E-commerce forces change on China's high street

Date : 2015-07-24  | From : Xinhua

Brick-and-mortar shops? More like broken and mortal. Challenged by the online shopping frenzy, Chinese high streets are struggling.

In the Lafayette Gallery, which opened in 2013 on Beijing's bustling Xidan Street, shop assistants complained about not selling a single shirt in days. Although restaurants and theaters in the top two storeys are crowded with people, the clothing shops are getting very little business.

A woman from Lafayette's press department, upon seeing Xinhua's interview request, asked, "Will this be a favorable or unfavorable report? Because all press reports have been about us having no customers."

Such a gloomy outlook has become common among China's retailers, as e-commerce, which saw a year-on-year growth of 40 percent in the first five months of 2015, reshapes the country's business landscape.

The retail market is polarizing: Traditional department stores selling everything from food to footwear are seeing fewer visitors and closing, but one-stop shopping centers like Beijing's Joy City are thriving.

At two such department stores, Xidan Shopping Center, and Beijing Department Store on Wangfujing Street, visitors are scarce even on a weekend.

"Department stores are being sandwiched by high-end competition from larger shopping malls and price competition from online sellers," said Wu Bin, operation manager of Yintai Shopping Group, which runs a number of department stores.

"We used to put out clothes and shoes and people simply came to buy. Now, we have to woo them. It's like in a relationship; you have to let the customers like you, love you and come to see you," he said.

"People have started to go to shopping malls for fun and you have to provide fun. Chinese retailers cannot survive only by selling products," Wu added.

According to a report by the China Retailers' Association, 26 department stores closed in the first six months of 2015. China's top retailer, Wanda, alone closed 10 shops in different cities. Sources with the company said none of its shops opened after 2007 were profit-making.

In 2014, about 201 retailers closed across China, up 474 percent from the figure in 2013. The sales of China's top 97 retailers in 2014 dropped by 6 percent from the previous year. In 2014, 214,600 people worked in retailing in China, down 5.56 percent from 2013.

"China's retailers are facing a tough battle, an inevitable erosion of customers," said Chen Lipeng, a professor with the Capital University of Economics and Business.

"The retailers have to either replace the non-profit-making shops with entertainment and dining facilities and provide hearty individualized service or they could spend six to 10 years to build their brand to boost consumption," he said.