Discount Department Stores Industry Profile

The US discount department store industry includes about 5,000 stores with combined annual revenue of $121 billion. Major companies include Kmart, Kohl's, Target, and Wal-Mart. The industry is highly concentrated: the seven largest companies have nearly 100 percent of the market.

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 labor-intensive: average annual revenue per worker is about $123,000.

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 sales); personal care products (15 percent); groceries (9 percent); and toys (6 percent). Apparel includes women's, men's, and children's. Personal care includes cosmetics and health and beauty products. Electronics include video and audio equipment (TVs, DVD ...