Discount Department Stores
Companies in this industry operate physical retail establishments that sell a wide variety of merchandise, including apparel, household furnishings, and personal care products. Major companies include Kmart, Target, and Walmart (all based in the US), as well as Carrefour and Groupe Auchan (France), Daiso Japan, Lojas Americanas (Brazil), and METRO AG (Germany).
Discount department store sales are strongest in developed parts of the world, including Europe, Japan, and North America. Top emerging markets for discount department stores are China, India, and other regions where middle-class populations are rising.
The US discount department store industry includes about 4,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $100 billion.
Unlike most traditional department stores, discount department stores typically have a central checkout at the front of the store. Discount department stores generally do not sell fresh, perishable foods, unlike supercenters and warehouse clubs. Some discount retailers, such as Target and Walmart, also operate supercenters or warehouse clubs, which are covered in a separate industry profile.
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 enjoy advantages in purchasing, distribution, and marketing. The US industry is highly concentrated: the eight largest companies account for nearly 100% of industry revenue.
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. As consumers migrate to online purchasing, e-commerce has become a battleground for discount department stores and other retailers. Walmart Stores, which in 2016 acquired online retailer Jet.com for $3.3 billion (its largest-ever purchase), has seen its sales and profits jump since the takeover and appears to be holding its own against Amazon. The deal underscores the importance of e-commerce to Walmart's sales growth and the competitive threat Amazon.com poses to Walmart and the broader retail industry.
To better compete with Amazon and their brick-and-mortar rivals, discount department stores are connecting their physical and online operations to create new services such as next-day (and even same-day) delivery of online orders, as well as offering in-store pickup for online orders.
Products, Operations & Technology
Major products sold include apparel (about 25% of sales); personal care products (15%); and groceries (10%). Apparel includes women's, men's, and children's.
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms