Page 433 - Foundations of Marketing

400 Part 5 | Distribution Decisions

stores also sell products through websites, which can service customers who live in smaller
markets where they have no access to a store or who prefer to shop online.

Discount Stores

Department stores have lost sales and market share to discount stores, especially Walmart and
Target, in recent decades. Discount stores are self-service, general-merchandise outlets that
regularly offer brand-name and private-brand products at low prices. Discounters accept lower
profit margins than conventional retailers in exchange for high sales volume. To keep inven-
tory turnover high, they carry a wide, but carefully selected, assortment of products, from
appliances to housewares to clothing. Major discount establishments also offer food products,
toys, automotive services, garden supplies, and sports equipment.
Walmart and Target have grown to become not only the largest discount stores in the coun-
try, but some of the largest retailers in the world. Walmart is the world’s largest retailer, with
revenues nearly three times higher than its next competitor Carrefour (a French retailer), and
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Target is ranked 11 th . Not all discounters are large and international. Some, such as Meijer
Inc., which has stores in the Midwest United States, are regional discounters. Most discount
stores operate in large ( 50,000 to 80,000 square feet), no-frills facilities. They usually offer
everyday low prices, rather than relying on sales events.
Discount retailing developed on a large scale in the early 1950s, when postwar produc-
tion caught up with strong consumer demand for goods. At first, they were often cash-only
operations with minimal services located in warehouse districts, offering goods at savings of
20 to 30 percent over conventional retailers. Facing increased competition from department
stores and other discount stores, some discounters have improved store services, atmosphere,
and location, raising prices and sometimes blurring the distinction between discount store and
department store.

Convenience Stores

A convenience store is a small, self-service store that is open long hours and carries a narrow
assortment of products, usually items such as soft drinks and other beverages, snacks, news-
papers, tobacco, and gasoline, as well as services such as ATMs. The primary product offered
by the “corner store” is convenience. According to the National Association of Convenience
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Stores, there are more than 149,000 convenience stores in the United States alone. They
are typically less than 5,000 square feet, open 24 hours a day and 7 days a week, and stock
about 500 items. The convenience store concept was developed in 1927 when Southland Ice
in Dallas began stocking basics such as milk and eggs in addition to ice for ice boxes for cus-
tomers who wanted to replenish their supplies. In addition to national chains, there are many
family-owned independent convenience stores.

Supermarkets

Supermarkets are large, self-service stores that carry a complete line of food products and
discount stores Self-service, some nonfood products such as cosmetics and nonprescription drugs. Supermarkets are
general-merchandise stores that arranged by department for maximum efficiency in stocking and handling products, but have
offer brand-name and private- central checkout facilities. They offer lower prices than smaller neighborhood grocery stores,
brand products at low prices
usually provide free parking, and may also provide services such as check cashing.
convenience store A small, Consumers make the majority of all their grocery purchases in supermarkets. However,
self-service store that is open
long hours and carries a narrow increased availability of grocery items at discount stores and other competitors have eroded
assortment of products, usually supermarkets’ market share. Supermarkets are discovering ways to utilize technology to lure
convenience items customers back to their stores. The major grocery chain Safeway, for example, has developed
a means of customizing prices in order to encourage customer loyalty and patronage. Through
supermarkets Large, self-
service stores that carry a mining data gathered from loyalty card programs, the chain offers individual consumers
complete line of food products, different prices based on their purchase history. Loyal consumers of certain brands can receive
along with some nonfood additional discounts for their continued loyalty. This variable pricing model will likely extend to
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products other retailers as supermarkets seek to regain market share and improve on thin profi t margins.

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