The Clash of the Discount Titans : Shoppers On The Prowl For Cheap Brassieres and Cut-Rate Refrigerators Are Helping Wal-Mart and Kmart Remake the Retail Business

SWARMING INTO HUGE PARKING LOTS AT the foot of the San Gabriel Mountains on a warm autumn afternoon, shoppers eager to snatch up bargains invade two giant shopping centers directly opposite one another on Mt. Vernon Avenue in the smoggy industrial town of Colton. Located just off the San Bernadino Freeway and surrounded by railroad yards, rock-quarry piles and strip mines, the malls are painted in demure pastel tones and capped by tile roofs.

At the Centerpointe Shopping Mall on the west side of the street, a Wal-Mart opened last February as part of a campaign by the nation’s largest retailer and most aggressive discounter to saturate California with its red-and-blue-striped gray stores.

Customers headed for the emporium stride by vending machines that dispense Pepsi for 35 cents and Sam’s Cola for 20 cents (this day, though, Sam’s machine isn’t working) and tell me how much they love Wal-Mart’s men’s leather jackets for $99, Gitano women’s pants for $18.96, Jordache women’s sneakers for $10.96, Magic Chef microwave ovens for $88--all about half what some department stores charge.

Enthusiastic shoppers sound as if they are auditioning for TV commercials: “I think it’s great we have Wal-Mart. Before we didn’t have much choice,” says Beverly Baker of Grand Terrace. “I love ‘em,” adds a second woman. “They bring competition to the area, where K mart and Target have dominated.” Chimed in a mother of four: “There’s a great selection at reasonable prices.”

Across Mt. Vernon, K mart, the nation’s second-largest retailer and also an aggressive discounter, opened a new outlet--also gray, but with a pink stripe--a year ago, one of 192 K marts in the state. In this fast-growing area near San Bernardino and Riverside, K mart is determined to defend a franchise being challenged by Wal-Mart. And, despite the store’s half-empty parking lot, K mart has plenty of supporters. Says shopper Glenda Binkley, who prefers its sparkling red-and-white interior design and emphasis on fashion: “There’s a big difference between the new and old K marts.”

To cruise through Colton is to see the future of retailing unfold: the merciless juggernaut of discount chains advancing, bulldozing the landscape and threatening to gobble up all but the hardiest competitors. While department stores and Main Street mom-and-pops struggle to hang on to a dwindling band of loyal customers for their apparel, footwear, electronics, hardware, home furnishings, drugs and beauty aids, Wal-Mart, K mart and other discounters--notably the Target chain operated by Dayton Hudson--are expanding to the cheery beep of high-tech scanners checking out an estimated $100 billion in merchandise annually.

Retailing is a rare bright spot on today’s economic scene. A surprising spurt in October sales has jump-started retailers’ hopes for a merry Christmas recovery after two years of gloomy holidays. Nationwide sales for stores that have been open at least one year--the industry’s key barometer of growth--were up about 8% in October from the previous year. Optimists are forecasting a solid gain of 4% to 5% this December over last, though they warn that California and New England won’t join the party because they continue to struggle with stalled economies. While discounters are a boon to shoppers wrestling to make ends meet, their growing dominance also has its dark side. Though they create jobs, most are non-union and pay minimum wage. And where they settle, as one grumpy Colton grandmother complains, “There’s too much traffic, too much noise, too many stores.”

Other critics fret that style and service today take a back seat to price. Says James Slayden, retired president of Robinson’s now teaching retailing at the University of Southern California: “I can’t believe the great American public will continue in this direction. There’ve got to be some people who say, ‘Hold it! Some things are more important than price.’ Women can’t go on wearing jeans and copycat suits forever. Someone will want to be distinctive.”

Still, discounters are enjoying greater gains than department stores and specialty retailers. K mart registered an 11% increase in total sales during October over the year before, Wal-Mart a 33% surge. With disposable income stuck at 1987 levels, nearly 10% of the state unemployed and few signs of economic recovery discernible in Southern California, consumers are focused on price, price, price.

Even well-off shoppers are seeking bargains. A recent nationwide survey of 450 homes by Chicago market researcher Leo Shapiro & Associates found that one-third of all respondents plan to do their Christmas shopping at discount chains such as Wal-Mart, K mart and regional discount stores--twice the number who said they would buy gifts at department and specialty stores. A new ad campaign by Target features the slogan, “Saving money is now in fashion.”

