The Past And Future Of America's Biggest Retailers

Wal-Mart, Target and Kmart all celebrate 50 years of business this year. i i

hide captionWal-Mart, Target and Kmart all celebrate 50 years of business this year.

Tim Boyle/Getty Images
Wal-Mart, Target and Kmart all celebrate 50 years of business this year.

Wal-Mart, Target and Kmart all celebrate 50 years of business this year.

Tim Boyle/Getty Images

It's an anniversary that most Americans can celebrate — the birthday of the big-box store. Discount shopping as we know it began 50 years ago. In 1962, enterprising retailers invented Wal-Mart, Target and Kmart.

These stores changed the way we shop and the way we think about price. Historian Marc Levinson, author of The Great A&P and the Struggle for Small Business in America, talked to NPR's Linda Wertheimer about what happened all those years ago, and how the stores will continue to evolve in the Internet age.

This is among the first Target stores. The company now operates 1,782 stores across the United States. i i

hide captionThis is among the first Target stores. The company now operates 1,782 stores across the United States.

Courtesy of Target
This is among the first Target stores. The company now operates 1,782 stores across the United States.

This is among the first Target stores. The company now operates 1,782 stores across the United States.

Courtesy of Target

Interview Highlights

On why 1962 was the year of the big-box store

"In 1962, a number of different companies decided to try and create brand new store formats. The leader in that in 1962 is forgotten today. It was a company called Woolworths and it opened a store called Woolco. Woolco was expected to be the giant because Woolworths was gigantic. And everyone thought Woolco was going to conquer the world. Woolco, as your listeners will know, didn't make it."

On how big-box stores popularized the idea of discounting after World War II

"There were laws meant to prohibit big retailers from getting volume discounts, so they couldn't buy merchandise more cheaply than mom-and-pop stores and mark it down. The other thing was that the manufacturer could make a product, could tell the retailer, 'You may sell our good, but only at the price we set.' And so if a retailer wanted to sell a certain brand of camera or a certain phonograph record or whatever, it had to sell it at the set price. That started breaking down in the 1950s, and that really opened the way to discount retailing."

The Changing Role Of The Big-Box Store

While big-box electronics retailers like Best Buy are shutting stores and suffering income declines, America's big discounters are, largely, thriving. Still, retail experts say, chains such as Wal-Mart and Target are considering changes to their store models in order to better compete with online retailers.

When it comes to big-ticket items like TVs and appliances, Amazon has the price and convenience advantage. But when it comes to "consumables" like groceries, Brian Yarbrough, an analyst at Edward Jones, says the physical stores still dominate.

"If you're going to buy some Tide and baby formula, is it worth it to save 50 cents on Amazon?" he says.

Probably not. And yet, the big-boxes still have work to do to make their stores more convenient for modern shoppers.

"The time it takes to drive to and walk through [a megastore] is more of a luxury for people than it used to be," says Bryan Gildenberg, an analyst with the research firm Kantar Retail.

While Wal-Mart and Target are still opening large stores, they are putting new emphasis on smaller ones — not just to save consumers time, but also to capture markets outside of the suburbs. Wal-Mart has opened Express stores in both urban and rural locations. Target, meanwhile, has introduced City Target stores in urban areas.

They're also working on their Web business and experimenting with pickup services, like Wal-Mart's "Click and Collect."

These efforts make Gildenberg confident in the prospects of big-box stores — at least for now.

"Wal-Mart and Target in particular are going to continue to grow over the next five years. They'll grow more slowly than in the previous, but they'll continue to grow," he says.

— Jordan G. Teicher

On how big-box stores cornered the suburban market

"One of the prerequisites for the big-box was the car. Everybody had to have a car because the big-box was sitting out in a parking lot somewhere. The big-box made shopping into a family experience. Mom and dad and the kids all piled into the car, they went out to this big store, and they could spend several hours there because there was, by the standards of the day, an enormous amount of merchandise. Now, you've got to give people a little sense of scale. We're talking about stores that were gigantic for their time, and that meant they might have about 50,000 square feet of space. If you go into a typical Wal-Mart Supercenter today, it's perhaps four times that size. So 'big' is relative, but for its day, 1962, these stores were quite large."

On how the big boxes evolved from traditional variety stores

"Stores had to figure out how to distinguish themselves. You couldn't all have the same merchandise and be just like the other one. And we went through a period of experimentation. ... Some [companies are] no longer with us. Some of them tried strategies and they just didn't work out. It was not clear in 1962 that running a discount store like this was going to be a winning strategy."

On whether big-box stores will still be around in 50 years

"There are very few retailers that have that kind of lifespan. There aren't too many that have been around for a hundred [years]. But even if they still exist, they may be quite different. For example, you see now retailers trying very much to integrate their physical store with their Internet store. So maybe the physical store becomes mostly a showroom — you don't actually go there to buy things and walk out with them. You go there to look at things, and then you order them online and then they're delivered to your house. Or maybe you order them online and you go to the store to pick them up, but the store may not be filled with quite so much merchandise. There are quite a few possibilities, and I think it's really foolhardy to guess what this is going to look like frankly in 10 years, much less 50."

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