Miscellaneous General Merchandise Stores

Industry Snapshot

According to the U.S. Census Bureau&s 2009 Statistical Abstract of U.S. Businesses, estimated annual retail sales (excluding food services) in this industry classification topped $4 trillion in 2007--an increase of 4 percent from the previous year. Of this total, combined sales of miscellaneous general merchandise stores and warehouse club stores accounted for approximately $442.1 billion.

The miscellaneous general merchandise stores industry is subdivided into seven groups: miscellaneous general merchandise stores, country general stores, surplus and salvage stores, army and navy goods stores, catalog showroom stores, duty free stores, and warehouse club stores. Warehouse club stores generate over 95 percent of the industry's revenues; country general stores account for approximately 2 percent, and the remainder is spread among the other sectors. States with the highest number of establishments were Texas (1,325), California (1,221), Florida (822), and New York (602).

A handful of major players dominate this retail industry segment in the United States. Arkansas-based retail giant Wal-Mart Stores Inc., the world's number one retailer, topped the list in fiscal year 2008 (ending January 31, 2009), with sales of $405.6 billion and 2.1 million employees. In 2009, Wal-Mart operated 7,870 stores worldwide. As of January 2009, its U.S.-based establishments included 891 discount stores, 2,612 Wal-Mart Supercenters (combination discount and groceries), 153 Neighborhood Markets, and 602 Sam&s Club warehouse stores. Sam&s Clubs accounted for about $47 billion of Wal-mart' revenues, or about 11.7 percent. Wal-Mart has extensive global operations: approximately 55 percent of stores are in the United States, the remainder are globally based.

Minneapolis-based Target Corp. followed Wal-Mart, with fiscal year 2008 sales of $64.9 billion and 351,000 employees. The company claimed a large share of the general merchandise market with approximately 1,700 Target stores. Located in 48 states, these included regular Target stores spanning about 126,000 square feet, as well as 145,000-square-foot Target Greatland stores and 175,000-square-foot SuperTarget stores. After years of struggling to turn around its department store division, Target sold both its Marshall Field's and Mervyn's department stores in 2004. Marshall Field's was sold to Federated and Mervyn's was sold to an investment consortium for $1.2 billion.

Headquartered in Issaquah, Washington, Costco Wholesale Corp. was another leading industry player, with 2008 sales of $72.5 billion. The company is the nation's largest operator of warehouse clubs. About 55 million club members frequent Costco's 555 stores in 40 states and several foreign countries, choosing from an array of roughly 4,000 different products.

Based in Grand Rapids, Michigan, the family owned general merchandise and grocery chain Meijer Inc. reported estimated sales of $13.7 billion in fiscal year 2008. The company operated more than 190 stores in a handful of Midwestern states, including Michigan, Ohio, Illinois, Kentucky, and Indiana. Meijer employed about 60,000 people in the late years of the first decade of the 2000s. Its stores, which were open 24 hours a day, 364 days a year, spanned anywhere from 200,000 to 250,000 square feet in size and offered patrons a selection of some 120,000 items.

The miscellaneous general merchandise stores industry also includes discount/closeout merchandisers like Dollar General Corp., with 2008 sales of $9.5 billion and 71,500 employees; Family Dollar Stores, with 2008 sales of $7.0 billion and 44,000 employees; Dollar Tree, with 2008 sales of $4.6 billion and 45,840 employees; and Big Lots Inc. (the nation's largest closeout retailer), with 2008 sales of $4.6 billion and 37,000 employees.

Despite a significant slowdown in the economy in the late years of the first decade of the 2000s, mainstays in the discount and general merchandise industry maintained a stable, if not positive, bottom line. Wal-Mart reported a total net sales increase of 7.2 percent and 8.6 percent in fiscal years 2008 and 2009, respectively. Growth was based on global expansion efforts, increases in comparable store sales, and acquisitions. According to Wal-Mart&s 2009 annual report, the company experienced both an increase in customer traffic and average transaction size per customer during fiscal 2009. Similarly, Costco reported an increase of 12.5 percent in net sales between 2007 and 2008 and net income increased by 18.5 percent to $1.28 billion, compared to $1.08 billion in 2007.

In fact, the overall retail sector experienced a decline during 2008, with holiday sales very depressed. However, according to MMR, forecasters predicted that discounters would be the only segment that would experience growth through 2009 as the rest of the retail industry continued to struggle. Nonetheless, club-based warehouse stores could face a drop in membership as consumers continued to slash unnecessary expenses and may consider either not renewing memberships or cutting back to just one membership if they hold multiple memberships.