Discounters Bask in Glow of Wal-Mart, Target

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Mar 19, 2002
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Month after month, the discount giants surge ahead in their comparable-store sales figures, leaving most department stores to languish. While Wal-Mart and Target get the most publicity, more than a half-dozen discount- and value-priced chains are faring as well or better than the juggernauts. Here are some of the comp-store results for last month:

  • Big Lots Inc. reports sales were up 14 percent; the Columbus, Ohio-based chain has 15 sites in metro Orlando.
  • Ross Stores Inc. says sales were up 13 percent; the Newark, Calif.-based company has seven stores in metro Orlando.
  • TJX Cos., owner of the TJ Maxx chain, reports a seven percent rise in sales; the Framingham, Mass.-based chain has three locations locally.

Dollar-bargain discount outlets also did well. Sales rose almost eight percent both at Dollar General Corp. and Family Dollar Stores; each has about two-dozen local stores. Meanwhile, comp-store sales for Wal-Mart and Target increased 11 percent and 8.5 percent, respectively.

Moderator Comment: Which discount/mass retailer not
named Wal-Mart or Target impresses you the most and why?

One vote here for Fred’s of Memphis, Tenn. The discount
pharmacy and general merchandise operator has 385 company stores and franchises
26 stores in 11 southeastern states.

It is growing and making money. Year to year sales comparisons
show increases in comparable store sales, sales per square foot and other key
financial measures. The company comes off a record sales nd earnings quarter
and fiscal year. Fred’s management has been focused on wringing costs out of
the system and it has been successful in reducing selling, general and administrative
expenses.

The chain’s marketing focus is on low, middle, and fixed-income
consumers. Almost two-thirds of Fred’s stores are located in markets with populations
of 15,000 or fewer people.

Stores carry approximately 12,000 items with a mix of
both national brands and off-priced products. Household goods, health and beauty
aids, food, beverages and tobacco account for about 48 percent of the total
sales mix. Pharmacy makes up 35 percent and the remaining 17 percent comes from
softline sales of clothing, footwear and accessories. [George
Anderson – Moderator
]

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