Clubs, CE chains run most productive stores - discount store productivity; warehouse clubs, consumer electronics chains - Annual Industry Report, part 2

Discount Store News, July 18, 1988

Clubs, CE Chains Run Most Productive Stores

Leading membership warehouse clubs and consumer electronics chains were the top performing retailers last year in terms of sales productivity, according to calculations based on DSN's Top 100 list of leading discounters.

Membership clubs like Price Club, Makro, Sam's, Costco, BJ's and PACE led most other types of retailers with sales per store averages ranging from $29.4 million at PACE to $89.8 million--the highest among all discounters--at Price Club.

Consumer electronics chains--which generally operate smaller units selling relatively big ticket goods--were the champs at churning out the highest sales per square foot of selling space. Tops Appliances, The Wiz, Crazy Eddie, Highland, Best Buy, Silo, Newmark & Lewis, American TV and Circuit City all generated more than $500 per square foot, with Crazy Eddie ($937.50), The Wiz ($1,135.42) and Top ($2,800) making the most productive use of their display space.

Average Square Foot Sales: $5.29M

Overall, the nation's Top 100 discounters generated average sales of $5.29 million per store last year--at an average of $161.54 per square foot.

Beside warehouse clubs, other store productivity powerhouses included Fedco, $58.3 million; Meijer, $47.9 million; and Ann & Hope, $43 million.

Other sales per square foot leaders included Price Club, $816.46; Filene's Basement, $505.45; Makro, $416.67; Meijer, $355; Lechmere, $331.25; Fedco, $324.07; Sam's, $322.74; Costco, $318.60; Herman's, $314.88; and BJ's, $302.63.

A close look at the sales productivity of the nation's leading discount chains reveals some interesting comparisons.

The three largest discounters in total sales--K mart, Wal-Mart and Target--exceeded the Top 100 average by a wide margin in sales per store. Target's per store sales productivity of $16.7 million and Wal-Mart's $11.9 million in sales per store more than doubled the Top 100 average, while K mart registered $10 million in per store sales.

In sales space productivity, Wal-Mart edged out Target, $169.89 to $167.38, according to DSN figures. K mart's selling space was slightly less productive, generating $146.46 per square foot.

Interestingly, Wal-Mart, considered by many as one of the leanest retailers in personnel, fell behind K mart by a slim margin in employee productivity: Wal-Mart posted $79,000 in sales per employee; K mart, $82,000.

Zayre, the nation's fourth-largest full-line discount department store chain, trailed the Big Three in both store and space productivity. Zayre posted per store sales of $8.6 million while garnering $117.98 per square foot of selling space.

Sam's Wholesale Club, which passed Price Club in units and is poised to surpass the industry pioneer in sales this year, still trails the venerable San Diego-based chain by a wide margin in productivity per unit. Individual Price Clubs generated an average of $89.8 million each, with sales per square foot of $816.46. Each Sam's produces an average $32.3 million in sales from $322.74 per square foot.

With the exception of Makro, which generated $75 million per store and $416.67 per square foot, other warehouse clubs more closely matched Sam's productivity figures than Price Club's.

Comparing the two top catalog showroom chains shows that Best Products generates higher per store sales than Service Merchandise--$10.7 million vs. $8.8--but fewer dollars per square foot--$163.92 vs. $175.91. Service appears to be leaner in personnel, with $136,000 in sales per employee compared to Best's $115,000 per employee.

Wide Range of Productivity

Productivity of full-line discount chains varied widely. Among the best performing were Fedco, $58.3 million per store, $324.07 per square foot; Meijer, with $47.9 million per store and $355 per square foot; and Ann & Hope, $43 million per store, $226.32 per square foot.

Other full-line discounters that generated more than $10 million in sales per store included: Fred Meyer, $18.7 million; Venture, $17.2 million; Swallen's, $16.3 million; Clover, $15.7 million; ShopKo, $14.7 million; Caldor and Gold Circle, both $12.9 million; Click, $12.4 million; Bradlees, $12.1 million; TSS-Seedman's, $10.5 million; and Rich's, $10.3 million.

In terms of sales by merchandise category, five of the nation's leading soft lines discount retailers are full-line stores. K mart, Wal-Mart, Target and Zayre each sell more soft line goods than the two leading off-price apparel chains, TJX Cos. and Marshalls.

In hard goods, K mart more than justifies its claim as the nation's leading hard lines discounter, nearly doubling the sales of its closest rival Wal-Mart.

Table : Sales Productivity of Top 100 Discount Chains

Table : 1987 Discounter Sales by Merchandise Type