By  on December 7, 2004

BOSTON — Discounters with visions of ringing up merry numbers are going to have to work harder for the holiday dollar this year.

After a decade of explosive growth, the sector is being squeezed. From the top, Sears, Roebuck & Co., J.C. Penney and Kohl’s have emulated Wal-Mart’s price-slashing plays. From the bottom, the $20 billion dollar-store industry offers some of the lowest prices in small, easy-to-navigate stores, a key advantage over the discounters’ jammed parking lots and seemingly endless aisles.

The percentage of shoppers who visited a discount store on Black Friday dropped to 30 percent of households from 41 percent last year, according to surveys by America’s Research Group, which polls shoppers aged 20 to 59. Shoppers hit electronic category killers such as Best Buy, and electronics stores saw their Black Friday share leap to 20 percent from 7.3 percent of shoppers in 2003 this year, ARG said.

The retailing numbers for November indicated a widening gap between booming luxury stores and the discounters, whose customers have been pinched hardest by high fuel prices and lower-than-projected job growth. The disappointing November is emblematic of challenges the discount sector faces as a whole. Midtier stores like Sears and Penney’s met discounters on their own turf, offering early-bird hours and electronics at drastically reduced prices. These retailers marshaled trendy and colorful fashions around the splashy deals.

Wal-Mart, the world’s biggest retailer, has “taught other retailers how to be better at pricing and getting product to the shelf more quickly,” said Wendy Liebmann, president of WSL Strategic Retail. “You now also have the dollar stores taking away the Wal-Mart entry price point for low-income shoppers. At the other end, you have people saying that the big-box shopping experience at more than 200,000 square feet is incredibly difficult to shop. So these consumers might go there, but not as often.”

Responding to lower-than-projected sales, Wal-Mart on Friday launched a radio, television and newspaper advertising campaign that underscored its “everyday low prices” philosophy with the tag line “Why Wait for Rebates?”

Company spokesman Gus Whitcomb said Monday it was “too early to tell” whether the campaign pushed sales up this past weekend. Wal-Mart will not release sales numbers again until Jan. 6. During a prerecorded call on Dec. 4, the company reiterated a 1 to 3 percent projected comp-store sales gain for December, compared with a previous 2 to 4 percent estimate.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus