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Three retailers that cater to the hardiest bargain hunters gear up for the holidays
Survey shows most shoppers heading to discount stores
Sunday, November 23, 2003

The economy may be waking up in time to help out Santa, but that doesn't mean the bargain hunters won't be out. To wit: Nearly 40 percent of shoppers surveyed for the National Retail Federation said where they shop will be based on sales and discounts; 70 percent of the more than 17,000 consumers surveyed by auditing firm Deloitte said they planned to shop for gifts at discount department stores.

It's not just a rational thing, according to one marketing consultant. The sheer adrenaline rush of getting a good price also plays a role. "It's about the feel and the thrill, the excitement of winning when you get a discount," said Pam Danziger, of Unity Marketing in Stevens, Lancaster County. "That's how you measure your success at shopping, by how much you save."

With the holiday shopping season kicking in full gear this week -- the day after Thanksgiving historically has served as the traditional kickoff -- the Post-Gazette takes a look at three decidedly discount operations -- Tuesday Morning, which sells upscale closeout items; Play It Again Sports, which sells used and new sports equipment; and the St. Vincent de Paul thrift store.

High-end cheap

The candle display has been gutted and a pile of Brio wooden toys tossed topsy-turvy at the Tuesday Morning store, off Route 19 in Cranberry. "When I walked in, they had this perfect," said Kathleen Mason, the president and chief executive officer of the Dallas-based chain.

That was a half an hour earlier.

Mason, a Sewickley native whose first retail job was at Kaufmann's department stores, was in town recently checking out new locations, visiting family and explaining how her company had almost doubled its locations and total sales in five years with little no-frills stores stuck in inexpensive sites.

She heads down the aisles to point out a shrinking pile of Swarovski crystal chandeliers, originally $2,395, now $399.99. Those became available when a major hardware chain decided not to carry them. Mason finds a Sferra Bros. cotton coverlet originally $285, now $69.99.

"If you're looking for cheap cheap, we're not it," she said.

No kidding. This chain means to be an upscale deep discounter. There's warehouse shelving and fancy brand names.

Tuesday Morning buys closeouts -- merchandise that companies have discontinued, repackaged or bought too much of -- but it won't carry seconds or irregulars. Mason swears those "original" prices are verified by vendors because state attorneys general keep a close eye out.

The company uses quirky marketing tools, such as closing the entire months of January and July for a good cleaning. It also collects lists of faithful shoppers who are notified when a new event begins on an upcoming Tuesday morning, of course.

But Mason credits simple changes in helping draw discount hunters, such as a decision to bring in new merchandise every week. Pieces on the "last chance" rack can stay only a week and then they get thrown away or donated to charity.

"I think that's part of the treasure hunt atmosphere," said Mason, moving on to absentmindedly straighten out piles of sheets pulled apart by shoppers.

The chain opened its first Pittsburgh-area store near Century III Mall in the summer of 2002 and has since added three more. A McMurray site is due early next year. Mason could see a total of seven here.

Forget the new stuff

At the five Pittsburgh-area Play It Again Sports stores, discount shoppers showed their staying power in the economic slump that followed the Sept. 11, 2001, terrorist attacks.

But then the numbers began tumbling as the post-9/11 push gave way to the realities of a tough economy. When the slide finally bottomed out, sales had dropped as much as 30 percent. Owners Salli Burrows and Rick Kamman pored through the results and found something interesting.

Sales of used sporting goods far outperformed those of the new merchandise -- goods brought in to fill out the stores' mix. Instead of offering 60 percent used items and 40 percent new as they'd done in the beginning a decade earlier, the stores had slowly evolved to the point where only 20 percent of the stuff was used.

"We'd gotten away from the basics," said Kamman.

People came to Play It Again looking for not just a set of golf clubs, but a deal on those clubs.

The franchisees went back to the rule book. To keep a big inventory of used goods, they had to get lots of people in the habit of bringing stuff into the store. They hosted baseball and hockey sign-ups in some stores, planned fitness seminars and held special days for customers to bring in their goods.

The franchisor, Minneapolis-based Winmark Corp., also has begun buying more from manufacturers with excess merchandise or discontinued items. "They made a real effort to go after closeouts," Kamman said.

Winmark makes its business in the new/used niche, also franchising concepts such as teen clothing store Plato's Closet, music retailer Music Go Round and children's clothing shops known as Once Upon A Child.

With more used inventory available than in the past, Burrows said the Play It Again store displays had been changed to focus on value more. In the Monroeville location recently, employees set up two hockey outfits to show that buying all new gear would cost $450, while a mostly used set they'd put together added up to just $182.

The overall merchandise mix is now closer to 50-50, half used goods and half new.

"Without question, we're seeing a response to what we're doing," said Kamman. They haven't returned to pre-9/11 sales levels, but Burrows predicted that may come next year.

Thrifty finds

A worker in a St. Vincent de Paul thrift store recently saw a vase done by a local artist come in with the donated goods. She recognized the name and did a little research.

"I think she charged $80 for it, and it was gone in five minutes," said Fred Just, central office executive director for the Catholic lay society's Pittsburgh council.

For the truly discount driven, there's no place like a thrift store. The treasure hunt thrill now cultivated by national chains has long been available at shops operated by organizations such as The Salvation Army and Goodwill Industries.

Sales at St. Vincent de Paul's Pittsburgh retail operation have been growing about 10 percent annually for the past couple years. In the fiscal year ended Sept. 30, gross sales totaled $1 million. "We had our best year ever," said Just.

The droopy economy definitely spurred some of that.

Officials also credit some lessons they've taken from traditional retailers. For example, it turns out, the more goods to sift through, the merrier. St. Vincent de Paul has been folding several smaller stores into bigger locations. In Penn Hills, there's a 10,000 square-foot site. The Coraopolis store covers 17,000 square feet. "We have to sell a lot of volume," said Bryan Miller, operations manager.

Clothes, which are donated at an average rate of 44,000 pounds per week, aren't allowed to stay on the racks longer than three weeks. The lesson, of course, is if you like it, you should buy it. Between 30 percent and 40 percent of the stores' regular customers come more than once a week.

The society created the stores as a means of both offering inexpensive merchandise to those who couldn't afford traditional stores and to generate revenues to serve the poor. But it's been clear for a while that not all the shoppers really need to be there. Just, of St. Vincent's, said antique dealers usually come first thing in the morning, and that Lexus SUVs are regularly sighted in the parking lot.

That's certainly OK with the Vincentians, who need the revenues to fund other services, which include a food pantry, a halfway house for those recently released from jail, and funerals for the indigent.

Actually, they're hoping to build the retail business even more. The Pittsburgh council has cobbled together financial help to do a marketing review. Issues getting a closer look include where advertising might be done effectively and just how far existing customers come to shop.

In the meantime, the society plans to open two more area stores, probably at least one in the next six months. And they'll be watching sales trends.

The St. Vincent stores' sales dipped a bit in October. That could be a sign the economy is rebounding and people are going elsewhere. Or perhaps the stores can take another cue from the national chains and blame unseasonably warm weather for keeping shoppers away.

First published on November 23, 2003 at 12:00 am
Teresa Lindeman can be reached at tlindeman@post-gazette.com or at 412-263-2018.
Correction/Clarification: (Published Nov. 26, 2003) A Nov. 23 story on discount shopping incorrectly said the Tuesday Morning chain of stores is planning another store in McMurray. The store at Donaldson?s Crossroads actually opened earlier this month.