Shopping Experience

Asia

Traditional department stores vs independent shops. Why it is still working in Asia? 

The convenience of “one stop for all” is still a viable option for consumers especially the silver economy for Asia.  Let’s explore how this idea came from historically:

Where did the “one stop for all” originate?

From an Asian perspective, traditional department stores originated in Japan, designed as multi-functional hubs that cater to various consumer needs. These establishments typically feature a supermarket on the lower level for groceries, alongside restaurants, bookstores, and clothing stores for the whole family. Additionally, they provide essential services, basement parking, and convenient access to public transportation.

If you need to buy a pen for school, a tie for work and the need to prepare for dinner, you would definitely stop by the traditional department stores where you could probably accomplished all these plus eat your lunch under two hours.  As no money could buy efficiency and time consumption, this would be the ideal world we lived in, especially pre-pandemic days.  We did left out a very important concern, which is the cost of these goods and services, which we will do so later.

When Did Department Stores Start Disappearing?

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The decline of major department stores, such as Macy’s, can be traced back to the 2008 global financial crisis. As asset values plummeted, companies faced mounting expenses and liabilities, which weighed heavily on their balance sheets. High loan ratios and rising interest rates made borrowing more expensive, forcing some stores to barely survive while others had to sell off assets quickly just to stay afloat.

From a business perspective, the traditional department store model struggled in a high-interest-rate environment, where the cost of maintaining large physical stores became unsustainable. The business landscape no longer encouraged preserving old structures with massive overheads.

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The Pandemic’s Final Blow

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The COVID-19 pandemic accelerated the shift away from physical stores, further diminishing foot traffic and human interaction in retail spaces. Online shopping became the norm, not just for convenience but also due to safety concerns. The ease of purchasing from home—without the risk of virus exposure—pushed more consumers toward e-commerce, leaving traditional department stores even more vulnerable.

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Economic Recovery?

Not for Everyone. Even today, most people's net worth has not fully recovered to pre-2008 levels. While the stock market has hit new highs in 2023-24’s so-called “Roaring Twenties”, not everyone has benefitted. Political and economic instability continue to create uncertainty, and rising indices do not necessarily translate to higher household incomes or widespread wealth recovery.

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The Case of AsianDepartment Stores

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Interestingly, in Asia, department store models have been reimagined rather than abandoned. Iconic names like Daimaru and Mitsukoshi have successfully adapted with smart strategies, creating one-stop shopping destinations.

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For instance, Mitsukoshi’s former presence in Causeway Bay, now replaced by Hysan Place, was a prime example of efficient planning. The store was designed with a single escalator leading directly to the food section, while clothing and lifestyle products occupied higher levels. Office spaces were leased to doctors’ clinics, ensuring a stable rental income to help cover expenses.

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However, as the retail landscape evolved, Hysan Place transitioned to a new economic model, prioritizing higher rental revenues over the traditional department store experience. Spaces were divided into smaller units to attract big-name luxury brands, increasing profitability but reducing variety and creativity.

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Profit vs. Convenience: The Modern Department Store Dilemma

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Previously, Mitsukoshi’s Causeway Bay store had multiple exits, making it a convenient stop for busy commuters. But in a bid to increase in-store spending, the current property management closed several of these exits, ensuring that foot traffic stayed inside the mall. While this strategy improves sales, it inconveniences commuters who once relied on those pathways to save time in a bustling city.

This raises an important question for modern department stores:

Should they prioritize revenue at the cost of convenience?

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From an investor’s perspective, profitability comes first. But from a customer’s standpoint, convenience is key. Striking a balance between the two will determine whether department stores can remain relevant in an era dominated by e-commerce and changing consumer habits.

Who will be the beneficiaries?

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The Silver Economy has now surpassed Gen Z as the biggest spender among all age groups, according to Business of Fashion. What makes this demographic so willing to spend?

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For one, they have a high level of disposable income—they are no longer financially supporting children, and their evolving lifestyles influence their purchasing habits. Recognizing this, fashion brands are increasingly targeting this group, showcasing models and ambassadors with silver hair, aging gracefully with fine lines. A prime example is Michelle Yeoh, who represents brands like Balenciaga and others.

To truly cater to these high-spending consumers, department stores must return to their roots. The Silver Economy values convenience over endless online searches or bargain hunting. If a store offers an easy, hassle-free shopping experience—where products are readily available without the need for extensive searching—they will spend. And when they do, they’ll return, share their experiences, and bring friends along, ensuring long-term customer loyalty.

Now is the time for retailers to take this shift seriously and adapt to the power of the Silver Economy.

How exactly would this work? 

Take, for example, a grandmother looking for a birthday card. From my experience, physical stores stock fewer greeting cards nowadays, and there are fewer dedicated outlets for them. However, a department store, by its very nature, must have a section for every occasion—including sympathy cards for condolences.

Now, imagine this same grandmother needs to repair her worn-out shoes. Instead of searching around the neighborhood or asking for recommendations, she could simply visit the in-house cobbler at the department store. While waiting, she could enjoy a coffee and cake in the same location—convenience at its finest. One trip, multiple tasks accomplished.

This is a special request for the CEO and shareholders to consider in the next meeting. Convenience, not hassle, attracts customers—and that’s where the money flows. When today’s younger generation reaches the next stage of life, they shouldn’t regret the decisions they supported in their youth. After all, you may one day be the ones benefiting from the foundations laid by those before you.