The purpose of this research is to put in order the basic problems derived from between the department stores and their clothes shops and to devise schemes to improve the relationship between them.
First, I, in consideration of the significance of t...
The purpose of this research is to put in order the basic problems derived from between the department stores and their clothes shops and to devise schemes to improve the relationship between them.
First, I, in consideration of the significance of this research, examined the concept and characteristics of the domestic clothes distribution and the concept of the distributive relations among the stores, on the basis of the prior research documents, and then, inquired into the basic structures, operation and all aspects of the management, of the department stores. Based on such examination findings, I put in order the transaction systems among the stores and the basic problem areas arising between the three major department stores in downtown Seoul and their store shops.
The research findings show that with respect to the problems occurring in transactions between the department stores and the shops, the clothes shops in disadvantaged positions have more complaints with the exception for the shops dealing with brand names at home and abroad.
It is judged that the major cause for such problems can be attributed to the state of affairs wherein the department stores at home are rather inclined to resort to their incomes from the rents or the commissions in proportion to the sales amount, than are trying to directly manage the shops, under the assumption of full responsibilities for development and procurement of the merchandises, display in the sales stores and sales.
As a result, due to the keen competitions for inducing brand names, the shops play major roles in products planning, prices determination and sales, which draws complaints from the discriminated treatments, leading to various kinds of problems. Such lax management styles eventually homogenize the merchandises dealt in by the departments stores and obscure the distinctions among the department stores, leading to the structural problems.
Thanks to such structural problems, the department stores and their clothes shops are not involved in development of merchandises and cost reduction through rational management and reduction in the sales prices to satisfy the customer needs.
Particularly, with increasing sales of clothes by SPA, fashion specialty discount stores and mega discount stores, and by mail orders and cyber malls such as electronic commerce, there are limits in sight to the continued competitive advantages enjoyed so far by clothes distribution of department stores.
Within such context, I would like to propose the following improvements first to the department stores which wish to continue their hitherto advantaged positions in distribution channels.
Firstly, the department stores should be the main player in decision - making process and do away with the trade practices of reigning over their store shops and be mindful of the partnership with the stores.
Secondly, the department stores should increase their direct management ratio. The direct management systems is preferable to leasing the shops for rent. The current 30% direct management ratio should continue to increase. Especially in view of the difficulties involved in domestic distribution systems and characteristics of the department stores, specialists in production and distribution should be urgently fostered.
On the other hand, the store shops should continuously strive to grope for new distribution structures rather than just accepting the unfair treatment resulting from the one-sided dependency on the department stores..
Currently, the domestic department stores completely depend on the commission for the specially arranged purchasing deal and maintain the commission rate at high level and try to further raise the commission rate. As a result, the store shops counter such high commission rate by resorting to the overseas production base to reduce their costs. This also has reached its limits and further cost reduction is most like to lead to degraded quality. If they continue to depend only on the department stores, the store shops may increase their sales but will suffer corresponding deficits.
In conclusion, it can be said that with respect to the business relations between the department stores and their store shops, they get either both involved in or suffer from unfair trade habitually, depending upon the business bargaining power such as the extent of the fame of the brand and customer-inciting power, rather than the investment characteristic of the respective trades, and mutual reliability and credibility. Since such unfair practices will surely lead to all problems, the department stores and their clothes shops both should do away with their current relationship of the buyer and subcontractor, and shift to the relationship of pursuing their respective profits by developing merchandises or the brands maximizing their respective specialties.
Accordingly, I dare judge that the drastic transformation producing the synergy effects through the mutual cooperation between the department stores and their store shops should be the only answer for their coexistence and mutual development.