Price Variations for Soft Goods in
Discount and Department Stores
HE postwar period has witnessed a major revolution in reTtailing—the
growth of soft goods merchandising by discount
RACHEL DARDIS
and
LOUISE SKOW
Lower prices are often cited as a major factor in the
growth of discount s t o r e s .
For soft goods, however, wellknown hrand names are few
and price quality comparisons
difficult to make. Thus, lower
prices may reflect lower quality merchandise rather than
the existence of actual price
"discounts." This article reports an investigation into
the feasibility of comparison
shopping for soft goods and
the degree to which price differentials exist between discount and department stores.
Journal of Marketing.
1969), pp. 46-50.
Vol.
33
(April,
stores. In recent years discount stores have surpassed the department stores as the number one retailers of general merchandise,
despite those who questioned the permanency of this postwar innovation. In 1967, sales in the discount industry rose 10.3% to
reach a total of $16.6 billion.' During the same period there were
29 discount chains with sales of $100 million and over.
Today the majority of discounters carry a line of merchandise
which is often more comprehensive than that carried by the conventional department stores. Most lines of merchandise can be
found, including food and drugs. Though most discount stores
began in hard goods, soft goods now account for an increasing
share of the merchandise mix. The women's wear department is
usually the leading general merchandise department in discount
stores, while the men's and boys' wear department is second. Discount stores have become the largest retailers of children's and infants' wear, accounting for 39% of the market in 1967. They were
the second largest retailers of linens and domestics and the third
largest retailers of both men's and boys' wear and women's wear in
the same period.There are several reasons for the success of soft goods merchandising in discount stores. First, discount stores offered well-known
brands of merchandise at discount prices. The public was thus in
a position to compare prices in discount stores with prices in traditional retail outlets. In time, the discount store name became a
guarantee of satisfaction to the public permitting the discount store
to expand into the area of soft goods where well-known brand
names are few.'* Another factor in the success of the sale of soft
goods in discount stores was that when department store branches
were established in the suburbs basement operations were omitted.
Thus these branches could not satisfy the demand for low-priced
.staples such as sheets and towels, children's clothing, men's sports
clothes, and women's lingerie.
It has been claimed that many discount stores turned to soft
goods merchandising because higher markups are possible.* In this
of the Discount Industry: 1967," Discount Merchandiser, Vol. 18 (June, 1968), p. 4-TL.
- Same reference as footnote 1, pp. 18-25.
•' E. B. Weiss, Marketing's Coming Readjustment to Low-Margin Retailing (New York: Doyle, Dane, Bernbach Inc., 1957), p. 21.
* W. H. Nelson, The Great Discount Delusion (New York: Pocket Books,
Cardinal Edition, 1966), p. 137.
45
46
area brand names are less prevalent, and price and
quality comparisons are difficult to make. Lower
prices may reflect either lower quality merchandise
or the existence of actual price discounts. While
many studies have been conducted to determine the
reasons for the success of discount stores, very little
effort has been devoted to the area of price comparisons. In particular, the existence of "price discounts" on soft goods in discount stores has not been
investigated. The primary purpose of this study was
to obtain information concerning price variations of
soft goods in discount and department stores. The
study had two parts: 1) determination of the feasibility of making price comparisons for soft goods
in view of the multiplicity of brands and consequent
variations in appearance and quality of many soft
goods, and 2) determination of whether significant
price differentials exist for soft goods of like appearance and quality in discount and department
stores. It should be noted that while the gap between
discount and conventional type department stores
appears to be narrowing, studies of discount store
customers indicate that the public does discriminate
between these two types of stores. Different merchandising policies by discount stores are, in fact,
the major reasons for customer patronage of such
.stores.5
Prior Research
Most price comparison studies have been concerned
with either branded durable goods or food items
rather than nonfood items." Products are generally
compared by brand name or by the quality grade
given on the label. Converse and Hirsch used a
market basket approach and compared food prices
in different types of stores. Millican and Rogers
examined prices for ten unbranded items selected
largely on an arbitrary basis. In 1955, Cole and his
co-workers compared prices between different brands
of food items rather than between different retail
^ See W. P. Doran, "A Study of Discount Store Customers' Shopping Patterns for Soft Goods," Unpublished M.S. Thesis (Cornell University, 1967), pp.
