Departmental and Discount Stores: Evolution in Retail Management

This report examines the changing landscape of retail management, focusing on the evolution of departmental and discount stores. It defines both types of stores, discusses the merchandise they carry, and explores their marketing strategies targeting diverse customer segments. The report also delves into the historical development of these stores in Australia, highlighting key players like David Jones, Kmart, and Target. It further analyzes the impact of the 'wheel of retailing' theory and the retail life cycle on these stores. The report concludes by discussing the future of retailing, emphasizing the role of technology and automation in enhancing customer experience and operational efficiency. Desklib provides access to this and other solved assignments for students.

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Contents
Introduction......................................................................................................................................2
Departmental Stores and Discount Stores.......................................................................................2
Definition.....................................................................................................................................2
Merchandise Carried by These Stores.........................................................................................2
Marketing to Different Market Segments of Retail Customers...................................................3
Assembling of Merchandise for the Customers...........................................................................3
Historical Development of Departmental Stores and Discount Stores in Australia........................4
The Changing Face of Retailing......................................................................................................5
Future of Retailing...........................................................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................8

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Introduction
With the passage of time, the retail industry has reached a tipping point. Today, a shopper has
different expectations of a service, product, environment, value than earlier. This has created
difficulty for the retail stores to survive by simply making incremental adjustments in the store
format and portfolio. The store proposition is required to be re- defined along with the proper
identification of the changing needs of the customers within the four walls of the store (Abratt,
Higgs & Nel, 2015). This report focuses on the changing face of retailing. In other words, this
report provides the evolution of departmental stores and discount stores.
Departmental Stores and Discount Stores
Definition
A departmental store can be defined as the large retail trading organization having several
organized and classified departments. The classification of department is made in accordance
with the different types of goods to be sold. All the departments are run under same
management, ownership and control. On the other hand, discount stores can be defined as the
stores which sell merchandise, particularly consumer goods, at a discount from the retail price
suggested by the manufacturer. These stores are also known as discount house. Usually, branded
products are offered by these discount stores with a wide variety of items. Discount stores are
capable of dropping their prices due to the existence of efficient distribution methods. Discount
stores are often called chain stores. The examples of discount stores are Kmart, Target and
Walmart (Wang, Soesilo & Zhang, 2015).
Merchandise Carried by These Stores
Departmental stores carry a variety of merchandise such as groceries, packed food goods,
cosmetics, cutlery, stationery, garments, computes, medicines, furniture, sports, etc. In this way,
departmental stores and discounts stores fulfill all the basic requirements of the customers under
one roof. Maximum shopping experience is provided to the customers. On the other hand, the
discount stores offer the specific merchandise lines. They aim at keeping the prices low by
purchasing products in bulk and developing their own effective distribution system. A variety of

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national brands is carried by these stores which are directly purchased from the manufacturers
(Zulqarnain, Zafar & Shahzad, 2015).
Marketing to Different Market Segments of Retail Customers
Diverse marketing strategies are being adopted by the departmental stores and discount stores
with the view to meet the changing needs of the customers. Large stores which have established
their brand reputation across the different countries of the world advertise their offers and
discounts on television during the offer period. Moreover, the offers are also advertised on large
posters and banners. Pamphlets are also distributed in various locations of the city along with
advertisement in the newspapers in order to make the customers aware regarding the latest offers
(Zhuang & Babin, 2015).
The stores are given an attractive outer look so that the prospective customers can be prompted
to make a store visit. This results in increasing the customer base of these stores. Moreover, the
retail customers are also informed regarding the offers and discounts through radio advertising
(Stathopoulou & Balabanis, 2016).
The increased use of internet have also forced these stores to become digital. Since they have
provided their customers to purchase their products online, they also advertise their offers with
the help of online marketing. These stores are also adopting social media marketing strategies
and search engine optimization for marketing to different market segments of retail customers
(Varley & Rafiq, 2014).
The target market segments of these retail stores mostly comprise of families which can fulfill
their day to day household requirements under one roof. Families are able to get diverse price
range of the single product under various brands to choose from. Therefore, this convenience
offered by these stores prompt the customers to make purchases. Purchases made for a larger
amount further leads to different offers such as free gift, special discounts, etc. (Scott, 2017)
Assembling of Merchandise for the Customers
Earlier, departmental stores and discount stores suffered from the problem of scrambled
merchandising. The term scrambled merchandising can be defined as the improper assembling of
products in the stores or assembling of unrelated goods together. These days, retail stores spend
heavy amounts in the proper designing of the interior of their stores and placing of the products.

