Discount Department Stores Industry Profile

Companies in this industry operate physical retail establishments that sell a wide variety of merchandise, including apparel, groceries, household furnishings, and personal care products. Major US companies include Kmart, Kohl's, Target, and Wal-Mart.

The US discount department store industry includes about 5,000 stores with combined annual revenue of about $121 billion and is expected to see revenue remain flat in the next two years. Key growth drivers include consumer spending and population growth.

Unlike most traditional department stores, discount department stores have a central checkout at the front of the store and may have additional checkout registers within individual departments. Unlike supercenters and warehouse clubs, discount department stores typically do not sell fresh, perishable foods. Some discount retailers, such as Target and Wal-Mart, also operate supercenters or warehouse clubs, which are covered in a separate industry profile.

COMPETITIVE LANDSCAPE

Population growth and consumer spending drive demand. The profitability of individual companies depends on efficient supply chain management, effective merchandising, and competitive pricing. Large companies dominate the industry, and enjoy advantages in purchasing, distribution, and marketing. The industry is highly concentrated: the seven largest companies have nearly 100 percent of the market.

Discount department stores carry a wide range of merchandise and compete with a diverse set of retailers, including department, drug, grocery, off-price, outlet, and specialty stores; warehouse clubs; and Internet and catalog retailers.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products sold include apparel (20 percent of ...