134
Part Two Apparel Industries
Some chains are centered in various regions
of the country. Others are nationwide. Mer-
chandising and operating decisions are made in
a central offi ce. Some chains are big enough to
have regional offi ces for direct stores reporting,
as well as the central offi ce to which all regions
report.
Prices in chain stores are often lower than
those in upscale department stores. Since large
chains have enormous buying power, manu-
facturers can afford to produce merchandise to
the chain’s specifi cations. Thus, private label
merchandise may be styled and made exclu-
sively for them at lower prices.
Chains include retailers that are in other
categories. Examples of general merchandise
chain stores are Walmart, Sears, Target, and
JCPenney. Examples of specialized apparel chains
are The Gap, The Limited, T.J. Maxx, Ross Stores,
and Talbots.
Discount Stores
Discount stores, as in 7-13, sell clothing and
other merchandise in large, simple buildings
with low overhead. Large amounts of garments
are crowded onto racks and shelves. Some items
are well-known brands, and some are lesser
known or the discount chain’s private label
brands. The merchandise is sold at low prices.
Manufacturers give discount stores special
pricing for buying in large quantities. They sell
huge amounts of lower-priced apparel and
accessories to customers with modest clothing
budgets. Discount stores earn profi ts from small
markups because they sell large quantities of
merchandise and have lower operating expenses.
They use mass retailing methods. They expect
customers to shop without assistance. Mer-
chandise from all departments is paid for at
checkout counters just inside the store exits.
No extra customer services, such as telephone
orders or gift wrapping, are offered.
In the past few years, discount stores have
been growing rapidly. Most are chains. They
are open in the evenings, on Sundays, and most
holidays. They undersell other kinds of stores,
thus creating stiff competition.
Dollar stores have also grown in popularity
in the past several years. Shoppers fi nd a variety
of items and more convenience. Dollar stores
generally offer a smaller retail venue, more
locations closer to home, close-in parking, and
smaller discount layouts. Bargain prices with
a treasure trove atmosphere contribute to the
growing success of these chain stores.
Off-price discounters focus on selling mod-
erate- to higher-priced brand name apparel at
lower-than-normal prices. They carry quality
goods, often with the labels cut out to protect
the manufacturers’ regular goods sold elsewhere.
Off-price discounters do not place advance
orders with manufacturers for specifi c mer-
chandise to be produced. They buy whatever is
available, such as overruns, odd lots, irregulars,
and end-of-season goods. They pay cash for
the inventory rather than asking for credit.
They buy this season’s extra items when most
other stores are thinking about the next season.
Goods are put on the stores’ fl oors to be sold
and worn immediately.
Factory outlets are discount retail stores
owned by manufacturers. Each store sells only
the merchandise the manufacturer makes. This
eliminates the middleman and the related
expenses.
A factory outlet was originally a single,
small store near a factory. The store sold the
manufacturer’s surplus production or seconds.
Recently, many new factory outlet malls have
opened that offer manufacturers’ lines nationally.
They are usually located in outlying areas and
must be careful not to compete against the full-
price retailers to whom they sell their lines.
Thus, many manufacturers now produce some
lower-price lines only for their factory outlet
stores.
Other types of discount stores are wholesale
warehouse clubs and hypermarkets. Warehouse
clubs specialize in bulk sales of nationally branded
merchandise. Hypermarkets are large stores that
sell almost every type of merchandise, including
apparel and groceries.
7-13
Discount stores sell large volumes of items at low
prices in simple buildings.