Discounter price wars descend on Dallas as Wal-Mart looks to stay on top - Texas

Discount Store News, Dec 5, 1994

DALLAS -- During its decade in this discount store market, Wal-Mart has solidified a consistently strong position against all its major competitors, but it does not dominate Dallas in the same way it does some other markets.

Target is a potent force in the Dallas area; Kmart has dozens of strong, and often new, stores; and newcomer Venture is attempting to pluck upscale apparel and home furnishings customers away from all three.

Nevertheless, a recent market visit indicated that Wal-Mart remains No. 1 by a slight margin over Target. Store visits in early October in the Irving/Addison suburbs north of the city revealed Wal-Mart edging out Target in customer count, while Kmart and Venture were suffering.

The four stores are within a mile of each other on the major Airport Highway artery.

Overall, Wal-Mart operates 21 discount stores compared to 27 Kmarts, 17 Targets and four Venture stores in the four-county (Collin, Dallas, Denton, Tarrant) market. Wal-Mart also operates more than a dozen Sam's Clubs in the area.

However, Kmart's discount store count lead has dissipated somewhat by the relative youth of its competitors' stores. Target's are nearly all recent prototypes in high-traffic areas, Wal-Mart's are split between newer and larger stores in growth areas and older stores from the original "ring" it built around the market in the early '80s, and Venture's, of course, are nearly brand-new.

Dallas store count

Chain      # of stores
Kmart          27
Target         17
Wal-Mart       21
Venture         4
Total          69

Source: DSN Research

Kmart's stores, on the other hand, vary widely, with brand-new, highvolume units in the growing northern suburbs, and extremely aged units in decaying neighborhoods downtown and further to the south.

It was of little surprise to find Wal-Mart with an edge in most pricing, although most competitors were very close in price. While no formal market basket was conducted, Wal-Mart still led everyone in the price for the justreleased "Jurassic Park" video, at $13.67. Kmart and Best Buy, also in the neighborhood, were still pretty close at $13.77, although Sam's at $14.18 and Venture at $14.99 failed to make the $14 cut. Kmart alone was meeting Wal-Mart's $12.75 price point on monthold "The Nightmare Before Christmas," with most other retailers returning the title to its everyday price of about $16.99.

In nonpromotional products, however, the story was a bit more muddled. For instance, Wal-Mart has reacted to the presence of Best Buy by lowering the prices of its CDs and cassettes, with CDs mostly selling in the $12.96 price range everyday (compared to historical levels of $13.99 and $14.99) with selected hits and specials at $11.96 and $9.96, while Best Buy offers everything at $11.99 everyday, with new releases and top hits selling for $9.99.

Target had also lowered many of its CD prices to $12.99, although some remained at $13.99, and no new releases (as opposed to "nice price"-type catalog goods) were offered below $10. Kmart and Venture were still at their $15.99 and $14.99 price points, and had noticeably poorer selections than the other three.

The same situation prevailed in the growing computer software business, where Best Buy offered the standard-setting price: for instance, $44.99 for the hit Myst, compared to Wal-Mart's $49.96. Wal-Mart came close, Kmart and Target offered a less complete selection at basically the same price, and Venture, which recently added the category, trailed with a shareware and unbranded software program priced at $5.99 to $19.99. Kmart has greatly expanded its offering, with Target increasing as well, but both trail Wal-Mart's selection, particularly in terms of leading games like Doom and Myst.

Venture's software program, sourced from East Lansing, Mich.-based SofSource, concentrates almost exclusively on generic children's educational products, with a smattering of home-productivity titles and screen savers.

Apart from the ongoing price war, Dallas discounters appeared to be shifting into a boutique war as well. Wal-Mart is adding a 2,000-sq.-ft. Children's Books & Video department with its own color scheme (bright blue) and signage, stocking video, books, sound story cassette/book combinations, plush animals, infants' toys and some juvenile furniture, strategically placed directly across the power aisle from toys.

Venture also carries through on the kids' theme in its Storytime book department from Golden Books.

Target, meanwhile, has introduced a bridal registration kiosk, Club Wedd, at the front of the store, while turning the back right corner into a shop-within-a-shop for seasonal goods.

In this case, Halloween and Christmas goods each had their own shop, compared to the more traditional seasonal layout along the right-hand power aisle.