Discount stores today account for more than 50% of retail sales nationally, and their explosive growth threatens the continued viability of many department stores. Consultant Isaac Lagnado, president of Manhattan-based Tactical Retail Solutions, agrees: “The rest of retailing has been hobbled. Discounting is where the action is.”

Department stores’ agony is plain to see. Buffum’s folded last year. May Department Stores announced it will merge the Robinson’s and May Co. chains and close 12 department stores by the end of next month. Carter Hawley Hale Stores, owner of the Broadway chain, recently emerged from bankruptcy with uncertain prospects. R. H. Macy, owner of I. Magnin and Bullock’s, just announced a five-year business plan to lift the retailer out of bankruptcy. Only a few hardy stalwarts, such as Nordstrom, Bloomingdale’s and Neiman Marcus, are thriving.

Wal-Mart, founded in Arkansas 30 years ago by the late entrepreneur Sam Walton--in recent years the richest man in the United States--rolled out from tiny towns in the Southeast to build 1,833 outlets to date, defying conventional wisdom that small towns couldn’t support big discounters. Wal-Mart sold $44 billion worth of goods last year, and surpassed K mart as the largest retailer two years ago.

Today, only two big markets are left for Wal-Mart to conquer: the Northeast and Southern California. Wal-Mart started its California expansion modestly, opening its first store in Lancaster near Edwards Air Force Base in August, 1990. By now, 35 have been erected, 10 in Southern California: Cathedral City, Colton, Fontana, Hemet, Lancaster, LaQuinta, Palmdale, Perris, Redlands and Victorville. Wal-Mart has announced that another 15 will be built next year, and vice president for corporate affairs Don E. Shinkle says the company is negotiating for additional sites--none located in or planned for Orange County.

Anxiously digging in to defend the California turf it has dominated for two decades is K mart, the $35-billion Troy, Mich., behemoth. K mart, which grew out of the S.S. Kresge variety chain in 1962 to build 2,400 stores nationwide, was credited by Walton in his memoir, “Sam Walton: Made in America,” with legitimizing the discount industry and providing Wal-Mart with a model.

But while Wal-Mart was mushrooming in the late 1970s and early 1980s, K mart stores were deteriorating. Executives were on a buying spree, acquiring Walden Book, Builders Square and other specialty outlets, while K mart stores grew shabby and service indifferent. The faulty strategy cost dearly. Alienated consumers defected, and sales growth leveled off. A final humiliation was Dustin Hoffman’s declaration in the 1988 Academy Award-winning film “Rain Man”: “K mart sucks.”

Today, renewal is well under way, led by a peppery, roly-poly chief executive, 51-year-old Joseph E. Antonini. Antonini is matching Wal-Mart step for step, price for price, while also bringing 30 years’ fashion experience to bear on a jazzy new line of apparel that appeals to K mart’s core customer: “the busy, budget-conscious mom” with a combined household income of $25,000 to $75,000. K mart is pouring $3 . 2 billion into a top-to-bottom refurbishing of its stores by 1995 and is building hundreds of new outlets such as the one in Colton. Antonini has won plaudits from retailers and analysts for his vision and skillful implementation. (“If you think this is easy,” says one analyst, “take a look at Sears,” referring to the once-dominant mass merchandiser that has floundered for years in search of a winning strategy.)

New York consultant Kurt Barnard, who publishes Retail Marketing Report, calls Antonini a “merchant king, sparkling, superb.” And of the Wal-Mart-K mart clash of titans, Barnard predicts, “The future of the industry is likely to be defined by the competition between these two.”

BENTONVILLE, ARK., POPULATION 10,000, SNUGGLES INTO THE HEART OF THE Arkansas Ozarks a few miles north of the University of Arkansas’ home in Fayetteville. The main drag in this peaceful burg is Walton Boulevard, and the main attraction is the Wal-Mart Visitors Center, a museum located in Sam Walton’s original Variety 5 and 10 store established in 1950.

Across a small village green from the Benton County Courthouse, the shrine to Walton, who died last April from bone cancer, is located next door to the Adoration and Praise Christian Book Shoppe. The biblical quotation “Let us rise up and build. Neh 2:18” greets the 50,000 or so pilgrims who pass through each year to snap up Sam memorabilia such as baseball caps, T-shirts, sweat shirts, pencils, pins and books.

