at an average level of 40000 people. During holidays, the large passenger flow exceeded 70000 people, and the monthly sales exceeded 35 million yuan.

"Our daily passenger flow is 10 times higher than before the renovation, indicating that the first step of transformation has been taken correctly. However, we are well aware that the market is constantly changing and needs to be constantly adjusted according to new needs. Although we have found the 'explosive point', we can never 'lie flat'. Hu Ting said that the mall has recently reached a cooperation with the retail brand Animate, which is the largest and most popular in the anime industry, based on consumer suggestions. Its first official flagship store in China will be opened in September, hoping to continue injecting new ideas into the mall.".

Another new store that consumers are looking forward to is about to open

Some brave men have broken their wrists, while others have progressed step by step

However, not every store can turn around its previous decline like Bailian ZX Fun Market by finding a "hot spot". For many shopping malls, they may not necessarily have the conditions to break their ties, but rather choose to gradually change.

During this process, there is likely to be an "empty" area. But if the temporarily "empty" areas in the mall are enlarged and interpreted as "the mall is no longer working" or "the real economy is no longer working", it obviously does not conform to market laws.

The transformation path of the first department store commercial center, also located on Nanjing East Road Pedestrian Street and an old brand department store, is different from that of Bailian ZX Creative Fun Field. The escalator outside Building C in the commercial center, which leads directly from the 1st floor to the 3rd floor, witnessed the transformation of the mall's vertical passenger flow from insufficient to crowded.

According to Lv Lingfeng, the General Manager's Office of the First Department Store Commercial Center, the location of Hall C was originally the South East Branch of Dongfang Shopping Mall, and the 100th Shopping Mall, which was separated from the first street, was once a department store. With the rise of online shopping, live streaming sales and other models, traditional retail industry is facing huge challenges, and department store formats are no longer able to meet new consumer demands. In order to keep up with the trend of the times and meet the constantly changing consumer needs, the First Department Store Commercial Center Adjustment and Transformation Project was launched in 2016- a corridor was built between the two department stores, and it was renamed as the "First Department Store Commercial Center". The South East Branch of the Oriental Shopping Mall became the C building of the new commercial center.

Multiple aerial corridors have connected the original First Department Store with the Southeast branch of the Oriental Shopping Mall, transforming it into the "First Department Store Commercial Center"

After holding hands, the space in the new commercial center has greatly increased compared to individual department stores, providing the possibility for introducing new formats and brands. For example, Adidas quickly took center stage and built the largest brand flagship store in the Asia Pacific region on the 1st to 3rd floors. With its fashionable layout and comprehensive products, it quickly attracted a large number of consumers.

But the mall operator found it difficult for these passenger flows to reach floors above the third floor of Building C. Although the mall intentionally installed direct escalators outdoors and recommended high-rise merchants through landmarks, the results were still unsatisfactory.

However, the operator also found that the immersive exhibition Van Gogh Starry Sky Art Museum on the 8th floor of Building C did not lack popularity due to its high floor height. And after opening it for so many years, this small art museum has always been very popular.

After careful study, they believe that the Van Gogh Starry Sky Art Museum did two things right: the first was to grasp the pulse of experiential consumption, with "art", "culture", "appearance", "check-in"... almost possessing all the characteristics of current popular consumption. Secondly, the art museum is not static. Over the past four years of operation, the operator has continuously optimized the original display content and added new experiences.

The immersive experience provided by the Van Gogh Starry Sky Art Museum is very popular

The upgrade of the entire shopping mall should also be innovative and constantly changing. After evaluating various formats on the pedestrian street, C Pavilion began a new round of adjustment after the COVID-19 outbreak in 2022.

The first one to make an appearance is the "Elegant Dimension Block" on the 4th floor, which focuses on anime and trendy products that Generation Z likes. However, the products here are different from those of Bailian ZX Creative Fun Field - most of them are anime related products, including products priced at tens or even tens of yuan. During the summer vacation, a "booth area" is specially designated for dimensional enthusiasts, where eligible consumers can set up stalls for free, shout out their treasures, or exchange goods with like-minded individuals.

"Training stalls" appear in old commercial centers

"You see, our consumers here are mostly students, which was not common in retail stores in the past," said Lv Lingfeng. From this point on, the direct elevator outside Adidas no longer runs empty - many young people come to the First Department Store commercial center and use this elevator to head straight to the beautiful dimensional block upstairs.

Outdoor direct elevators have become a popular choice for many consumers to go straight to the theme

Next, the immersive performance space "Star Space" on the 7th floor was unveiled in front of the May Day holiday, with 11 theater spaces reserved. Currently, 8 original plays are being performed.

During rehearsal time, there are no consumers here. But as the performance approaches, spectators will gather from all directions in the city, and even some fans will come dragging suitcases for their favorite actors. Each theater has around 110 to 150 seats, with an occupancy rate of over 80%, which means thousands of consumers visit every day. In the face of such passenger flow, can we say that the "empty" during the rehearsal period is "lack of popularity" or "no business"?

