New Sears: a specialty mass retailer - editorial

Discount Store News, July 22, 1991 by Tony Lisanti

New Sears: A Specialty Mass Retailer

As you read this special issue--DSN's annual statistical report--you will notice several additions to what is already recognized as the most comprehensive analysis and source of data about the discount retail industry.

This special issue contains the vital stats of all top chains in every segment of discount retailing, not merely one or two chains from a segment or two pulled together in one chart with no apparent rhyme or reason. The data includes sales, operating income, and store count. In addition, major trends, including mergers and acquisitions, are reviewed in each segment analysis.

Also added this year was a complete financial analysis of public companies in the discount retail field.

Another highlight of this year's annual report is that for the first time ever, Wal-Mart is officially ranked as the largest discount retailer.

But, perhaps to some readers what may be the most significant change--and to others what may be the most controversial--is the addition of Sears to the DSN Top 150 list of discount retailers.

Is Sears a discounter? Is Sears a specialty retailer? Does this troubled behemoth belong on a list ranked among Wal-Mart, Kmart, Target and Toys "R" Us?

These are only a few of the questions that I am sure many DSN readers will have about Sears. The answer is "yes" to all the above questions. Here are some of the key factors that put Sears into the "discount" classification. In fact, Sears and Montgomery Ward are now officially categorized as "specialty mass retailers."

* Superstore format. Montgomery Ward was added to DSN's Top 150 ranking of discount retailers two years ago. At that time, DSN reported the breakup of the triumvirate of the three mass merchants--Sears, Penney and Ward. DSN stated that comparing the three retailers was no longer a valid comparison because the chains had changed their formats significantly. Penney went upscale and distanced itself from the mass market. Montgomery Ward was added to DSN's Top 150 because it created several power formats within the store that make it more competitive with specialty discounters. It's obvious that Sears has also adopted the discount specialty store format. Its Brand Central concept, for example, is positioned as much as a specialty electronics store as Circuit City is.

* Value. The term discount now has the connotation of "value." And Sears is certainly positioned as a "value-driven" retailer; * EDLP. Sears' everyday low price strategy has enabled the retailer to compete more aggressively with other discounters; * Discount store strategies such as "Dollar Days" have been promoted heavily in recent months and will continue to be utilized simply because they work; * Other factors that justify classification of Sears under the discount retailing umbrella include a significant increase in national brand name merchandise (the company has been described as a "brand name discounter"), a centralized buying staff, a streamlined organization and a likely evolution towards a more self-service environment.

But more important than how DSN or anyone categorizes the giant retailer is whether the consumer accepts the "new" Sears. And while Sears may be decidedly discount, it's still struggling.