Walton left a fortune worth an estimated $25 billion to his widow, three sons and one daughter, which makes the Waltons the richest family in America, according to Forbes magazine. Widow Helen, 73, has never been active in the business, but son S. Robson Walton, 48, is chairman of Wal-Mart Stores; John T., 47, owns a boat-building business in San Diego; James C., 44, is president of Walton Enterprises, which owns banks, newspapers and family charity interests; and daughter Alice, 43, heads the Llama Co., an investment firm in Fayetteville.

No item of Sam’s is too small to cherish; his battered old hunting boots are encased in glass alongside a presumably empty box of Hi-Power .28-gauge shotgun shells that he used to hunt quail. It’s hard to imagine other entrepreneurs so glorified. Thomas Watson’s typewriter ribbon enshrined at International Business Machines? A floppy disc once used by William Gates memorialized at Microsoft?

Most analysts believe Wal-Mart will continue to grow and prosper despite the death of its inspirational leader. Says Robert Bissell, senior vice president of Wells Fargo, which owns a big chunk of Wal-Mart stock: “Wal-Mart has a deep bench.” Walton’s successor, CEO David D. Glass, has been with the company for 16 years and is responsible for implementing its much-admired high-tech inventory system and a successful move toward bigger stores. Most of the Walton lucre flows from Wal-Mart stock, which Wall Street loves and accords a very high price compared to earnings. Wal-Mart’s so-called “Price/Earnings ratio” is an outstanding 39, compared to K mart’s 14 and the Standard and Poor’s average of almost 25.

Creation of wealth not only for himself but also for profit-sharing Wal-Mart employees has created quite a legend about Sam Walton in this impoverished state. Walton was also famous for innovative employee relations--like the cheer. Sam would pilot his plane to his stores, where he would stand up before a group of employees, wave his arms and shout, “Give me a W! Give me an A! Give me an L! Give me a squiggly!” The employees would answer him happily, wiggling and twisting when it was time to spell out the “squiggly”--the hyphen in the company name. Today Glass--and all Wal-Mart’s executives--do the honors.

Walton’s zeal at championing consumers approached religious intensity, and today it is the Wal-Mart mantra: Give consumers the best-quality goods at the lowest-possible cost every day ; make them feel appreciated by greeting them at the door as they come in and thanking them as they leave; accept all returned merchandise cheerfully; never run out of hot-selling items. Because the company started in small towns where distributors seldom venture, Wal-Mart was forced to order directly from manufacturers and transport goods by its own truck fleet. For the same reason, Wal-Mart had to erect its own distribution centers in out-of-the-way spots like Port Smith, Ark., and Palatine, Tex.

Today these twin strategies provide competitive advantages. Instead of small shipments to individual stores, suppliers send their trucks to Wal-Mart’s 21 automated distribution centers, where goods are mechanically sorted for delivery. This saves the cost of middlemen and provides for instant replenishment. In California, Wal-Mart has established a distribution center in Porterville and will start construction next spring on a second in Red Bluff.

When Wal-Mart moves into a new area such as Southern California, the company employs a “saturation” technique. Enough stores are erected within a few hours’ drive to justify a distribution center. With a lot of stores clustered within 400 miles of a warehouse, they can be resupplied within 24 hours, keeping those scanners beeping and customers happy.

Wal-Mart’s spiffiest innovation is an ingeniously conceived computer-communications technology, which retailers around the world are cloning because it can shave up to one-third off retail prices. This technology manages inventories so that goods are delivered to warehouses or stores not one minute before they are needed. Wal-Mart has spent $600 million to build its wondrous network; such efficiencies are the engine behind Wal-Mart’s blitzkrieg to capture 26% of the discount market.

Here’s how the system works: News about every item sold in every store every day is beamed from checkout computers via the company’s six-channel satellite--the largest private satellite network in the country--to headquarters, where automatic reorders for Size 12 women’s black stirrup pants, an eight-ounce bag of Halloween jellybeans and a box of six glass tumblers are instantly recorded.

More important, the information is also telegraphed to computers at the apparel, candy and glassware manufacturers that are tied into the Wal-Mart network. These suppliers convert the data into manufacturing schedules that more accurately than ever before reflect the real demand for their goods. The sales information also helps manufacturers plan shipping schedules. This cooperative system is called “partnering,” and suppliers such as Procter & Gamble (which sells more to Wal-Mart than to all of Japan), Rubbermaid and General Electric like it because it gives them fast consumer feedback and more efficient flow of materials, which in turn lowers their inventory costs.

