Discount store

A discount store or discount shop is a term that has been used over time and across different countries for a number of different retail formats, all of which sell products at prices that are in principle lower than the regular retail price.

Types (United States)

Discount stores in the United States may be classified into different types:

Discount superstore, Discount department store
See also: superstore, hypermarket, and warehouse club

Discount superstores such as Walmart or Target sell general merchandise in a big-box store; many have a full grocery selection and are thus hypermarkets, though that term is not generally used in North America.[1]

In the 1960s and 1970s the term discount department store was used, and chains such as Kmart, Zodys and TG&Y billed themselves as such.[2]

The term "discount department store" or "off-price department store" is sometimes applied to big-box discount retailers of apparel and home goods, such as Ross Dress For Less, Marshalls, and Kohls.

Category killers
Main article: Category killer

So-called category killer stores, specialize in one type of merchandise and sell it in big-box stores. Examples include Petco and Petsmart (petsmart), HomeGoods (home furnishings and accessories), or Staples, Office Depot and OfficeMax(office supplies).

Warehouse clubs
Main article: Warehouse club

When membership is required, discount superstores are known as warehouse clubs, and often require purchases of larger sizes or quantities of goods than a regular superstore.

Discount grocery store
See also: grocery store

Discount grocery stores include Aldi, Lidl, and Grocery Outlet.[3] Currently Aldi, the largest retailer in the world (Planet Retail Ranking; June 2014), operates more than 10,121 discount stores or discount shops worldwide.[4]

Variety stores, dollar stores
Main article: Variety store

Variety stores, which used to commonly be known as five and dimes or dime stores, and now are most common as dollar stores such as Dollar General, which sell goods usually only at a single price-point or multiples thereof (£1, $2, etc.). During the early and mid-twentieth century chains such as Woolworth's, J. J. Newberry and S. S. Kresge lined the streets of shopping districts of America's downtowns and suburbs; these stores had origins as five and ten cent stores, but later moved to a model with flexible price points, with a variety of general merchandise at discounted prices, in formats smaller than today's discount superstores.

Techniques

Discounters rely on bulk purchase and efficient distribution to keep down costs.[5]

History

United States

During the period from the 1950s to the late 1980s, discount stores were more popular than the average supermarket or department store in the United States. There were hundreds of discount stores in operation, with their most successful period occurring during the mid-1960s in the U.S. with discount store chains such as Kmart, Ames, Two Guys, Gibson's Discount Center, E. J. Korvette, Mammoth Mart, Fisher's Big Wheel, Zayre, Bradlees, Caldor, Jamesway, Howard Brothers Discount Stores, Kuhn's-Big K (sold to Walmart in 1981), TG&Y and Woolco (closed in 1983, part sold to Wal-Mart) among others.[6]

Walmart, Kmart, and Target all opened their first locations in 1962. Kmart was a venture of S. S. Kresge Company that was a major operator of dime stores. Other retail companies branched out into the discount store business around that time as adjuncts to their older store concepts. As examples, Woolworth opened a Woolco chain (also in 1962); Montgomery Ward opened Jefferson Ward; Chicago-based Jewel launched Turn Style; and Central Indiana-based L. S. Ayres created Ayr-Way. J. C. Penney opened discount stores called Treasure Island or The Treasury, Sheboygan, Wisconsin based H. C. Prange Co. opened a chain of discount stores called Prange Way, and Atlanta-based Rich's owned discount stores called Richway.

During the late 1970s and the 1980s, these chains typically were either shut down or sold to a larger competitor. Kmart and Target themselves are examples of adjuncts, although their growth prompted their respective parent companies to abandon their older concepts (the S. S. Kresge five and dime store disappeared, while the Dayton-Hudson Corporation eventually divested itself of its department store holdings and renamed itself Target Corporation).

