Department stores ditch cheap merchandise

Local department stores are upgrading their merchandise and moving up their annual sales in an attempt to gain an edge over their online competitors, local media reported Tuesday.

The Pacific Department Store, which own three stores in downtown Shanghai, announced Monday that they are going to make major changes to 20 percent of their merchandise, according to a report on the news website Eastday.com. For example, the company plans to move the woman's shoe section at its Huaihai Road store to the basement level to make room for a new jewelry and watch section.

Yan Chengda, the company's vice manager, said that online shopping website have dealt a blow to the department store industry, especially in clothing and cosmetics, the report said. Jewelry and watches are now among department stores' biggest sellers.

Consumers prefer to buy expensive products at department stores rather than online because the former are perceived to be more reliable, said Liu Haoming, an economics expert from Shanghai University of Finance and Economics. "Because there is no well-established credit system for online shops, consumers tend to go to brick-and-mortar stores to buy high-priced products like jewelry," Liu said.

Department stores have had a difficult year, primarily because of the growing dominance of online retailers, said Wang Liuhe, secretary general of the Shanghai Merchandise Commercial Profession Trade Association. "Department stores have had to make changes to avoid competing with websites that can sell certain products at lower prices," Wang told the Global Times.

Shanghai residents spent 1.35 billion yuan ($216 million) during an online sale Sunday on tmall.com, a major shopping website, according to Alibaba Group, the site's owner.

In comparison, Shanghai department stores took in 800 million yuan on average each day during their big sales for the National Day holiday, according to the Shanghai Morning Post.

Local stores are also rescheduling their big sales to grab business ahead of the online retailers.

The Shanghai No.1 Yaohan Department Store in Pudong, which is famous for its annual overnight sale at the end of year, will start the sale this month instead of at the end of December.