But not all news about Wal-Mart is so upbeat. Like any 600-pound gorilla, the company has bruised a lot of people with its single-minded drive to dominate retailing. When a Wal-Mart simian sits on a supplier, for example, breathtaking price concessions are yielded. Says one Southern California purveyor of health products, who asked not to be identified: “You have to deal with them because they are so enormous. But they make Attila the Hun and Simon Legree look like Boy Scouts.” Suppliers don’t want to be quoted for fear of retaliation, but others call Wal-Mart “a piranha” or “the rudest account in America.”

Wal-Mart executives declined to be interviewed for this story, which is the company’s general policy, and escorted a photographer out of two stores after she took pictures. As I patrolled the aisles in the Bentonville, Ark., store, jotting notes on goods and prices, a manager asked if he could help. When I explained I was doing a story on Wal-Mart coming to California, he sternly warned me, “We don’t allow anyone to take notes in here.”

Wal-Mart’s tactics have incensed independent sales representatives--brokers hired by companies to sell their merchandise when they don’t have their own sales forces. The reps have been bitter since Glass informed suppliers a year ago that Wal-Mart would no longer conduct business with brokers. They don’t believe the company’s stated reason: the need for “improved communication and increased reaction time.” Rather, they are convinced Wal-Mart simply plans to eliminate the cost of their commissions in violation of federal antitrust laws. A coalition has asked the Federal Trade Commission to investigate Wal-Mart and several other retailers yet to be identified.

Says Shinkle: “Wal-Mart’s policy is not to comment on matters being litigated.”

Other disaffected parties include small-town newspapers. Publishers are steaming because Wal-Mart stops advertising once its saturation strategy and word-of-mouth build market share. According to Advertising Age estimates, Wal-Mart spent a modest $189.8 million in advertising in 1991, compared with $527.2 million for K mart. Several small-town papers have halted all local Wal-Mart news in retaliation; in Texas, a newspaper association is sending members examples that contradict the chain’s motto, “Always the low price, always.”

In California, Wal-Mart’s use of financial incentives in selecting building sites--a legal strong-arm tactic--has angered townspeople and other retailers. Wal-Mart’s outside real estate developers search for communities willing to reimburse most of the cost of acquiring a store site with redevelopment agency funds, tax monies a town uses to subsidize businesses in blighted areas. The communities benefit from future sales taxes, but some residents are annoyed at the huge giveaways.

These are minor annoyances compared with mounting resentment by Wal-Mart’s 400,000-plus decidedly non-union employees. Borrowing a leaf from James Cash Penney’s notebook, Sam Walton dubbed his hourly employees “associates” to bestow dignity on their station. Walton contended that profit sharing, incentive bonuses and discount stock-purchase plans were the building blocks of a solid employee-manager-owner partnership.

Indeed, many employees have retired with six-figure nest eggs, since all Wal-Mart profit-sharing funds are invested in its stock. Wall Street values the total of Wal-Mart shares at a stunning $70 billion, which means Wal-Mart’s market value is the second-highest of all U.S. companies, behind only Exxon. Last fall, however, the Arkansas Times, a weekly published in Little Rock, cracked the one-big-happy-family facade Wal-Mart cherishes with an expose by a disaffected salesman titled “Low Pay Every Day.”

Dale L. Stiles, a retired BellSouth Telecommunications manager who has worked at a Hot Springs, Ark., Wal-Mart for a year, found the company so penurious that he wrote in the Arkansas Times, “When you work at Wal-Mart, you’ll probably need another job, too.” Stiles maintains--spokesman Shinkle denies it--that “Wally World” enforces a schedule of no more than 35 hours per week at an average $4.60 per hour in order to avoid paying overtime. Writes Stiles: “Under that policy, an average associate with one year’s service earns only about $8,400, less than 40% of the median Arkansas family income (about $21,000).” Wal-Mart maintains that a more accurate figure is $6.02 per hour if benefits and overhead costs are added in.

So, Stiles concluded, “When the associate helping you check out or find an item seems a little zombie-like, take pity. He may have closed McDonald’s after midnight and then been at Wal-Mart at 7 a.m.”

