Frontline of Circulation

Author: Sun Minggui / Country: Mainland China
Publisher:
Publishing Date: 2002-05-01
Features: However, with low-price strategies becoming a common approach across various industries, the price advantage of discount stores is facing challenges. Therefore, some scholars (Kojima Yoshiki, 1996) have proposed that discount stores must undergo new innovations. Discount stores are not the ultimate form of retail formats, and exploring new discount retail models has become a trend in foreign discount stores. Currently, the following have emerged:
1. Category Killer: This type of store specializes in a specific product range, offering overwhelming competitive prices and a wide variety of items, typically in the form of large specialty stores. The U.S. frequently adopts this format in home appliances, clothing, cultural goods, furniture, and daily necessities. In recent years, due to rapid growth, these stores have not only captured market share from department stores but also from supermarkets. For example, a U.S. home appliance category killer achieved $3.3 billion in sales in 1992, accounting for 6.6% of the home appliance market share, with a gap of only 10 percentage points compared to supermarkets, which held a 10% share. In 1985, this figure was only 1.8%.
2. Outlet Store: Literally meaning "outlet," this type of store specializes in handling excess inventory from manufacturers and retailers. Initially, it was used to sell surplus goods directly from producers, making it a natural outcome of overproduction. Today, this format has expanded to include excess or stagnant goods from department stores and other retailers. These stores collect unsold items from retailers and manufacturers and sell them at very low prices, such as discounted clothing that can be purchased at 90% off. Outlet stores generally lack a clearly defined product range and do not offer after-sales services.
3. Off-Price Store: This type of store sells branded clothing, fabrics, accessories, and decorative items at prices lower than the general market. It primarily operates in the clothing sector, focusing on high-end brands. However, due to potential defects, obsolescence, or overstock, prices are lower. This format has been widely accepted by consumers in the U.S. and has grown rapidly. According to a survey by Discount Store News, total sales reached $14.6 billion in 1992, a 10.6% increase from the previous year, compared to $10.5 billion in 1983.
4. Wholesale Club: This type of store is designed to offer bulk sales and low prices, typically functioning as warehouse-style retail outlets that combine wholesale and retail operations. Membership programs are often used to increase sales volume. The U.S. currently has 500–600 such stores, generating annual sales of $35 billion.
5. Power Center: This type of shopping center aggregates multiple discount stores under one roof, offering low prices and convenience. These centers usually feature large parking lots, a high number of stores, and a wide range of products to meet customers' one-stop shopping needs. Power centers strongly attract consumers. For example, a power center established in Utsunomiya, Niigata Prefecture, Japan, on the Hokuriku Highway has a floor area of 45,200 square meters. In April 1994, a large power center extending along Japan’s National Highway 18 in both directions covered approximately 188,000 square meters and could accommodate 1,700 vehicles, housing over 50 stores from several companies.
(IV) Convenience Stores
By definition, convenience stores combine convenience and affordability. In 1972, the Japanese Small and Medium Enterprise Agency summarized the characteristics of convenience stores:
① Location: centered around residential areas with a service radius of 500 meters;
② Store Size: less than 300 square meters, with actual selling space typically ranging from 50 to 200 square meters, making them small and specialized stores;
③ Product Range: fewer than 4,000 items, primarily daily necessities, targeting single individuals and students;
④ Operating Hours: longer than other retail formats, typically open 24 hours a day with no holidays;
⑤ Self-Service: managed by one store manager and several employees;
⑥ Organization: chain-based.
Convenience stores emerged in the 1920s but did not develop rapidly until department stores became the primary shopping destinations. While convenience stores have lower survival conditions than department stores, their growth depends on lifestyles and work patterns rather than economic development levels. Japan introduced convenience stores in the 1970s, a period when it was already a developed country, which somewhat supports this argument. In the 1980s, convenience stores in Japan experienced rapid growth. According to the Ministry of International Trade and Industry’s commercial survey, in 1994, convenience stores generated ￥833.53 billion in sales, accounting for 80% of department store sales, with 48,405 stores. In 1985, sales were only over ￥300 billion, and there were only 30,000 stores. Currently, Japan continues to open 3,000 convenience stores annually, with about 1,500 declaring bankruptcy each year.
