Parkson positions itself in the mid-price market.

The Nanchang Parkson Shopping Centre is the first department store opened by foreign-invested, chain-operated department store group Parkson in scenically beautiful Nanchang in Jiangxi Province; it's learned a sharp lesson of how one area can be totally different from another on the Chinese mainland for shopping appeal.

Zhang Jun, Deputy General Manager of Parkson tells the story of how the store chain made its entry into the city's market by purchasing Nanchang Pacific Shopping Mall by stock acquisition.

At the beginning, Parkson sold young fashions popular in the coastal regions adjacent to Nanchang. But after two years of operation, the group came to realise that Nanchang consumers are quite different. They tend to shop for established, more conservative brands.

For instance, established brands such as Goldlion and Montague sell very well. On the other hand, the city's consumers are rather slow to accept new brands or fashion items.

Part of the reason is that Nanchang incomes are not high and their spending power is rather limited.

Hongkelong Department Store Investment Co Ltd is the largest local commercial enterprise chain in Jiangxi. According to Wang Mingbiao, the CEO, Nanchang has a relatively small population and its market size is not big. The consumption power of its residents is weaker than that in neighbouring cities such as Wuhan and Changsha.

Average monthly incomes of white-collar workers in Nanchang are between about Rmb2,000 and Rmb3,500, with housing being the largest expenditure item.

People don't have much money to spare. So, consumption among Nanchang residents is rather conservative and most live closely within their means.

It is perhaps for this reason that when Nanchang residents shop they mainly go for established brands because they don't want to risk buying new brands or even "new" fashion items.

Since the spending power of youthful Nanchang consumers is limited and that of their elders more mature, Parkson decided to adjust its approach and switching its focus to mature ladies' and men's garments, targeted at customers aged over 30.

High-end department stores are generally still in the development stage in Nanchang. Hongkelong Group opened its Caifu Plaza in 2004 in the hope of turning it into upmarket department store. It offered imported international top-of-the-market brands. However, for the next four years the store made a loss. It's only this year that profits have begun to appear.

As for Nanchang Parkson, its positioning is slightly lower than that of Caifu Plaza. In the first half of 2009, gross profit margins dropped as intense market competition led to frequent discounts and free offers.

The scale of profitability in the Nanchang market is not very large, but there's been relatively fast growth in the past few years. In 2008, total retail sales of consumer goods grew 24%, higher than that of Wuhan (21.8%) and Changsha (22.8%).

In the first half of this year, the growth of Hongkelong Group's sales of general merchandise hit 25.8%.

from Zhou Yilei, Wuhan Office