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Discounting "discount"

Jennifer Marks, Staff Staff -- Home Textiles Today, September 23, 2002

Sometimes we fail to realize that a new species has emerged until a trained professional clips a tag on its ear and declares the arrival of a new addition to the genus. In this issue, that marker is found in HTT's annual Retail Report Card — but not in the financials, which were hardly surprising given the events of 2001. Instead, the signpost of evolution is located on page 17 in a note about retail classifications headlined "Name game."

It is here that HTT business editor Don Hogsett makes the point that "discounter" no longer describes what retailers in that channel do. It's one of those things we all should have recognized long ago, but that's the trick with evolution — you don't notice an amphibian morphing into a mammal until one day somebody points out that the creature has lost its gills and sprouted digits.

When you really think about it, the term "discounter" has become as outmoded as the concept of the five-and-dime. The idea originally was that discounters offered department store brands at lower prices. Today, however, there is precious little overlap between discount store and department store assortments — and merchants in both channels work very hard to make sure there isn't.

In addition, over the past decade or so, many classes of business that used to belong to department stores — toys and consumer electronics among them — migrated out of department stores altogether. As late as the mid-1990s, Macy's still operated a consumer electronics department. The Sony's of the world, which once wouldn't have touched a mart with a stick, eventually found the marts to be a wildly fruitful channel. As did Mattell and Hasbro. As did Proctor-Silex. As did Martex and Springmaid and Cannon.

Today, the Channel Formerly Known As Discount is collectively the largest seller of consumer electronics, toys, pre-recorded music, household appliances — and home textiles.

And once marts became the dominant sales channel for a broad cross-section of consumer goods, they ceased discounting. Instead, it is the "discount" channel that now sets the benchmark for pricing on the most commonly purchased goods. All other channels — supermarkets, drugstore chains, dollar stores and department stores — set their pricing against that bar.

That's why today the true distinctions between class of trade really break down into a price point issue. Kohl's, Penney, Sears and Mervyn's can call themselves whatever they like; they're really mid-price retailers, and suppliers develop product for them as such.

The concept of "discounting" depended upon apples-to-apples comparisons of product. Clearly, Martha is not Waverly is not No Boundaries.

Just as clearly, discounters aren't discounters anymore.

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