The main difference between convenience stores and supermarkets lies in product range. Supermarkets typically offer 200,000–300,000 items, while convenience stores usually have only about 3,000, focusing on fast food, vegetables, magazines, alcohol, and daily necessities. How can such a limited selection provide "convenience"? The key is that convenience stores do not serve all customers but only a specific segment. Japan’s largest convenience store, 7-Eleven (operating from 7 a.m. to 11 p.m.), achieved ￥1,392.7 billion in sales in 1994, ranking third in the retail industry after Daikoku and, but with only 3,000 items. To expand sales, convenience stores are very selective in their product offerings, focusing on best-sellers and replacing slow-moving items promptly.
Foreign convenience stores are continuously innovating. For example, Home Centers are a retail format similar to convenience stores. First introduced in Japan in 1972, Home Centers had 550 companies by 1989, operating over 3,000 stores with total sales of ￥230 billion, accounting for 13% of self-service store sales and comparable to traditional convenience stores, though still second to supermarkets and food supermarkets. Home Centers typically have a selling area of 500 square meters and a footprint of 700 square meters, with average store sales of ￥1 billion and 180 parking spaces. In 1989, five Home Centers in Japan exceeded ￥50 billion in sales. Their product range primarily includes home-related items such as lumber, building materials, tools, gardening supplies, and home decor, with household goods, electrical appliances, auto supplies, gardening products, and seasonal items accounting for 60% of total sales.
(V) Shopping Centers
Shopping centers are composite retail formats featuring multiple stores (including different types of retail). They are typically developed by developers who create regional development plans to build comprehensive commercial facilities that integrate dining, services, and retail. Shopping center operators are divided into two categories: core stores and lessee stores.
Core Stores are typically major retailers within the shopping center, such as supermarkets or department stores. These stores have larger floor areas and operate a wide range of products, attracting customers. Lessee Stores are typically specialized stores and local retailers, operating in a chain format with smaller scales and a focus on specialized retail, primarily meeting diverse needs and extending customer stay. Core stores and lessee stores form a store association to organize promotional activities, integrating various commercial functions under group management.
The International Council of Shopping Centers (ISCA) defines a shopping center as a group of commercial facilities that operate, are established, owned, and managed as a unified entity. Generally, shopping centers have the following characteristics:
① Total Floor Area: at least 3,000 square meters in designated cities and 1,500 square meters in other areas;
② Store Composition: composed of multiple stores from different companies, with at least 10 non-core stores engaging in unified advertising and promotional activities, though individual operations are not centrally managed. Customers can compare and shop simultaneously;
③ Core Store Ratio: the combined floor area of core stores (including occupied dining and service areas) must not exceed 70% of the total center area;
④ Facilities: equipped with multiple amenities such as police stations, banks, post offices, medical facilities, large parking lots, and a variety of services, including shopping, entertainment, culture, and fitness;
⑤ Location: most are located in suburban areas.
Shopping centers first appeared in Texas, U.S., in 1932 but did not develop significantly until the 1950s. This was due to the U.S. government’s decentralization policy in the 1950s, which led to a mass migration from old cities to new ones, rapid development in suburban areas, and the need for commercial facilities. The widespread adoption of automobiles also contributed to the rise of shopping centers. In the U.S., shopping centers are most common, with three main types (detailed information can be found in Table 3-1-6). There are over 40,000 shopping centers nationwide, 60% of which have a floor area of less than 9,000 square meters, while only 700 have over 70,000 square meters. The largest is MOA, which opened in August 1992 with a total floor area of 380,000 square meters and a selling area of 230,000 square meters. Centered around four core stores, it has 500 specialty stores and restaurants, 14 cinemas, attracting over 30 million customers annually. 70% of these customers come from a commercial radius of 250 kilometers, while the remaining 30% are from outside the radius. On average, 50,000 customers visit daily, rising to 15–20,000 on weekends.