THE GUTS OF DISCOUNT RETAILING CAN BE SEEN FIRSTHAND AT K MART’S ONTARio distribution center on Airport Drive, a sprawling structure the equivalent of 5 1/2 football fields under one roof. Miles of conveyor belts sort, store, pluck and ship cartons filled with merchandise to sate shopper appetites.

This building never sleeps. Around the clock, every day of the week, blinking computers monitor laser scanners as an endless procession of cartons containing auto-body undercoating, Salon Selectives hair products, Chinese woks, Lysol, Prime Time glassware, Fresh Step cat litter, Magnavox VCRs and Gummi Bears bump along on high-speed belts until they collide with ramps that slide them deep into trucks awaiting departure.

Nearly 550 K marters, some pedaling bikes back and forth, course through the building along stacks of merchandise piled nearly 40 feet high as far as the eye can see. Their tasks sound simple but look complex: On one side of the building, they unload manufacturers’ shipments at 24 bays; on the other side, they pile goods into another two dozen containers ready for immediate shipment.

K mart sells more than 100,000 different items--called “SKUs,” for stock-keeping units--and each can be instantly located by Ontario’s computers. To speed a store’s order, the list is broken down into work details that range from picking a few packs of film by hand to labeling an enormous carton for electronic scanning. The order is recombined for shipping at a station three levels above the ground floor called, appropriately, “The Merge.” Here the scanners read bar codes that tell them where each box should make a right turn off the belt onto a conveyor that leads to the appropriate truck.

General Manager Ken L. Johnson, a 32-year K mart veteran, explains that with the Just in Time inventory system, some goods come in one side of the cavernous building and go out the other within one to four hours. His description sums up the retail revolution: “This used to be a warehouse; five years ago it became a distribution center.”

Transformation of the Ontario warehouse is but one of CEO Antonini’s achievements. When he took charge in 1987, Antonini, whom everyone calls Joe, crafted a master plan to shake up a complacent company suddenly endangered by Wal-Mart’s momentum. In an interview at his sleek headquarters office in a Detroit suburb, Antonini explains, “We had to focus on the stores’ ambience and presentation to regain our status. We had to re-establish a commitment to be dominant in every market: price, presentation, service.”

To date, K mart has “renewed” 1,130 outlets, or about half its U.S. stores, transforming them from crowded beige boxes to cheerful emporiums that feel more spacious. Merchandise is pushed farther back from the front doors, aisles are wider and apparel is displayed on hangers that allow you to see more than, say, just a blazer shoulder. Says Robert Benson, K mart regional manager based in West Covina: “Joe’s changing the way we think, feel, do and act.” K mart has shamelessly copied some of Wal-Mart’s gimmicks: a man or woman called a “greeter” is stationed at the door, and employees are called “associates.”

While Wal-Mart generally builds on the outskirts of big metropolitan areas and waits for cities to come to them, K mart nourishes its urban roots. There are now 29 stores within Los Angeles County, 12 in Orange County and 29 in San Bernardino and Riverside counties.

Antonini is keenly aware that to fulfill his ambitions, he must constantly keep moving. “If it doesn’t come from the CEO,” he says, “it won’t happen.” So, he appears on some K mart TV ads and turns up at many new-store openings. At the inaugural of the first K mart in New York City earlier this fall, Antonini led a pack of news hounds through a former Bloomingdale’s in Fresh Meadows, Queens.

Klieg lights shining on his balding pate, sound equipment amplifying his voice, Antonini regaled the group with his supersalesman’s patter. “Look at this!” he exclaimed, grabbing men’s sweaters, little girl’s dresses and women’s blazers and flinging them across racks. “Look at this quality, this price. One hundred percent cotton! Look how fashionable this is! You get all this only at K mart!”

Antonini waxes jubilant about the success of Martha Stewart’s line of home accessories, Jaclyn Smith’s “ontrend”--K mart’s strange term for stylish--career clothes for women and men’s sportswear by former golf champ Fuzzy Zoeller. His P.T. Barnum, leave-’em-laughing pitch stresses the K mart strategy: fashion, fashion, fashion.

For Antonini, fashion is an essential ingredient in delivering the value today’s tightfisted customers seek. Because he grew up at K mart, he is painfully aware that K mart must excel in order to win back disenchanted former customers. “We didn’t treat them the way they wanted,” he acknowledges. “The TLC was missing.”

