Parkson Closes Beijing Shop as Department Stores Stagger

Parkson Retail Group has temporarily closed one of its Beijing stores following reports of dropping sales and after it permanently closed two stores in other Chinese cities.

Sam Au, chief financial officer of Parkson Retail Group, told the local press that the company is closing its store on the capital’s East Fourth Ring Road for remodeling, but declined to give a reopening date.

Department stores in across China have been struggling as they face high-end competition from larger shopping malls and price competition from ecommerce operators.

Customers Scarce at Beijing Shop as Department Stores Suffer

Reports in the local press interviewed local residents about the closed Beijing shop, and indications are that the store may need more than just remodelling to reopen profitably.

Locals described business at the local Parkson branch as tepid, with customers scarce even on weekends. Apparently the shopping district Parkson chose for the store is facing general challenges from a lack of foot traffic.

For Parkson, however, there appear to be deeper troubles as a report in Xinhua indicated that the company is signing shorter term contracts of six months with brands renting space in its stores, rather than the standard one to three year agreements. The shorter lease agreements are seen as a sign that retail brands are unwilling to commit long term to putting their merchandise into Parkson’s stores.

Earlier this year Parkson closed stores in Jinan, Shandong as well as in Changzhou, Jiangsu.
Earlier this year, it closed a store in Jinan, Shandong province, as well as one in Changzhou, Jiangsu province. Last year the chain closed stores in Hebei’s Shijiazhuang and Guizhou, despite opening six new stores in other locations.

In 2013 Parkson suffered its worst performance in nine years with net profit dropping 58.4 percent in China to RMB 354 million.

According to a report by the China Chain Store & Franchise Association, in 2013 the top 50 department store operators in China saw their revenue grow by an average 9.6 percent, with store numbers increasing by 0.4 percent.

Malaysian Company Pioneered Department Stores in China

Parkson which was a pioneer foreign investor in China’s department store sector lists 57 stores in 37 cities on its website, but that number maybe heading south after the Malaysian-based chain’s Chinese operations reported eight percent lower same-store sales and 34.3 percent lower net profits during the first quarter of this year compared to the same period in 2013.

The upper mid-market department store operator opened its first China store in Beijing in 1994.