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This facilitates the customers to easily find the needed products. These stores assemble the
products in the manner such that the customers can have similar product from different brands at
a single location. For example, cosmetics are offered at one place and electronics at another.
Moreover, similar products are placed at the side so that the time of the customers gets saved and
ultimately they get an easy and convenient shopping experience (Das, 2015).
Historical Development of Departmental Stores and Discount Stores in Australia
The concept of departmental store first originated in France in the 19th century. In 1825, the first
departmental store was established in Sydney, Australia. David Jones is the departmental store in
Australia which is considered to be the oldest. The largest departmental store in Australia was
Coles Bool Arcade which was established after some time. However, the store was closed in the
year 1929. However, the store created history due to its organized departments which facilitated
ease in searching different products (Gross, 2016).
With the passage of time, these stores started adopting innovative strategies in order to attract the
customers. They initiated providing store cards to the customers through which special discounts
can be availed at different branches of the store. David Jones, Harris Scarfe and Myer are
considered the most popular and largest departmental stores.
The origination of discount stores is largely associated with United States. Slowly and gradually
these stores have spread worldwide in Latin America, Europe, Japan and Australia. For example,
the first international outlet of Walmart Stores Inc., the discount store operator, was opened in
the year 1991 in Mexico City which slowly made it the largest retailer of the world by the end of
20th century. Big W, Target and Kmart are some of the popular discount stores (Kumar, Anand &
Song, 2017).
Slowly, competition started to increase in Australia due to which these stores required to adopt
innovative strategies in order to survive in the market. Moreover, international retailers
established in Australia and the living style of the customers began to change which caused
departmental and discount stores to bring the needed changes. Technological innovation was
considered by these stores which also brought an effective improvement in their internal
operations (Espina & Pérez, 2015).

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The Changing Face of Retailing
The popularity of the discount stores has led them towards bringing a hike in their prices. The
hike is the result of their popularity in the market and brand recognition. This can be associated
with the theory of wheel of retailing. Wheel of retailing provides various patterns of retail
development in which market is entered into by the new retailers as a low margin and low price
operator. With the passage of time, the facilities and premises are elaborated by such retailers
and suddenly they move upward. This theory is also known as retail wheel which provides that
retailers start their operations as discount stores and gradually boost their prices after their
establishment. Then the former niche of such stores is filled by some newer discount businesses
(Paul & Ponnam, 2018).
The concept of retail life cycle provides that every retail organization goes through the four
stages namely innovation, development, maturity and decline. At the first stage, a retail firm
enters the market and takes a number of steps for the purpose of improving the convenience and
advantage to the ultimate customers. At this stage, the organization only has a few competitors.
The next stage is that of accelerated growth where the organization faces a rapid increase in their
sales and establishes a position of leadership. After this, the organization enters into the stage of
maturity where it faces competitive pressures which lead to the decline in the growth rates. The
last stage is where the competitive edge is lost by the organization and there is a significant
decline (Chakraborty, Lee, Bagchi- Sen, Upadhyaya & Rao, 2016).
These days, departmental stores and discount stores are expanding their operations globally with
the help of mergers, downsizing and diversification. The acquisition of Coles by Wesfarmers is
the biggest example of Australia for this purpose. This assisted Coles in acquiring required
funding and facilitated expansion. Moreover, retail stores are increasingly adopted value driven
retailing along with the cost- containment approach for the purpose of ensuring effective
handling of immense competition in the market. These approaching are also assisting the retail
stores in bringing the required increase in their productivity. Slowly and gradually, the adoption
of these approaches along with several innovative approaches has led these stores to become the
retail outlets of tomorrow.

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Future of Retailing
Retailing is expected to reach new heights in the coming 5 to 10 years. The technological
developments are taking place at the rapid pace. These developments will have a positive impact
on both the internal operations of these stores along with shopping experience of the customers.
The billing queues are also expected to reduce as a result of technology. All the processes of the
store will be digitalized right from the incoming of the stock in stores till the departing of the
customer from the store (Wrigley & Lowe, 2014).
It is expected that robot customer service will be utilized by the big departmental and discount
stores in order to assist the customers in having a convenient shopping experience. The robotic
service will offer assistance in different languages so that none of the customer suffers as a result
of language barrier. The need of employing store staff will also be minimized to a great extent.
The requirements of the customers will be understood by the robots in a proper way so that it can
be met accordingly. The billing will be done by the robots in an instant manner thereby reducing
the waiting lines and queues. In this way, technology will assist in providing outstanding
shopping experience to the customers (Piotrowicz & Cuthbertson, 2014).
Different markets will further adopt better technology due to which new stores will open up in
the market. Other type of stores involves specialty stores, convenience stores, supermarkets, etc.
Such stores are expected to enhance the shopping experience of the customers through expert
assistance. The automated environment of the stores will reduce costs and will offer competitive
advantage to the firms. For example, Walmart is taking a number of steps for bringing
automation in their stores in order to gain competitive advantage (Richey & Skinner, 2015).
Conclusion
Therefore, it can be concluded that the retail industry has reached a tipping point. The
expectation of the shoppers has changed from the products and services. This report focused on
the changing face of retailing and provided the evolution of department stores and discount
stores. A departmental store can be defined as the large retail trading organization having several
organized and classified departments. David Jones, Harris Scarfe and Myer are considered as the
most popular and largest departmental stores. On the other hand, discount stores can be defined
as the stores which sell merchandise, particularly consumer goods, at a discount from the retail

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price suggested by the manufacturer. Big W, Target and Kmart are some of the popular discount
stores. The report further provided the historical development of these stores in Australia.
Retailing is expected to reach new heights in the coming 5 to 10 years.

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