Download It feels good to get a bargain: Retailers realise bargain stores appeal

Chapter 10 – Current Events
‘It feels good to get a bargain: Retailers realise bargain stores appeal to
a broad range of consumers’
LEAD STORY-DATELINE: The Australian Financial Review, December 2-3, 2000
Go Lo, Silly Solly's, Crazy Clark's, Clint's Crazy Bargains, Cheap as Chips. According to Liz Johnson
in The Australian Financial Review 'the names say it all'. Who hasn't scrounged through their
overflowing bins looking for a bargain or a bargain priced brand? These stores offer not only low
prices but also budget retail therapy for shoppers who like to consume but whose credit cards
couldn't handle a foray through the upmarket boutiques in the Queen Victoria Building in Sydney.
How can they sell so low? The buyers for these stores purchase the stock other retailers like
Woolworths, Coles Myer and David Jones don't want to buy or want to offload - called 'opportunity
buys' by the trade - including end-of-packaging lines, discontinued lines, branded products closer
to sell by dates than desired by the major retailers and products sourced at auctions and
liquidation sales around the world. Interestingly, branded items aimed at teens such as Billabong
and Mambo branded clothing is one area where Crazy Clark and his colleagues chose not to
compete.
Stores are chock-a-block, subliminally communicating economies of scale to consumers - we buy
lots, get it cheap and sell it low. Or as Cowboy Bob, the eldest of the Crazy Clark brothers says,
'Pile it high and watch it fly'. Space is at a premium so items that don't sell are deep discounted
until they do. Promotion is often by way of catalogues - Crazy Clark's published almost 15 million
in 1999 - or television advertising blitzes.
Australian consumers make an annual 32 million visits to Crazy Clark's and Go Lo stores in NSW
and Queensland, spending an average of $8.50 per visit. Perhaps these figures help explain why
Miller's Retail Limited, owner of Miller's Fashion Club, purchased these two chains, in addition to
Katies (purchased from Coles Myer in November) in 2000.
So who shops at these bargain stores? According to Alan Treadgold of the Australian Centre for
Retail Studies at Monash University, Australian discount stores parallel their American counterparts
where 52% of US households shop - up from 47% in 1998. Treadgold sees two basic types of
customers: one, the battler, who of economic necessity shops for bargain prices; the other,
consumers who want brands but at the best available value. According to an AC Nielsen Homescan
survey, bargain stores continue to steal market share from more upmarket retailers in categories
such as confectionery, laundry supplies, cleaning products, snacks, paper products and particularly
stationery, with gift wrapping and cards drawing in a large number of consumers.
Johnson feels that there may be another category of bargain consumer - compulsive shoppers
who use bargain stores as an alternative retail fix when financial constraints dictate.
TALKING IT OVER AND THINKING IT THROUGH
1.
What do you think motivates consumers to patronise bargain stores? Why would
consumers 'feel good' about getting a bargain?
2.
Why do you think stores like Crazy Clark's have deliberately decided not to stock branded
items aimed at teenagers?
3.
Do you think that bargain stores appeal to a particular social class or classes? If so, why;
if not, why not?
4.
Do you think that bargain stores appealed to a particular social class or classes in the
past? If so, what social class and why? What have you observed these stores doing in
their marketing strategies to broaden their appeal to other social classes?
5.
What social class factors might impact on an individual's decision to patronise a bargain
store?
THINKING ABOUT THE FUTURE!
Form a discussion group with family or friends. Select two bargain stores and two upmarket
retailers that you currently patronise. Make note of their current marketing strategies, including
product mix, pricing strategies, location, retail design and promotional strategies. You might also
choose to review their Internet marketing strategies, including products offered, web design and
communication strategies. What major differences do you observe? What explanations can you
offer for these differences?
Regularly review what your four selected retailers are doing. Do you see any convergence
between the marketing strategies (either bricks and mortar or online) of the bargain stores and
the upmarket retailers over time? If so, why do you think this is the case; if not, again, why do
you think this is the case?
DIGGING DEEPER!
Research has shown that social class gives insight into media habits and store selection. Marketers
have used social class in their segmentation, positioning and marketing strategies. Many would
contend that Australia is a 'classless society', especially compared to strictly stratified societies
such as Britain and India. Do you believe that Australia truly is a classless society and that
marketers should no longer consider social class in their marketing strategies? If so, why; if not,
why not?
SOURCE: 'Remedial retailing', The Australian Financial Review, December 2-3, 2000, pp. 4
and 5.
Jan Charbonneau