Discount Stores

Origins

The “wheel” model proposes that retailers enter at the low-cost end of the price spectrum and later trade up to become mainstream themselves. After the Industrial Revolution, low-entry-point retailers on both sides of the Atlantic chose similar discount formats. In the United Kingdom, Marks and Spencer began life with Russian émigré Michael Marks's Penny Bazaar and his slogan, “Don't ask the price, it's a penny.” Marks was offering easy, comfortable shopping to a mass market: some illiterate and innumerate. U.K. market traders who, like charity/thrift shops, are rivals to discounters now offer a fixed-price scoop of produce, inviting the same low-engagement customer relationship. In the United States, from 1878, F. W. Woolworth led the five-and-dime revolution where, again, neither customer nor salesperson needed advanced interpersonal skills.

Nonfood Discounting

Several formats have evolved from F. W. Woolworth's generalist product range and low-margin goods. These, when combined with its choice of expensive town center locations, finally saw its closure in the United Kingdom in 2009 (in the United States, it earlier transformed into Foot Locker). The dominant name in discount is Walmart, which started with a single nonfood discount outlet in Arkansas. Curiously, rivals Target and K-Mart (formerly Kresge, now Sears) also commenced operations in 1962. In recent years, and with its adoption of the supercenter format selling food, Walmart has largely moved away from straightforward discounting. Unlike Marks and Spencer, however, Walmart never deserted its “everyday low price” image and low-cost operating base: many see this as pressuring staff, suppliers, and the environment. Numerous aspects of Walmart operations, notably sourcing low-cost consumer goods from China—it is China's fifth largest export market—attract attention. Its preparedness to dally with antitrust regulations has rendered it constantly controversial. Researchers have noted its antipathy toward trade unions and that a significant percentage of its U.S. workforce does not have healthcare coverage. Sustainability and fair-trade [Page 459]lobbyists persistently challenge the high cost of low price. The issue of sourcing is one that has troubled many other discount chains. Fordist economics drives outsourcing to low-labor-cost counties as a route to price-cutting. Lobbyists are constantly seeking instances of poor working conditions and several fashion chains (including UK Primark, rivals to New Look and Matalan) have been forced to revise their ethical statements. With cut-price clothing on sale in supermarkets, debates are now surfacing over the suitability of allegedly oversexualized clothing for children. Growing inequality and the rise of a significant underclass in the United Kingdom as in the United States has fueled the recent rise of Poundland and Poundstretcher. In the United States, Dollar General and Dollar Tree (in Canada, Dollarama) are the inheritors of the five-and-dime tradition.

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