Mass merchants: melting pot or motley crew? - mass retailers and their tendency to be similar or different from each other - Between the Lines - Editorial

Discount Store News, August 5, 1996 by Jennifer Negley

Sometimes it's the smallest things that set off the most interesting discussions.

As we were preparing this year's Productivity Report, the "small thing" in question was a single word in the analysis that leads off the report. The word was "homogenous," and the dispute about whether to use it to describe the current retailing scene or to strike it from the story set off a debate about the complexion of retailing today.

The pro-homogenous position basically held that retailing formats are more similar now. The argument: In their quest to differentiate themselves from one another, retailers end up adopting each other's best ideas, making all of them more alike than ever. Cases in point:

* Wal-Mart for years deliberately aimed to be the first choice among consumers for fast-turning hard lines merchandise. To get to the apparel section, customers had to walk around the racetrack to the back of the store. Now apparel is right up front--emulating Target and many regional retailers--with waterfall presentations and bold, more fashionable signage. The strategy has pulled up the contribution of apparel sales to the overall store total from the mid-teens to 24%, putting it closer to Target's 33% and Kmart's 31%.

* Target, which has always set the fashion standard at discount, has moved commodities out of the shadows. The chain is re-accentuating the CE and sporting goods categories, particularly camping. It's also giving greater prominence to consumables like detergent and household cleaners.

* Venture, Bradlees, Caldor and ShopKo are so diligently mining the category dominance strategy--with particular emphasis on more margin-rich soft goods and upscale housewares--that hardware and automotives have been pared back to convenience items.

And now for the countervailing argument--that the industry is as diverse as ever, and growing more so.

* Regional retailers have been particularly flexible in their remerchandising strategies. Venture's category dominant approach goes much deeper than its other soft-lines-oriented brethren. Hills and Ames are sharpening their strategies in the opposite direction, sticking to the fundamentals of traditional, old-fashioned discounting. Pamida pursues a strong consumables strategy in smaller, largely rural markets.

* Dollar General and Family Dollar plumb the low-income niche, and unlike many full-line discounters, are in the midst of significant expansion. The acquisition of Rose's by Fred's will bring a third large player to this tier of discounting.

* Supercenters are changing the retailing landscape, forcing even smaller retailers to rethink their food strategies.

* When is comes to discount merchandise mixes, a rose is not necessarily a rose. EDLP and good/better/best pricing strategies require different types of merchandise--and exclusivity, if only in packaging, is an important component of buying decisions. PL programs further diversify the assortment.

Which set of arguments prevailed? For the answer, turn to page 45 and check out the opening paragraph.