Where does America shop?

Discount Store News, March 23, 1998 by Jeffrey Arlen

The fight for consumers' apparel dollars continues to grow in intensity as retailers from all segments of the business do battle to make their store the place where America shops.

Yet even as merchants and manufacturers finely hone their assortments, product development areas, distribution systems and micro-marketing schemes, this battle of attrition did little last year to move consumers as a group from one tier of retailing to another.

Market share in dollars shifted less than 1 percent at virtually all retail levels. The lone exception was in the specialty area, which managed a 1.2 percent share increase, according to data gathered by The NPD Group, the Port Washington, N.Y.-based research company.

However, total 1997 retail apparel sales (at all store levels) grew to $169.2 billion, a 4.8 percent increase compared to the previous 12 months. And discounters rang up $33.6 billion, and thus experienced a comparable 5.0 percent increase for the year.

But it must be noted that there were considerable differences among full-line discount stores. In general, the Big Three fared better than regional stores, although Kmart failed to make plan because that company's womenswear business "truly struggled," says Jack Smailes, senior vp, gmm, Kmart.

Wal-Mart and Target stores, on the other hand, performed well in apparel, producing significantly above-average increases during 1997, according to NPD.

Regional discounters in general declined for the second year in a row, down 2.6 percent in 1997 to $9.4 billion, NPD says.

Some non-national discounters produced considerably better results. According to Skip Chustz, senior vp, gmm at ShopKo, his chain managed comp store apparel increases of more than 3 percent, which was in line with his projections for the period.

"You have to remember," says Chustz, "that that 3 percent is on top of 13 percent comps that were anniversaried from the year before."

ShopKo's sales pattern in respect to gender and age was diametrically opposed to the pattern at Kmart.

"The female piece of our business was much healthier than the male and children's piece. It was led by terrific business in plus sizes and intimates," Chustz says.

Womenswear generated nearly $90 billion at all tiers of retail last year, a 5.0 percent increase over 1996, NPD reports. But discounters--ShopKo's record notwithstanding--didn't perform up to the industry standard on the distaff side. These stores produced $14.1 billion, a scant 2.2 percent increase for the period. Department stores took in $19.1 billion, a 6.1 percent hike; specialty stores, $22.8 billion, up a admirable 75 percent; while mid-tier operations (these stores include Sears, JCPenney, Montgomery Ward, Mervyn's and Kohl's) pulled in 13 billion, 7.4 percent more than in 1996.

In menswear, though, discounters--which tally more men's clothing dollars than any other retail tier--outpaced the industry. Total menswear grew only 3.4 percent last year to $51 billion, according to NPD. But discounters enjoyed a 6.7 percent increase amounting to $9.6 billion. Specialty stores and mid-tier operations pushed business up only 1.1 percent to $93 billion and $9.5 billion, respectively, while department stores garnered a 3.4 percent increase with an even $9 billion in 1997 sales.

While specialty stores showed some impressive gains in childrenswear last year, discount retailers remain the leaders in childrenswear sales and show no signs of relinquishing that position.

Discounters logged $9.8 billion in kids clothes sales in 1997, an increase of about $500 million over the prior year. Specialty stores pushed sales to $4.4 billion, up from $3.8 billion in 1996, while mid-tier operations--second in children's share to the discounters--had relatively weak increases, logging $6 billion in sales compared to $5.9 billion in the prior year.

Nineteen ninety-eight has so far produced significant apparel increases across the retailing landscape, proving that this country's consumers cross shop heavily, cherry-picking the stores for items that represent real value. If mass merchants stay on their current course, a road that leads to more and more acceptability as venues for apparel shopping, incremental discount clothing share is inevitable.