General merchandise stores are defined as retail stores that sell a number of lines, such as dry goods, apparel and accessories, furniture and home furnishings, small wares, hardware, and food. General merchandise stores are subdivided into three major groupings: department stores, variety stores, and miscellaneous general merchandise stores. Each of these three groupings has different characteristics. Remaining article at end of page
Special Thanks to website www.wa.gov for their article Department stores, by far the largest of the three, accounts for over 89 percent of total employment and almost 80 percent of total sales within the general merchandise industry. A department store carries men’ s, women’s and children’s apparel, household appliances or other home furnishings, and various other lines. These stores are generally arranged in departments with individualized accounting. Department stores usually provide their own charge accounts, deliver merchandise, and maintain open stocks. After a disappointing performance in the second half of the eighties, department stores have increased their market share during the nineties. In 1990, department stores accounted for 9.0 percent of total retail sales and 14.1 percent of nondurable goods sales. Since then, restructuring within the department store industry has led to continued gains in market share. In 1998, department stores accounted for 10.1 percent of total sales and 17.2 percent of nondurable sales. The rise of discount department stores (or "superstores") such as Wal-Mart, Target and K-Mart, have contributed to the overall growth of the industry by posting better than industry sales increases every year in the 1990s. Consumer spending at department stores is likely to remain healthy in the near future. Technology advances and continuing change will keep costs, and therefore prices, down, which should lead to strong sales in the future. One of the major reasons for stronger department store performance has been the consolidation in the industry. Many of the big names in department stores not only downsized their operations in an effort to become more efficient and profitable, but also merged with other giants in the industry. Even so, department stores face stiff competition from various other forms of retail businesses. Entities such as the Home Shopping Network, mail order catalogs, and Internet retailing have the ability to capture sales due to their convenience and ease. Nonstore retailers have greatly increased their sales revenues in recent years due in large to the explosion in "e-retailing." Department stores continue to face competition from specialty stores—those that offer goods in a certain category line; and from the latest trend in retailing—the "category killer" or "superstores." These superstores, like Home Depot, and Borders seriously threaten department store sales because they offer practically every product within a particular retail category usually at much lower prices. Variety stores, the smallest component of general merchandise, are defined as retailers who do not carry a complete line of merchandise, are not departmentalized, do not carry their own charge service, and do not deliver merchandise. As such, variety stores have been performing quite poorly in recent years. Since the mid-1980s, annual variety store sales have grown at a meager rate of 1.0 percent. Variety stores’ share of all general merchandise sales has fallen from 7.2 percent in 1980 to 3.3 percent in 1998. The growth of specialty stores and superstores is the major reason behind the demise of variety stores. Although the major attraction of variety stores is lower prices, not carrying complete product lines have made these stores especially vulnerable to superstores, which carry every product in a category at relatively low prices. Miscellaneous general merchandise stores, the final category, are similar in structure to department stores, except they generally have fewer employees. Miscellaneous general merchandise stores normally have fewer than 50 employees. Sales at these stores have struggled in the mid-1990s. Sales growth (in real terms—i.e., without inflation) averaged 6.8 percent from 1986 to 1993, but have slowed significantly to a mere 1.3 percent average since then. The market share within general merchandise stores held by miscellaneous stores has remained somewhat strong, due largely to the strength of past sales and the demise of variety stores. Miscellaneous merchandise stores market share grew from 11.5 percent in 1980 to 20.7 percent in 1993, but has since fallen back to 18.0 percent in 1998.