A170 – Principles of Retailing
Tuesday Nights – 5:45pm-9:00pm
February 12, 2008
Full-line discount stores are departmentalized retail operation that sell at prices substantially lower than conventional retailers. Discount stores can be classified into department stores and discount department stores. Once the store has been classified into the type of store they actual are they can be further classified into full-line department stores or specialty department store. The full-line discount store can keep their low prices on their merchandise because they minimize free customer services, maximize the use of self-service, and use inexpensive fixtures, decorations, and displays. Any history before 1960 for full-line discount stores would have to be traced back to the basic discount stores. This would begin with small apparel stores in New York City around 1910, although they did no begin to take shape until the late 1940s and early 1950s. The industry began to take shape in the 1950s with the launch of innovative merchants such as Caldor, Bradlees, Hills, Heck's, Goldmans and Leonard's, Gibson, Fed-Mart, Fedco and GEM.
Discount stores evolved from a series of retailing changes that began in the United States in the late nineteenth century. They evolved from three different types of stores: the mass-merchandising department store; the second was the chain store, which included variety stores and the junior department stores or areas; the third was the mail-order house, evolving from the technology and from the growth of popularity from the USPS.
Full-line discount stores continued to evolve from the basic discount stores in the 1960s with Kmart, Wal-Mart, Target, Venture, Clover and Gold Circle launching from their business ventures. Most of who are the backbones of the full-line discount stores today.
In 1993, full-line discount department store chains tallied an 11.3% sales increase, nearly double the increase from 1992 and ahead of the 9.9% projections for gains. Sales for the full-line discount chains, which include supercenters, totaled $124.0 billion in 1993 and only $111.4 billion in 1992.
With Wal-Mart reporting more than 58% of full-line discount store’s sales, the future trends in this retail sector will tend to follow Wal-Mart’s lead. This includes the conversion of full-line discount stores to supercenters, and opening new supercenters as opposed to opening new basic retail stores. Wal-Mart is planning to open 220 new supercenters each year, 2/3 of which will be conversions of current discount stores. This year, it is estimated that Wal-Mart will be running over 2,300 supercenters and less than 1200 full-line discount stores. This change is the result of full-line discount stores having increased competition from discount specialty stores and department stores, as well as the face that supercenters have a greater operating efficiency. Some of the largest competitors of full-line discount retailers include companies like Lane Bryant, Best Buy, Linens ‘n Things, Menards, and MC Sports.
To combat this competition, full-line discounters are looking to expand in new product areas that were previously overlooked. For example, camcorders are now in a record 10 percent of households.With this happening, and the future looking promising, full-line discount stores are looking at carrying more of the categories like this that were previously carried with just a few SKU’s.
These retailers are not necessarilly carrying the best products in all situations, or at the cheapest prices, but full-line discount retailers are here to offer both private and national brands, and are typically less fashion oriented than department stores. For this type of retailer, Wal-Mart, Kmart, and Target are responsible for roughly 84% of total yearly sales. Let us take a look at each store and what they bring to full-line discount retailing.