Top Biz News
Discounts bring back shoppers
By Yu Tianyu (China Daily)
Updated: 2009-12-22 08:00
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Despite freezing temperatures, serious shoppers were out in full force over the weekend to capitalize on pre-holiday sales being held across Beijing. And with a limited number of discount items available at most department and designer stores, the early birds often landed the best deals.
For Zhou Chi, a self-admitted shop alcoholic from Beijing, her early arrival at Shin Kong Place's Gucci store on Beijing's Jianguo Road paid off for the 27-year-old analyst of a foreign consulting firm. She beamed as she clutched two Gucci bags bought at 30 percent below retail price.
Other discount seekers also found bliss in the halls of Shin Kong Place, including Li Zhuzhu, a 25-year-old Juicy Couture fan, that was beside herself with joy at learning some of the brand's products were offered at a 50 percent discount.
In recent weeks, both domestic and international retailers have been rolling out discount promotions prior to the Christmas holiday season in the hope of luring in shoppers.
Recently Beijing New World department store held a 24-hour discount promotion that grew store sales by more than 150 million yuan in three days, the company said.
Across town at Cuiwei Department Store on Huayuan Road, the store's holiday shopping event in late November netted a record 330 million yuan in five days.
Some stores are also drawing in customers by offering free giveaways with purchases over a certain amount. "Many brands, including luxury ones, have carried out different dis-count activities, and consumers receive various gifts when they spend certain preset amounts of money," according to Shang Bo, PR officer of Shin Kong Place said.
"For example, consumers who spend over 3,000 yuan will receive a box of Valentino chocolates and those who spend 5,000 yuan will be given a Christmas cake. People who spend over 8,000 yuan will get a bottle of fine wine."
Industry watchers agree retailers need to drum up large sales numbers to rack up profits on very thin, discount margins. "For department store operators discount sales and promotional events will squeeze their profit margins despite higher revenues in the first half of 2009," said Alex Liu, retail analyst at market research firm Euromonitor International. "But the sale pricing has to continue despite the economic recovery because many shoppers have gotten used to receiving huge discounts and special promotions, so they are likely to stop purchasing and wait for department stores to do more," Liu said. He also predicts that Chinese department stores will end the year with sales down some 2 percent to 3 percent when compared to 2008.
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Retail giant Carrefour China conducts its biggest promotional events now, according to company spokesman Chen Bo. "During the New Year and Spring Festival period, Carrefour will have promotional activities which are the largest of the year, including discounts on cosmetics, food, daily commodities and so on." The season brings out an extended willingness by residents to spend.
Meanwhile, retail analyst Liu is predicting supermarkets, which have been harder hit by the economic slowdown than department stores, will be less likely to spread holiday cheer via discounted prices.
Since the end of 2008, department stores in China held promotional activities and sales events to lure customers to their stores, which resulted in profits being squeezed, according to the half-yearly reports for this year.
