Chapter 293 - 210: Examination and Instruction (Part 2)

This was why Yang Hui wanted to open on the first floor, in a street-facing location. He had no interest in an upper-floor spot. Traditional department stores had very low ceilings, which made it impossible to achieve the right decorative effect. He couldn’t be bothered with that kind of shop.

Wang Qing didn’t reply immediately. He lit another cigarette, then went to his desk to get the store’s blueprints, which he spread out on the table to study.

He asked Yang Hui about his requirements for the store’s area and entrance.

Yang Hui stated that the storefront needed to be over 12 meters wide and the total area over 240 square meters. After all, this was Qingzhou Pedestrian Street; he wanted a larger space to accommodate more customers.

Wang Qing studied the plans for a moment. The mall’s column spacing was 8.4 meters. Opening two stores here would require taking up three bays. From a structural standpoint, it was feasible, as long as they didn’t touch the mall’s main entrance.

"A Hui, we’re talking as brothers here, so I’ll be direct. This space is currently occupied by several gold and jewelry counters. They contribute about a hundred million in sales annually, but the profit really isn’t much—less than three million combined."

Yang Hui knew this was primarily because the gold and jewelry business boomed during holiday sales events. At those times, the mall ran promotions and offered temporarily reduced commission rates. Sometimes, desperate to boost their sales figures, the mall would approve any deal as long as they weren’t losing money. So, Wang Qing’s statement that the combined annual profit was less than three million aligned with Yang Hui’s own assessment. This was the source of his confidence in demanding this specific location.

Wang Qing continued, "If I give you this space, I’m confident we can at least break even on profit. But we’d be down a hundred million in revenue, and that’s not going to be easy to justify to the board."

Yang Hui smiled. He had come prepared and had already considered all the issues Wang Qing was raising.

"Brother Wang, first of all, why does the gold and jewelry business at Yida Department Store do so well? It’s because customers know they won’t buy fakes at a department store; there’s a natural level of trust. Plus, many long-time customers have developed a habit of buying their gold here over the years.

Giving me this space doesn’t mean you have to kick out these jewelry brands. You can adjust the layout inside, move them further into the store, and phase out some of the shoe brands in that area. I don’t think you’ll lose the two types of customers I just mentioned. You’ll only lose the impulse shoppers, and there aren’t that many of them. So, you wouldn’t be losing a hundred million in sales—it would probably be less than twenty million.

On the other hand, if Zen and NLB open here, I’m confident each can average no less than three million in monthly sales. That’s over seventy million a year for both brands combined. By that calculation, your revenue will actually increase, and so will your profit.

Also, your first floor is currently all gold and jewelry, which brings in the ’auntie’ crowd from all over China. They only buy gold and don’t contribute to sales in any other category. My two brands are different. They attract a young, fashionable clientele with real spending power. That’s valuable customer traffic. They’ll also boost sales for other brands in the mall, generating even more profit for you."

Wang Qing listened, nodding in approval. It was clear he agreed with Yang Hui.

"Three million a month, per store?"

Wang Qing was clearly skeptical of this figure. The performance of Futong Commerce’s NLB store had been so dismal that he had little faith in the brand. If he didn’t know the sales figures for NLB and Zen on the first floor of Xinyue Square, he would have thought Yang Hui was just bragging. He knew Yang Hui was a strong operator, but three million a month was still a huge challenge.

"Brother Wang, if you’re worried, we can structure our partnership with a fixed rent agreement."

Wang Qing understood what Yang Hui meant. The difference between a fixed rent agreement and a commission-based one was that fixed rent provided a guaranteed income, whereas commission-based rent scaled with sales. If sales were poor under a commission model, the mall’s profits could take a big hit.

He thought Yang Hui was offering a fixed rent model for the sake of Yida Department Store’s stable income, but that wasn’t the whole story. With a fixed rent agreement, Yang Hui could handle his own cashiering, meaning all daily revenue would go directly into Yanghe Commerce’s accounts.

A commission-based deal, on the other hand, meant the mall handled all transactions. Payment for goods sold wouldn’t be settled until the 25th of the following month, effectively tying up capital for 55 days. This was no small sum. ’If not for the recent strong sales at Xinyue Square and the boost from live-streaming, which brought in a lot of cash,’ Yang Hui thought, ’I’d never dare play this commission-based game with Yida Department Store. A broken cash flow chain is no laughing matter.’

Wang Qing, however, was a magnanimous person and didn’t suspect Yang Hui’s ulterior motives. He replied forthrightly, "Let’s not do fixed rent. I trust you, brother. Let’s take a gamble on this together. Forget three million—if you can get me two million a month, I’ll have something I can report to the board.

As for the commission rate, President Tian privately told me about your deal with Xinyue Square. I won’t lie to you, I can’t get a rate that low approved here. Even though I’m the chairman, if I brought those terms to the board, they’d probably try to have me removed."

Yang Hui waved his hand dismissively. "Brother Wang, regarding the commercial terms, you name the price. I won’t put you in a difficult position."

’In truth, I never expected to get the same deal as the one with Xinyue Square. To be honest, I still haven’t figured out how Zhang Chun managed to get that approved by Xinyue Group Headquarters.’ He also knew there was another reason Wang Qing didn’t want to go with a fixed rent model: if they did, Yanghe Commerce would handle its own cashiering. That revenue wouldn’t be counted as part of the mall’s total sales. In the year-end report, the mall’s revenue would genuinely appear to drop by nearly a hundred million, and the negative publicity from that would be significant.