Antonini hopes to win back K mart defectors with his bigger, newer, refurbished outlets. These stores yield higher sales per square foot, so he predicts K mart will prosper as their number increases. Many on Wall Street agree; both Salomon Brothers and Burnham Securities recently recommended investors buy K mart.

Meanwhile, Antonini takes pleasure in describing a recent K mart opening in Honolulu, where everyday low prices had been an unknown concept. Traffic was tied up two miles in either direction. Police had to cordon off the crowd, allowing entry only when others departed. A pregnant woman created momentary panic when she suddenly went into labor, and the ambulance couldn’t reach the door. Luckily, she made it to the hospital in time to deliver a son and christen him with initials that honor the new store: Kyle Martin.

AS A BUSY, BUDGET-CONscious mom myself, I found K mart the more pleasant shopping experience. Most of the six Wal-Marts I visited in Arkansas and California smelled like popcorn, while the four K marts in New York, Connecticut and California had inviting Little Caesars pizza outlets, their odors apparently swept away by fans.

Wal-Marts’ floors are covered with acres of dull gray carpet, which makes them look slightly dingy, but the new K marts are bright and welcoming. At the Fontana Wal-Mart, employees were repeatedly paged twice for each phone call, an irritating intrusion, while at a Southbury, Conn., K mart I enjoyed soothing music. At the Redlands Wal-Mart, a jumble of signs hung from the ceiling, some in yellow and purple, others in white, black and red; by midafternoon, the ladies’ room there had a broken faucet and no soap.

Though Wal-Mart’s California associates behaved pleasantly, they weren’t nearly as friendly as the Arkansas clerks I encountered. As Wal-Mart expands farther from home, some observers believe its distinctive esprit and fabled service will falter. Says New Yorker Alan G. Millstein, editor of Fashion Network Report, “When they get to New York, they can forget all about that Bubba Belt service; they’ll be lucky to get courtesy.”

Which store has the lowest prices? Kenneth Stone, an Iowa State University economics professor who has consulted with communities in 46 states about how to deal with the arrival of a Wal-Mart, says, “It’s awfully hard to tell if Wal-Mart is cheaper. Most people perceive Wal-Mart as cheaper because it is masterful at figuring out the few hundred items people tend to know the price of. For example, they have a low price on the four-pack of GE Soft White light bulbs, but their 150-watt single bulbs are the highest I’ve seen anywhere. That’s because most people don’t know the price of a single light bulb.”

Though it seems incredible, neither of the marts, Wal or K, is content with its achievements to date. To snare even more shoppers, they are now spreading their tentacles into groceries. The idea is to offer one-stop shopping 24 hours a day to busy American families without a minute to waste. Wal-Mart has built 27 “Supercenters,” all within a 400-mile radius of a distribution center in Clarksville, Ark., which includes Missouri, Oklahoma, Tennessee, Alabama, Mississippi and Texas. K mart has erected four “Super K mart Centers” in Michigan and Ohio.

These Goliaths aren’t for the fainthearted. Thirty checkout aisles line up with military precision at the Wal-Mart Supercenter in Bentonville, where customers pile up purchases of celery, curtains, build-your-own-furniture kits, Charlie cologne and Wheat Thins.

What will come of this headlong rush to blanket California and the country with discount stores and gigantic supercenters? In the near term, analysts say, with the economy stagnant, the trend will be win, win, win for consumers. But the country in general is “overstored,” which means that even more department stores, small shops and regional discounters will be driven out of business.

Of the titans, Wal-Mart demonstrates the winning momentum and competitive edge. K mart must struggle for at least another two years with its turnaround, a costly drain. But K mart’s urban background has prepared it for future competition, while Wal-Mart’s institutional memory is of small rural locations with little competition. No one doubts that Wal-Mart will succeed in California, but some believe the company will not enjoy the overwhelming profitability that it did in small towns. Its growth is bound to slow as malls around the country become surfeited with discounters.

Retailing instructor James Slayden predicts, “Wal-Mart is going to have a more difficult time in Southern California than other markets, because this is already the No. 1 retail competitive area, especially in off-price stores.”

Chicago consultant Leo Shapiro, however, believes that “since each discounter has special strengths, they will make California a better place to shop. After all, they’re going to square off anyway; they might as well compete where the weather is good.”