To View The Profitability From The Cost Angle

The traditional department store in China is facing industry competition from both external and internal. The internal competition mainly behaves in product homogeneity. Meanwhile, the increasing rent, human resource cost and other material cost have become the "killer" of company profits. The major performance of outside competition is reflected as the market share battle from e-commerce. Whats more, the populated oversea shopping is striving for the rising market by satisfying modern customer group with high quality diversified products.Compare with the management mode, traditional department store industry comes to development bottle-neck and is urging for industry revolution. This thesis use WangFuJing department store in China with Macy’s department store as a classic example. From the comparison of these two department stores, this paper tries to find the profitability gap according to the relevant relation between cost and profit. From the view of cost structure, this paper analysis cost elements and specific reason that affects profitability. Then, a more logical objective and operable suggestion will be raised to help the traditional department stores in China improve internal management, modify industry revolution system. In this way, this paper may have some guidance for department store industry in China. So the author brings about a sort of improving suggestions about lifting the traditional department store’s profit index to bring on the profitability in the reforming process, and to give out some practical guidance for China’s traditional department store basing on the cost management and inner-outer circumstance building angles.This thesis can be divided into five parts, and the main contents are listed as following:The first part is introduction. In this part, the research background, research purpose, methodology and frame are discussed. The innovation and deficiency is also stated. The second part is literature review. This part summarizes relevant study of cost structure, profitability and the profitability specifically in department store industry both in China and abroad.The third part is about cost structure in department store and profitability analysis. This part expounds the history and existing conditions of foreign department store and introduces the current profit model. This part also presents the evaluation theory of profitability indicator and relevant cost theory and analysis methodology in detail.The forth part is case analysis. This part contains background introduction of WangFuJing department in China and Macy’s department store, as well as an compared analysis of profitability and cost structure.The fifth part is conclusion and suggestion. This part sums up the reasons that cause profitability difference, and gives some suggestion from the view of cost control and both external and internal environment construction.This article uses methodology of theory combined with cases to analyze the current profitability situation of two kinds of department store in China and foreign country. From the view of cost structure, this article tries to find the cost elements and other specific reasons that affect profitability. Then, a practical and operable suggestion will be given in order to have some guidance on department store development. This is the innovation of the article. Due to the lack of theoretical accumulation, this article only picks the traditional department store management model in the local. Thus, the investigation result may have some deviation with actual conditions.