Rationalizing regionals - regional retail discount houses - Special Supplement: AM Apparel Merchandising - Editorial

Discount Store News, March 1, 1993 by Jeffrey Arlen

With close to 4,000 stores, and combined apparel sales of approximately $15 billion, Kmart and Wal-Mart are the dominant participants in the discount store clothing game.

To date, Wal-Mart's apparel strategy has in large part been predicated on price. In any given market, the Bentonville giant almost always has the lowest day-to-day tickets on widely distributed name-brand basics. By concentrating on apparel basics, Wal-Mart executives have been able to apply the operational efficiencies originally developed in the hardgoods businesses to apparel.

Kmart's tack is somewhat different. Like Wal-Mart's buyers, Kmart merchants obviously strive to keep prices low. After all, by any definition, Kmart remains a quintessential discounter. However, fashion assortments and in-store merchandising at Kmart tend to be a step ahead of Wal-Mart's.

In fact, Kmart executives, through internal policies and a major televised marketing effort that is meant to appeal to middle class women, have made fashion a priority.

Kmart is opening several new prototypes; the latest is scheduled to open in Utica, Mich., later this year. What's more, the company's ceo Joseph E. Antonini, makes sure that the apparel world is aware of Kmart's latest efforts.

A few months ago he led a bus load of business reporters through Kmart's new Flushing Meadows unit in New York. Antonini - the Lee Iacocca of the discount store world - also pointed out the new in-store details and fashion merchandise at his chain's boutique-filled Auburn Hills, Mich., location when it opened last November.

With powerhouse stores such as Wal-Mart and Kmart - not to mention Dayton Hudson's Target - it sometimes seems amazing that regional and independent discount operations can survive.

Nevertheless, in the Midwest Venture and ShopKo are successfully competing against the nationals, while in the East, Caldor and Bradlees maintain very successful businesses. Even Rose's, now that it is under new management, is quickly turning around, despite the fact that it has to fight Wal-Mart in its own Southeastern backyard.

How do the regionals do it? The answer is differentiation. Each store focuses on a specific customer base, and merchandises its stores in distinctive, cost-effective ways.

Even the industry's compact players, such as Franklin, Mass.-based Stuarts, have come up with tools to level the playing field. In this issue of Apparel Merchandising, Stuarts' executives discuss the strategies that are moving the company forward after two years in Chapter 11 reorganization. Despite the heavyweight competition, the company's well-thought out plans give the nimble 20-unit player a real good shot for a bright future.