Discount birthday: Walmart, Kmart, Target hit 50

 

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Kmart. When it seems as if everyone in Hollywood has their own clothing line, it's easy to forget one of the first major celebrity fashion launches. Former Charlie's Angel Jaclyn Smith started her clothes and housewares line at Kmart 27 years ago, and it's still among the most popular brands, says Kmart's interim Chief Marketing Officer Andrew Stein. Selena Gomez and Sofia Vergara also have Kmart lines now.

Nisch recalls shopping while eating popcorn you could smell throughout the store. Karen Davidson, who started with the S.S. Kresge company that became Kmart in 1971, fondly remembers the excitement when the blue light on a rolling cart would move near different products in the store. A loud-speaker announcement would declare that product's price cut, and, "Customers would run over there to take advantage," recalls Davidson, 58. Then they'd wait to see where it rolled next.

After companywide stops and starts through the years, Blue Light Specials are now only done on a store-by-store basis, and there's no more actual light, Stein says.

It's been hard to maintain the excitement at Kmart, which was under bankruptcy protection and had a disappointing merger with Sears in the past decade. And it has been shrinking as its two biggest competitors grow.

Stein says Kmart's "biggest challenge is what every retailer faces. It's very competitive." He says Kmart has moved quickly to respond to shoppers' desires, including adding free layaway and membership rewards card deals.

Even Walmart, the world's largest retailer, has had its challenges. It's had decades-long struggles with labor unions that want to organize workers. It also got off to a messy start.

Sam Walton planned to give away watermelons to the first customers at the 1964 opening of his second store in Harrison, Ark., on an August day when temperatures hit 110 degrees, Dranow says.

He was also offering donkey rides to the kids. The two promotions didn't mix well.

"The watermelons started to pop, so you had all this watermelon juice and guts running into the parking lot," Dranow says. "The donkeys were walking around, and donkeys do what donkeys do, and it started to mix together. Customers were traipsing thorough it and then going into store."

David Glass, the head of a discount drug chain, was at the store opening to see Walton's vision in action. He wasn't too impressed that day.

"David Glass thought Sam was a nice enough fella, but he didn't really think much of this new store," Dranow says.

Glass apparently reconsidered his position. He joined the company in 1974 and became its CEO in 1988.

Walmart now has more than 10,000 stores around the world. But where does discount retail go from here?

Today, the discount stores that revolutionized how America shops have paved the way for aggressive and constant price competition between physical stores and online retailers.

"You say to yourself, 'My God where is it going to go?'" Loeb says. "Pretty soon, they're going to give it away."