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The Straits Times

Inevitable Disruption Of Department Stores

These platforms mainly sell a selection of products available in their physical outlets” (Major Department Stores Beefing Up Online Presence, Cheryl Faith Wee).

Taken from http://www.wgsn.com/blogs/wp-content/uploads/2014/03/stylesight_mode-in-asia-robinsons8.jpg.

Unless the department stores are far more aggressive with their online endeavours, and have the corresponding numbers to prove the progress, the decline in the future is inevitable.

While the department stores in Singapore are eager to keep up with its rivals on the Internet, the advent of these disruptive technologies may be the preface to an inevitable elimination of these big players in the long run. “Retail experts believe department store chains should differentiate themselves from online competitors” (ST, Jul. 18), but the inherent business advantages held by the latter – for instance, of convenience, the absence of lease challenges (especially in geographically constrains Singapore) and perhaps the low inventories necessary) – might be too hard to overcome.

Furthermore, what is also absent in this discourse is the traction that the department stores might have gained through their present offerings. Metro reported a “steady increase” in daily sales, yet the 3,000 visitors daily should old in comparison to their online rivals. Isetan claimed that its online customer base has grown by more than 10 per cent over the last two years, though what if the base is narrow to start with? Besides, one could even make the point that the growth rate is far from impression too. In addition, how do the number of products offered stack up against digital platforms, bearing in mind that consumers also have the luxury of diverse choice across multiple platforms.

Suggestions mooted by the retail experts hardly address the inherent disruptive potential of the Internet. It is far from straightforward, creating “opportunities for consumers to buy from [the online stores of the department chains]”, or merging “the advantages of online and offline shopping”. First, the incentives to do so are far less pronounced today, and the value propositions of physical storefronts are hard to ascertain, beyond the specialty or premium brands. “An established customer base” will also be eroded as an advantage, if the online competitors maintain their high consumer growth and retention rates. Targeting the older demographic will eventually cease to be an effective strategy.

Unless the department stores are far more aggressive with their online endeavours, and have the corresponding numbers to prove the progress, the decline in the future is inevitable.

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About guanyinmiao

A man of knowledge lives by acting, not by thinking about acting. Carlos Castaneda.

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