Target, Wal-Mart expand home office items

Discount Store News, Dec 14, 1987

Target, Wal-Mart Expand Home Office Items

Target and Wal-Mart are looking toward the future of the stationery department by expanding their offerings of home office products. Both these chains were cited by vendors as being aggressive in their stationery department merchandising strategies. For now at least, K mart appears less oriented toward the home office category but does offer a wide selection of basic, low-priced items in stationery.

"All three could improve their stationery departments by putting in a stronger year-round program instead of viewing stationery as a seasonal department," said one prominent vendor who asked not to be identified.

Fashion Foothold

A recent consumer survey of K mart, Wal-Mart and Target shoppers also revealed that Target's fashion foothold propels its stationery selection beyond department offerings at either K mart or Wal-Mart stores.

Color and style awareness in hard lines merchandise like stationery was evidently the vehicle that drove more Target customers to do most of their shopping within the department. In fact, when Target was in direct competition with K mart and Wal-Mart stationery departments, preference for Target heightened.

Regardless of whether the three chains were competing in metropolitan areas of over 1 million people, small metro areas with populations of 50,000 to 1 million, or non-metro areas, a larger percentage of Target customers said they mainly spent their money in the stationery department of the store than did shoppers at the other two chains.

The statistics were generated by a study of 1,800 people conducted for DSN by the Chicago-based Leo J. Shapiro & Associates research firm.

Nine percent of Target shoppers in metro areas said they mainly spent their money on stationery merchandise compared with 4 percent at Wal-Mart and 3 percent at K mart.

In both small and non-metro regions, nearly 7 percent of Target shoppers said they mainly spent their Target dollars in the stationery department, compared to 4 percent at Wal-Mart and between 2 percent and 3 percent at K mart.

Not only did more customers overall go to Target specifically to shop for stationery department products, the percentage of customers shopping Target mainly for stationery items actually increased when the upscale discounter shared a market with Wal-Mart. Target's fashion position along Wal-Mart's basics enhanced its image among consumers, vendor and industry sources acknowledged.

When Target was alone in a market area, 4 percent of its shoppers said they mainly spent their money in the discounter's stationery department. When the market was shared with K mart alone, there was no change in that percent.

Percentage Surges

But, when Wal-Mart shared the market with Target, the number of Target customers who said they mainly spent their money on stationery surged to 14 percent, and dropped to only 13 percent when all three of the discounters were in a market together.

When K mart was in a market without the other two chains, 2 percent of its customers said they mainly spent their K mart dollars on stationery. This number rose to 8 percent when all three competitors shared the market, but did not rise at all when just Target or just Wal-Mart were present.

Wal-Mart was the only chain that showed a decline in all instances as competition increased. When alone in a market, 6 percent of Wal-Mart shoppers said they mainly spent their Wal-Mart dollars in stationery. With either a Target or a K mart in the area, the number dropped to 3 percent.

And, when all three big discounters shared a market, only 5 percent of Wal-Mart shoppers said they mainly spent their money on stationery at Wal-Mart.

The impact of price on these shopper habits was difficult to measure within the stationery department. While there are few substitutes for Visions cookware in housewares or Colgate toothpaste in health & beauty aids, the abundance of stationery vendors which produce essentially the same merchandise allow the Big Three to differentiate themselves from one another by relying on alternate sources.

For example, Mead is more integral to the Wal-Mart and Target stationery selections than to K mart's, according to DSN's 1987 Top Brands survey, released earlier this year. Just 24 percent of store managers at K mart named that vendor as a leading department brand, compared with 70 percent at the two other chains.

By selecting to work with the stationery manufacturers that are not used by the competition, K mart, Wal-Mart and Target escape direct price competition from each other. As a result, a market basket study conducted by DSN at these chains in five market areas was difficult to complete.

Target's storewide fashion image would appear to be a fundamental stimulus fueling the higher spend rate in the chain's stationery department, a category that has become increasingly driven by color and style.

"Target is certainly the strongest in stationery fashion of the three," said an industry source, who added that Target's overall category appearance is better because it is serviced by rack jobbers, while no Wal-Mart and few K mart stores have serviced stationer departments.