Statistics show that the trade volume of E-commerce of China in 2011 totaled 7 trillion RMB, with a growth of 46.4 percent on a year-on-year basis. This increase presents a tremendous challenge to the share of our traditional department stores. Given that the market demand remains relatively stable in a short period of time, when more and more people go shopping online, it means a loss of customers to traditional department stores. Some insiders have revealed that the types of goods that have recently suffered a sharp decline in sales at department stores happen to be those that can be easily purchased on the Web, such as home appliances, IT products, textiles, and even luxuries.

In the meantime, some traditional supermarkets have embarrassingly been reduced to “fitting-rooms” for E-commerce customers—many of them go to department stores to find out about the size and style of clothes among many other things they need and then purchase them online, thus becoming “fit-lifters”, so to speak. With the rapid growth of online market, clothing, make-up products, house-wares and so on, are all caught in this trend.

Apart from the pressure from the E-commerce, the severe competition within the department store business should also not be underestimated as a cause for their potential decline. Homogeneity among department stores has caused vicious competition within the trade, and, in recent years, a huge number of newly-built large shopping malls in many cities around the country have made the situation worse. Walking on those shopping streets, you can hardly tell the differences between department stores in terms of their layout, store design and goods. From Beijing to Fuzhou, as a PhD candidate put it, everywhere you go, you are likely to enter a similar kind of department store.

Under these pressures from within and without, will the traditional department stores become the next “disappearing trade”? A good number of the experts interviewed express the view that in spite of the challenges, there is still a chance for the traditional retail stores to survive and turn the situation around if they can synchronize their efforts both on and off the Web, optimize their competitive edge, and reform their business patterns.

Reportedly, quite a few retailers have opened their own online stores. Since 2012, mega department stores in Beijing have been vying to build their own E-commerce website and Tianjin Department Store is planning its own E-commerce.

Moreover, department stores should adopt a differentiated marketing strategy to attract their targeted customers. As a doctoral supervisor points out, although confronted with increasingly severe commercial competition in recent years, especially that from the E-commerce and conglomerate companies, only a part of their customer base has been diverted. Department stores should therefore work effectively to take care of their current loyal customers by improving their sales service and exploring into it with an individualized approach.

Correspondingly, traditional department stores should take a transformative lead in view of the recent shopping center surge. Research also suggests that there is a correlated pattern between the retail format and the GDP per capita of a population. Mega department stores mainly cater to a population with GDP per capita between $3,000 and $5,000, while shopping centers, especially retail stores, and convenience stores cater to a population with GDP per capita between $5,000 to $10,000. Since the GDP per capita of China exceeded $5,000 in 2011, it is time for traditional department stores to be transformed into shopping centers or other forms.