The fastest growing discount chains - Discount Industry Annual Report

Discount Store News, July 4, 1988

The Fastest Growing Discount Chains

Nationwide DSN Report

When asked which chains opened the most stores last year or which had the largest percentage sales growth, there is probably a temptation to first think of K mart for the former and Wal-Mart for the latter.

In reality, the listings of chains showing the greatest growth in four specific areas contains a few surprises.

The companies that are growing strongest when measured against their previous year's performance include a high percentage of specialty stores and membership warehouses, along with the usual discounters like K mart, Wal-Mart and Target.

Wal-Mart and Sam's, its membership warehouse operation, took first and second place for largest dollar sales growth between 1986 and 1987, with Target, K mart, and a number of warehouse clubs and specialty stores composing the bulk of the top 20 chains showing the greatest growth in sales.

Last year K mart ranked second and Target ranked No. 6. This year Target was third and K mart fourth.

Costco was No. 1 in terms of percentage sales growth between 1986 and 1987, recording a 83.4 percent sales surge. The only discounter to measure up was Wal-Mart, No. 15, with a 29.9 percent increase.

Other membership warehouse clubs that experienced similar high-percentage sales spurts last year included Price Savers, The Wholesale Club, Sam's, PACE and Warehouse Club, all of which had 1987 sales that were at least 45 percent higher than for 1986.

As for the highest growth in dollar earnings. Wal-Mart, with $221 million, lead the pack, followed by Service Merchandise, $73.5 million, and Best Products, $72.4 million. The two catalogers managed to increase their dollar earnings within a one-year period even more successfully than K mart (up $70 million) and other powerhouses.

Both Service and Best turned red ink in 1986 into black last year. Each cataloger lost over $20 million two years ago but recorded profits exceeding $40 million in 1987. The roughly $70 million in earnings growth at the two catalogers outpaced highly successful specialty stores such as Toys "R" Us and Circuit City, as well as a long list of wholesale clubs and traditional discount outlets.

Family Dollar and Wal-Mart again topped the chart in terms of having the highest number of new store openings in a one-year period. The dollar store operator opened 165 stores during 1987: Wal-Mart opened 134 units. Toys "R" Us, which had ranked No. 9 last year with 49 store openings, jumped to the No. 3 spot by opening 86 new locations.

Other than Wal-Mart, discounters fared poorly in the new stores measurement. Target was the next discounter to show, ranking No. 6 with 71 new units in 1987.