Discount stores involve a form of retailing in which low-priced products are sold in specialized stores.
In the United States, discount stores gained prominence from the 1950s through the late 1980s, surpassing traditional supermarkets and department stores in popularity. Chains like Kmart, Ames, and Zayre expanded rapidly during the mid-1960s. Notably, Walmart, Kmart, and Target each launched their first stores in 1962.
By 1987, discount stores held a 42% share of the U.S. retail market, which surged to 87% by 2010. In recent years, many have transitioned to “supercenters,” which stock both general merchandise and full-service grocery offerings.
Discount retail chains have established significant presences on a global level as well. For example, German-based Aldi and Lidl operate thousands of stores across Europe and beyond. In Japan, Daiso offers a wide range of affordable products. France’s Carrefour has expanded into numerous countries, providing discounted goods.
These retailers have adapted their models to various markets, catering to cost-conscious consumers worldwide.
Though there are exceptions, discount stores often have the following characteristics:
- Low-price goods: Discount stores focus on offering products at significantly lower prices than traditional retailers. They achieve this by reducing overhead costs, negotiating bulk purchasing deals, and often selling private-label brands instead of well-known national brands.
- Limited product selection: Unlike supermarkets or department stores, discount stores typically carry a smaller range of products. This helps them streamline inventory management, reduce storage costs, and focus on high-turnover items that maximize efficiency.
- Minimal store presentation: To keep costs low, these stores often use basic shelving, minimal decoration, and simple product displays. Instead of elaborate merchandising, items may be displayed in bulk packaging, on pallets, or in their original shipping cartons to reduce labor costs and maintain affordability.
It’s important to note that the discount retail model has evolved considerably in recent years, such as with retail giant Lidl attempting to impose a trendy, high-quality image. To achieve this, Lidl has invested heavily in communications, integrating more organic products and major national brands, and creating new services such as Lidl Voyages.
As more consumers enter discount stores each week to shop for goods, the industry continues to adapt, ensuring competitive pricing and an array of affordable brand and product options for sale.
