Competing with the Discount Mass Merchandisers

The nature of retailing has changed dramatically in the last decade, compared to previous decades. In the last decade there has been a great proliferation of discount general merchandise stores as Wal-Mart, K Mart, Target and several regional chains. In addition there has been a great expansion of membership warehouse clubs, such as Sam’s, Pace, Cosco, and Price Club. There has also been rapid expansion of “category killer” stores such as Home Depot, Circuit City, Best Buy, Toys “R” Us and others. These stores are called category killer stores because they have a very large selection within a narrow category of merchandise, along with low prices, and they “ kill” smaller local stores within the same “category”. We have also seen the development of many new factory outlet malls and the spread of specialty mail order. The net result of this expansion is the saturation of many retail markets, or what is commonly referred to as the overstoring of America. Many retail markets have more retail stores than can possibly be supported, and it would appear that a major shakeout is coming in the not-too-distant future.

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