During the rehearsal, there was no passenger flow in the star space, but during the performance, it would become crowded with people

In mid August, the brand "Han Lishen", which focuses on immersive experiential consumption, opened an immersive theater called "Flying Over Shanghai" on the 6th floor, attracting thousands of consumers on the day of its opening. "Each performance, including the entry and exit time, takes about 10 minutes. We played it in a loop from 10am when the mall opened to 9:30pm, and some consumers watched it three times." Brand regional manager Zhang Zhao didn't expect the new script to have such strong appeal.

On weekday afternoons, consumers waiting at the entrance of an immersive theater to experience

The data shows the positive changes brought about by the new round of adjustments: since May, the overall passenger flow of commercial centers has increased by 4% year-on-year in 2021, and by 30% in July; The overall revenue of tenants in Building C increased by 7%, and the Elegant Dimension Block and Star Space Theater drove the overall revenue of Building C up by 24% year-on-year in July.

But the adjustment has not ended, and there are still "empty" places in the mall. Lv Lingfeng said that the iteration of commercial retail occurs under changes in market demand; So the future of shopping malls should also respect the market, find the right direction, and then steadily move forward.

Not being a landlord, constantly seeking change

What is the path to transformation and upgrading of traditional department stores and shopping centers? Whether it is business research institutions or practitioners, their views are generally similar: in terms of products, we need to highlight "new", "scarce", and "personality", so the first store economy and first launch economy have emerged and will continue to thrive; In terms of experience, it can be combined with scenes, as well as objects such as catering, movies, exhibitions, sports, parent-child activities, as well as new product tasting experiences such as electronic products and cars, all of which have the opportunity to become popular.

Since the beginning of this year, the consumption of fitness and sports has grown rapidly

Zhou Yong also suggested that department stores and shopping centers should not just be landlords. As for traditional department stores, the previous role of the mall operator was more like that of a landlord, renting out shops and collecting rent, with little involvement in brand operations; Some even use tricks such as falsely labeling the original price and offering false discounts to attract consumers. But now, mall operators must deeply intervene in products and services to fundamentally enhance their business capabilities.

"Experience consumption really has a market, and Shanghai is the touchstone for various experiences," said Zhang Zhao. On the entire Nanjing East Road pedestrian street, Han Lichen opened a total of 4 stores, with a density higher than any other street in any city. However, each of these four stores has a different theme, and now each one is not lacking in consumers. The customer base includes both local consumers and tourists, "indicating that as long as it is a novel experience, the audience will be very broad."

Experience consumption is highly popular in Shanghai

Another detail he mentioned coincides with the views of experts and scholars - the operators of shopping malls in Shanghai cannot be landlords, but should develop together with brands. He said that on the first day of opening at the 100th Commercial Center, the "Flying Over Shanghai" theater encountered a large influx of customers. The mall operator did not stand idly by, but immediately helped the brand set up a snake shaped channel and dispatched staff to maintain order, making the theater operate in an orderly manner in the face of high passenger flow. "We have stores in other cities, but there are not many mall operators who actively provide assistance. This makes us feel that the operators of Shanghai malls are not only landlords, but also willing to work with merchants to serve consumers."

"The era of being a 'landlord' has passed, and whether it's products or services, we need to highlight the attitude of mall operators themselves. Only by going to the front line can we directly face market demand and understand what the market likes; directly participating in stall operations can also have more control over the quality of products and services." Shen Chao, the manager of the e-commerce department of the time-honored brand Shao Wansheng, said that many people believe that physical commerce is defeated by the 'price war' of e-commerce, but ignore another major feature of e-commerce - facing consumers directly. The evaluation mechanism of e-commerce platforms reflects the voice of consumers and drives operators to face praise and criticism directly.

Consumers trust shopping malls not only because of their brand, but also because they value their control over product quality and service level

Just a few days ago, the Shao Wansheng main store on Nanjing East Road Pedestrian Street welcomed customers again after closing and renovating. Shen Chao, who was in charge of e-commerce business, appeared on site at the first time. Whether it is a self owned brand or a registered brand, when facing various inquiries from consumers, he talks confidently, "Isn't that how e-commerce customer service works?" He said that from a business model perspective, Shao Wansheng is similar to traditional department stores, with rental counters accounting for the majority; But in recent years, time-honored brands have increasingly realized that self operated counters and products are more important. Even as landlords, they need to know what products the market likes and not just rent out the counters casually.

Shao Wansheng's old store was newly opened, increasing the proportion of self operated counters and self operated products, and the new "Dim sum shop" was unveiled

The biggest change of Shao Wansheng in this "new opening of an old store" is not the store furnishings, but the proportion of self operated counters and self operated goods - the proportion of self operated counters has increased from 20% to 35%, and the SKU of self operated products has also increased to more than 20% of the SKU of the whole store. On the basis of classic bittern products, new products with a wider customer base have been added, such as freshly baked Dim sum and freshly made drinks. "At present, the proportion of self operated counters and self operated products is not the largest, but it reflects our determination to no longer be a 'landlord'. In fact, operators of the real economy should be closer to consumers and listen to their needs." Shen Chao said.