In the United States, discount stores had 42% of overall retail market share in 1987; in 2010, they had 87%.[7]

Many of the major discounters now operate "supercenters", which add a full-service grocery store to the traditional format. The Meijer chain in the Midwest consists entirely of supercenters, while Wal-Mart and Target have focused on the format as of the 1990s as a key to their continued growth. Although discount stores and department stores have different retailing goals and different markets, a recent development in retailing is the "discount department store", such as Sears Essentials, which is a combination of the Kmart and Sears formats, after the companies' merger as Sears Holdings Corporation.

Canada

Woolworths entered Canada in the 1920s, the stores were converted to the Foot Locker, Champs Sports and other stores in 1994. Kresge's, a competitor to Woolworth's entered the Canadian market in 1929.

Zellers was founded in 1931, and was acquired by the Hudson's Bay Company in 1978. Giant Tiger opened its first store in Ottawa in 1961, modeled on Woolworths. Winners was founded in 1982 in Toronto, and sells off-price brand clothing. Costco entered Canada in 1986. In 1990, the American chain Walmart purchased the Woolco chain in Canada, and converted the stores to Walmarts. Dollarama was founded in Quebec in 1992. In 1998, Zellers bought out Kmart Canada, taking over its stores.

In 2011, Marshalls, owned by the American TJX Companies, entered Canada, and Zellers sold most of its stores to Target, but still operates 2 stores (in Etobicoke and Nepean) as liquidation centres for The Bay merchandise. Target Canada filed for bankruptcy in 2015, selling its stores to Walmart, Lowe's and Canadian Tire.

In 2016, the Hudson's Bay Company started opening Saks Off 5th locations to sell off-price brands. American off-price chain Nordstrom Rack has announced that its first Canadian location will be opened in Vaughan Mills in 2018.

Discount store chains by country

Australia

Australia has many national and regional discount variety stores including Aldi, Big W, Kmart, Target, The Reject Shop, Cheap and Chips, Dollars and Sense, Shiploads, Red Dot and many more regional players

Brazil

Colombia

Germany

The most important discount shops in Germany are Aldi, Lidl, Netto Marken-Discount, Norma and Penny.

Italy

Italy has numerous discount shops. The biggest chain is Eurospin, while others include Tuodì, MD Discount, Todis, DPIU', Discount Dial, Lidl and Penny Market.

Japan

Japan has numerous discount stores, including Costco, Daiso, Don Quijote (store) and The Price (owned by Ito Yokado).

The Netherlands

Action, Euroland, Big Bazar and Zeeman are Dutch discount shops. Action and Zeeman both operate throughout Europe. In addition, the German chains Lidl and Aldi are both operating shops in The Netherlands.

New Zealand

New Zealand's main discount shops includes The Warehouse.

Poland
ALDI in Tomaszów Mazowiecki, Poland

Discount shops cover about 30% of food sales in Poland. Main retailers:

Portugal

Russia

Turkey
  • Şok Market
  • BİM[8]
  • A101

United Kingdom
Further information: List of discount shops in the United Kingdom
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See also

References
  1. "Walmart, Target, Kmart, Kohl's Lead 50 Years of Retail Revolution". adage.com. March 19, 2012.
  2. "History", "Kmart", Transformco website, accessed July 3, 2020
  3. "What is Lidl? Why this discount grocery store is giving Aldi a run for its money". TODAY.com.
  4. "Archived copy". Archived from the original on 2014-09-03. Retrieved 2014-08-27.CS1 maint: archived copy as title (link)
  5. Charles Lamb (1 Jan 2011). Essentials of Marketing. Cengage Learning. p. 465. ISBN 978-1133171904.
  6. Arkansas, Encyclopedia of. "Wal-Mart Stores, Inc". Encyclopedia of Arkansas. The Central Arkansas Library System. Retrieved 8 February 2013.
  7. "America's top stores." 'Consumer Reports, June 2010, p. 17.
  8. "Bim A.Ş. > Welcome..." english.bim.com.tr. Retrieved 2017-08-21.

Further reading
  • Nelson, Walter Henry, The Great Discount Delusion, New York: D. McKay, 1965.
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