Dallas - marketing survey of Dallas, Texas - includes related articles on other cities in the Dallas, Texas area - DSN Market Study

Discount Store News, April 15, 1991

SPECIAL REPORT ON DISCOUNT RETAILING IN DALLAS-HOST OF THE 1991 IMRA CONVENTION

DALLAS

The "rolling recession," which hit Dallas hard in the late 1980s, is but a bad memory. As it swirls through other cities creating the same economic havoc that left many Metroplex retailers fighting for survival, it now has local retailers talking about prosperity and even expansion.

But this optimism has a '90s style to it. It's cautious and conservative, not rich and reckless as it was in the early '80s.

Most Dallas retailers and observers agree that the incredible growth of the 1980s and the cocky attitude of invincibility have been replaced by a realistic assessment that competition will be as tough as ever, but growth will occur, albeit slowly.

The Dallas retail industry could be described as the City of the Giants or the City of Super Stores. The Metroplex is truly a "megaplex" of retailing. The list of retailers reads like a "Who's Who" among the top chains in every segment.

As a result, Dallas is an example of what many observers predict the future of retailing will be like--a market comprised of mega retailers and very small mom and pop niche concepts clustered around them. Furthermore, Dallas is an example of the polarization of retailing. There are simply two distinct types of retailers: the high end, upscale chains and specialty stores, and the mass market.

An example of this polarization, as well as growth in the market, are two stories which appeared in the Dallas Times Herald last month on consecutive days. In the first article, retail reporter Chandrika Narayan reported on the grand opening of Tootsie's, a high fashion specialty retailer based in Houston.

Narayan reported, "Tootsie's is on a roll. In its first week in town, the Dallas store, across from Gucci in the Galleria Mall, racked up more than $200,000 in sales . . ."

The following day Narayan reported on the announcement by Pace that the warehouse club chain owned by Kmart will open its first two Texas clubs in Dallas in November going head-to-head with Sam's. One Pace unit will be located in Plano at 15th Street and Central Highway, the other club will be in Irving at Highway 183 and Beltline Road. A new Kmart will also be built at the Irving location.

Other discount retailers expanding in the Dallas market include Circuit City, BizMart, Home Depot, and Montgomery Ward as well as non-discounters such as Food Lion, Foley's, and JCPenney.

Among the retailers headquartered in Dallas are Neiman-Marcus, JCPenney, Pier 1, Tuesday Morning and BizMart.

In the discount department store segment, Wal-Mart, Kmart and Target clearly dominate, operating about 80 stores throughout the Metroplex. And you can bet that the competition is fierce. Wal-Mart has 29 stores; Kmart operates 35 stores; and Target operates 16 stores.

Unlike other markets in the Pacific Northwest, the Midwest or the Northeast, there are no super-regional chains such as Fred Meyer, Venture or Caldor, respectively.

Among the Big Three, according to the most recent Dallas Times Herald research, Target is the market share leader. Wal-Mart is ranked second, while Kmart is ranked seventh (see chart).

Several store managers admitted that they constantly shop the competition to monitor prices. However, in a market where competition is so fierce and prices are very similar, many shoppers are likely to base their shopping decisions on other factors such as service, selection and convenience. With freeway traffic as heavy as it is, accessibility oftentimes is more important than price. One discount department store shopper said she sometimes bases her decision on which side of the freeway a store is located.

Among specialty discounters, the top chains such as Toys "R" Us, Pier 1, Tuesday Morning, BizMart, and Western Auto dominate the marketplace.

Circuit City, the nation's largest consumer electronics chain, entered the market this month with 2 stores. A total of 7 stores are planned. Circuit City goes head-to-head with Best Buy and McDuff.

BizMart, the office supply superstore which is also headquartered in Dallas, currently operates nine stores throughout the Metroplex area. The only other office supply chain in the Dallas area is Office Depot with 3 stores. Home Depot also opened this month in Arlington opposite Circuit City and across the street from Wal-Mart's Hypermart USA.

In the warehouse club segment, Sam's Club, with 10 stores, is currently the only player in the market. As previously mentioned, Pace will open in November.

The Metroplex is also the home of two of Wal-Mart's four Hypermart USA superstores, one of the most publicized new retail concepts in recent years. Both the first unit located in Garland and the other unit in Arlington have undergone a series of changes including the addition of the Wal-Mart name, which was not promoted when the concept debuted.

Several major department stores including Foley's and Dillard's also dominate the retail marketplace. In fact, Foley's ranks third in market share (44.1%) among major retailers and Dillard's ranks fourth (42.8%). Other department stores operating throughout the Metroplex include JCPenney, Neiman Marcus, Macy's, Lord & Taylor, and Marshall Field's.