The Chinese Company That Beat Macy's to Department Store Closings
The Chinese Company That Beat Macy's to Department Store Closings
by Scott Cendrowski
Pedestrians walk past the Tongzhou Wanda Plaza shopping mall, operated by Dalian Wanda Group Co., at night in Beijing, China, on Saturday, March 14, 2015. Dalian Wanda is controlled by Chinese billionaire Wang Jianlin. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images
Bloomberg Bloomberg via Getty Images
A Chinese department store owner said last year it would close half its locations.
Westerners often underestimate how good China’s private businesses are at swiftly adapting to consumer tastes.
That’s why the news of Macy’s M -1.76% closing 100 stores, or about 15% of its total, seems tame from a Chinese perspective.
Macy’s relevance, even if it is a most storied department store brand, is fading amid the rise of Amazon.com AMZN 1.26% and countless Brooklyn-inspired startups peddling online luxury underwear and entire outfits.
A similarly popular Chinese department store chain has faced the dynamics as Macy’s over the past few years. Fewer shoppers and harsh online competition cut into traffic and profits. The Chinese brand responded by slashing a lot more than 15% of its stores
Last year Dalian Wanda Group, the mall developer owned by China’s richest man Wang Jianlin, decided to close almost half of the department stores it ran inside its larger malls, shuttering 40 of 90 locations, according to Chinese media reports. Insiders told the Chinese press that Wanda’s department stores opened after 2007 had never made a profit.
Although its push into online shopping looks like a mess, Wanda’s decision to close outdated department stores—along with flipping its $45-billion-annual-sales business from a real estate focus to services over a few short years—is the kind of decisive act that might be praised in the halls of Harvard Business School but seems near impossible for a U.S. CEO to make.
China’s startups offer more examples.
