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Discounters profit as sales slide for specialty stores

March 26, 2002

With sales slipping in major department and retail chain stores across the country, discount stores providing a broader range of products could see a boost.

Specialized clothing stores such as The Gap, Banana Republic and Old Navy, which are all owned by parent company Gap Inc., have seen a 13 percent drop in sales in the 2001 fiscal year.

“We have been seeing a trend, especially in apparel sales,” said Larry Meyer, chairman of the board and chief executive officer of the Michigan Retail Association. “They have been less vigorous than other sales, where purchases have been made in the discount channel.”

Discount stores including Target, Wal-Mart and Kohl’s which offer a variety of merchandise, ranging from shoes to groceries could be picking up some of the consumer slack with increases in recent quarterly reports.

But Meyer said this loss may not be as great depending on the quality of products introduced by specialty stores.

“I do think there will more interesting products on the specialty stores’ side.” he said. “They will compete.”

Meyer said people may be leaning away from specialty stores for many reasons - including the products within the stores. Sears, Roebuck and Company used to sell fishing tackle, but they weren’t able to keep sales high enough and were forced to discontinue the products.

“It’s not necessarily how many stores you have, but what’s in the store that counts,” Meyer said.

Terry Graham, Target guest service team leader in Okemos, said competition isn’t a threat; buyers are going for variety and price.

“I tend to shop at stores where I can buy a lot of different items than go to five other stores,” Graham said.

But not all discount stores are experiencing a rebirth.

Troy-based Kmart filed for Chapter 11 bankruptcy protection in January.

“It’s kind of sad that all of that business is now going to go to Wal-Mart,” said elementary education junior and Downtown Community Action League leader Erin Tobey.

The action league advocates for small, independently owned businesses rather than corporations, such as Kmart and Wal-Mart.

But students buy their clothing from various retailers.

No-preference freshman Heath Schollenberger buys his clothes at The Gap, as well as Abercrombie & Fitch, over discount stores.

“There is a stereotype about (discount stores) being cheap, but I don’t really care about that,” he said. “They just don’t look as good.”

Music education sophomore Jaime Merritt disagrees.

“I buy most of my clothes at Target,” she said. “You can get the same stuff and it’s a lot cheaper.”

Meyer said the future of retail is as hard to guess as the consumer.

“Which way the customer goes is always a mystery,” he said.

The Associated Press contributed to this report.

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