Remnant of a bygone era gives shoppers touch of nostalgia in quest for survival

In downtown Beijing, a run-down department store just five minutes' drive from two new super-shopping malls is bursting with customers every day. The Chongwen District store's products, layout and services are exactly the same as stores in the old days of the planned economy. Step inside and it is like going back in time 30 years. A red banner hangs outside the Dafang Department Store hailing its name, while two saleswomen stand chatting in a small doorway. In the sales area, red padded jackets and black trousers hang from the ceiling of the 100-square-metre emporium; children's clothes are piled up on counters; and bolts of material line the windows, with notes pinned to them saying 'pure cotton'. Hand cream, shampoo and other household product lines familiar to people in their 50s and older are sold from under glass counters, priced from several yuan to 30 yuan. About 20 shop assistants in blue uniforms answer customers' queries, fetch goods and efficiently calculate bills on an abacus. The customers include familiar faces from the neighbourhood and younger shoppers attracted by recent media reports reminiscing about the old-style shopping experience. The store may seem like a remnant of a bygone era, but it is not simply trying to cash in on retro chic. Its focus on affordable products and back-to-basics retailing is a deliberate strategy for survival. The store has weathered the ups and downs of the mainland's opening up to the world. It was a state-owned department store when it opened in 1979 and, like thousands of other shops across the nation at the time, it had a political function. It had to ensure supplies in the days of goods shortages and followed the local commerce bureau's instructions in every aspect of its business and management. From the late 1980s, the economic boom times spurred an enthusiasm for investment, and the old department stores were expanded and decorated to match the latest international styles. The number of big department stores, with a business area larger than 5,000 square metres, rose from 164,000 in 1985 to 174,000 in 1990, the highest annual increase since 1949. But Dafang, a small store serving neighbourhood residents, was not one of them. The store embraced another opportunity in the early 1990s when its management decided to sell 'foreign-trade apparel'. There were thousands of factories in eastern and southern provinces exporting cheap clothing to the world and Dafang linked up with a few to buy products that failed importers' standards. 'They were trendy and cheap. And because we described them as goods made to serve foreign customers, they were snapped up by domestic customers for their exotic feel,' store manager Xue Hong said. The business was so good that monthly turnover between 1996 and 1999 was up to 700,000 yuan in good months. Meanwhile, the big department stores were paying the price for their unrealistic expansion. An economic slowdown trimmed purchasing power and management problems in the industry began to bite. In 1996, 119 of the mainland's 121 large department stores saw their sales fall and four major stores - in Beijing, Shenyang , Tianjin and Guangdong - collapsed that year, followed by more shutdowns over the following two years. Dafang was lucky. It survived and its employees did not hesitate when they were offered a chance to buy the store from the Beijing government in 2000 under an ownership restructuring plan. 'It was the policy that the store had to go through reforms, which would turn the ownership over to the employees. Many other stores were also being restructured. I didn't think much about why I should be a stakeholder and did not know what lay ahead,' Ms Xue said. The store became a joint-stock co-operative enterprise owned by 29 investors, all of whom were employees ranging from managers to shop assistants. Each contributed more than 17,000 yuan, amounting to about 513,000 yuan. Ms Xue later discovered they had overpaid because it did not give them total ownership of the property. 'We [also] did not get any preferential policies and were not fully informed about the risks,' she said. They did not know a major housing demolition project in the district would start that year, which forced 50,000 households, the main source of the store's customers, to move out. They were also kept in the dark about the opening of a second shopping mall, owned by Hong Kong's New World Development, in the district the same year, with 30,000 square metres of floor space. At the same time, the foreign-trade goods were losing their appeal amid competition from street vendors and mushrooming boutique-style stores. Customers had grown more discerning in the 20 years since the mainland opened up and were no longer willing to accept the rejects of overseas buyers. There was also restructuring among the store's suppliers. As a result, some went out of business and some were managed by different owners. Dafang had to adapt. The economy grew rapidly in the next seven years and retail sales increased by an annual 10 per cent year on year. More and more people were willing to pay for better quality and services, and over that period the mainland's retailers made progress that had taken western countries 150 years to achieve. All kinds of retail outlets - chain stores, supermarkets, shopping malls, automatic vending machines, pedestrian shopping streets and internet stores - seemed to appear overnight. And Dafang struggled to survive. The staff attended fairs organised by communities, selling goods directly to their residents. They also set up temporary booths in hospitals and big factories, to win over customers outside the store. When the licence expired on the store's only truck, the sales team had to curtail its travels. Sometimes they played a cat-and-mouse game with city regulators by displaying their goods outside the store, trying to lure passers-by. These days the store's debt amounts to 300,000 yuan, 60 per cent of the stakeholders' investment. But few have given up. The staff are used to working here, unwilling to move somewhere else. Managers are working hard to avoid closure. They have sat in on management courses, visited modern stores and worked on a solution. Their plan now is to target middle-aged and elderly customers by selling 'quality and cheap' goods. Customer Yang Weixiu, 72, thinks it's a winning formula. 'I don't dare to go into big department stores. It's not like our place. I buy everything here. It's what a true department store should be,' she said. 'There are so many bad and defective goods nowadays. Here quality is guaranteed.' Although it is a niche business, the management is optimistic about being able to cash in on the nostalgic sentiment of old people. And, as the mainland's society ages, they believe their business will only get better. But management will have to work hard to convince 22-year-old Yu Huan. 'My granny asked me to come here to buy hand cream. Such a traditional store is a vague memory to me. I don't reject the idea, but I don't find the products and the interiors attractive,' she said. Ms Xue said the store had no plans to redecorate because it would have to put prices up to afford it. Dafang will stick to its cheap price advantage but, to attract younger people, the store has started to search for more fashionable products a bit more pricey than their main range. Everything old is new again, and not only with the store but with some of its 'new' products aimed at a younger generation. It is now sourcing 22-yuan perfume pouches, an old keepsake sent by women to their lovers, from a brand that is 178 years old.