47-51; D. J. Rachman and L. J. Kemp, "Profile of
the Boston Discount House Customer," Journal of
Retailing, Vol. 39 (Summer, 1963), pp. 1-8; S. U.
Rich and B. Portis Jr., Shopping Behavior of Department Store Customers (Boston, Mass.: Harvard University Graduate School of Business Administration,
1963), pp. 83-132.
« R. H. Cole, L. M. DeBoer, R. D. Millican, and N.
Wedding, Manufacturer and Distributor Brands, University of Illinois Bulletin No. 80 (Urbana, 111., 1955) ;
P. D. Converse, "Prices and Services of Chain and
Independent Stores in Champaign-Urbana, 1937,"
JOURNAL OF MARKETING, Vol. 2 (January, 1938), pp.
193-200; W. Z. Hirsch, "Grocery Chain Store Prices:
A Case Study," JOURNAL OF MARKETING. Vol. 21 (July,
1956), pp. 9-23; Richard D. Millican and Romano J.
Rogers, "Price Variability of Non-branded Food Items
in Champaign-Urbana," JOURNA", OF MARKETING. Vol.
18 (January, 1954), pp. 282-284.
Journal of Marketing, April, 1969
outlets. This study was limited to canned fruit and
vegetables since quality comparisons were feasible
for such items.
In another study Jung examined prices in discount stores and other retail outlets." While Jung
found considerable price variations in all outlets,
discount stores offered significantly lower prices than
other outlets. Like Converse, Jung found that price
differentials between different retail outlets had narrowed over time.
Research Procedure
The present .study was conducted in Syracuse, New
York in September, 1967. Three discount stores and
four department stores were selected to represent
the two store groups. The selection was to some
degree arbitrary. The discount stores belonged to
well-known chains which in 1967 were among the
top 25 discount store companies in terms of sales.
One of the discount stores was considered the best in
its chain in the eastern division of the United States.
A second discount .store was a closed-membership
store. The department store group contained one
independent, two members of national chains, and
one member of an ownership group. The independent and ownership group stores differed from the
national chains in that they had basement departments which featured low-priced merchandise as
opposed to "regular" merchandise offered in other
departments. In addition, neither of these stores
had national distribution.
The soft goods were selected from a market basket
of consumer goods and services priced by the BLS
for the Consumer Price Index. This market basket
represents goods purchased by urban wage earners
and clerical workers. Items were chosen from those
categories of merchandise that were most successful
'' A. F. Jung, "Price Variations Among Discount Houses
and Other Retailers," Journal of Retailing, Vol. 37
(Spring, 1961), pp. 55-59.
• ABOUT THE AUTHORS. Rachel Dardis is Associate Professor, Department
of Textiles and Clothing. Cornell University. Her research interests are in
the areas of textile product marketing
and the economics of the textile and
apparel industries.
Louise M. Skow is an economic researcher for Rinfret-Boston Associates,
national economic consultants, in New
York City. Her principal area of research is in the forecasting of economic
trends of major industry groups.
The authors would like to thank
Arnold E. Chase. Doris Rothwell. and
Frances Fox. U.S. Department of Labor.
Bureau of Labor Statistics, for their help
in providing information concerning the
Consumer Price Index and its compilation.
Price Variations for Soft Goods in Discount and Department Stores
in the soft goods departments of discount stores.
According to recent studies, the most popular merchandise lines are primarily nonfashion items such
as infants' and children's clothing, sportswear, men's
shirts and socks, undergarments, hosiery, and household linens.'' High fashion items such as women's
coats, suits, and better dresses were excluded from
the price analysis for this reason. An attempt was
also made to represent as large a proportion of the
household clothing and textile dollar as possible.
The items finally selected for pricing were: men's
business suits, business shirts, golf jackets, work
trousers, and socks; boys' dungarees and undershorts; women's blouses, sweaters, brassieres, and
nylon hose; girls' school dresses, robes, and slips;
children's slacks; infants' sleepers, diapers, and
blankets; and sheets and towels. These items represented approximately 36'"c of the items priced by the
BLS for the Consumer Price Index.
Visits were made to each store to select the exact
items for pricing. Since few stores carried identical
brands it was not possible to compare prices by brand
names. Instead the quality of each item was determined by the specifications used for the Consumer
Price Index derivation. These are detailed descriptions of the physical characteristics of a commodity
(style, fabric, workmanship, and size range) which
determine its quality. