Discount Department Store Essay

The discount department store industry has, over the past decade, undergone several unique changes due to macro-environmental forces. Particularly, the industry has been strongly affected by demographic, economic, socio-cultural, and technological factors.

During an interview with Bryan Owens, the owner of the Unclaimed Baggage Center, a destination location that sells the lost contents of baggage from airlines at a discount, one interesting factor that emerged was the change in demographic due to socio-cultural forces. Owens stated, “Because the idea that thrift stores among young people are becoming more and more popular, the demographic has drastically changed”(Owens). More specifically, because thrift stores (and other discount department

IBIS World notes that the change in per capita disposable income and the percentage of services conducted online are the strongest of these developments. Interestingly, while the profitability of the department store industry is negatively affected by the change in per capita disposable income, the profitability of discount department stores has been positively affected. (Industry Market Research, Bizminer) This is again likely due to the growth in the number of middle and upper class youth visiting discount department stores that is not present for the industry of department stores as a whole. IBIS World notes a similar affect on the percentage of services conducted online, as discount department stores are somewhat less affected due to their affordable and unique inventory compared to other department stores. However, during his interview, Bryan Owens noted another large consequence of the increased percentage of services conducted online. Specifically, he mentions that the number of sales is neutrally affected by this factor, but stores’ prices are greatly affected. Because people now have access to the internet via their phones and the internet retail market has grown significantly, customers now have the ability to look up in-store items online and compare prices. This provides lower expectations overall and forces