Consumer China

Department Stores: Only the savvy may win

  • Published 11 Feb 2010

Increasing competitive pressures and rising costs of rents, power and payrolls is sorting the savvy operators from the bumbling neophytes.

All the signs are pointing to a vibrant shopping season ahead of Chinese New Year, the Year of the Tiger, which starts on Sunday February 14. Shops are thronging with customers, banks report heavy cash withdrawals and hotel rooms in the southern holiday haven of Hainan have surged to an average Rmb 15,000 ($2,197, €1,603, £1,410) a night. All this would seem to augur well for the retail sector in general in 2010 and for department stores in particular. Department stores have tended to outperform the general retail sector in recent years and we expect this trend to continue in 2010. The best stores may post revenue growth in excess of a real 20% year on year, compared with our estimate for real sales growth in the overall retail sector in 2010 of between 10% and 15%.

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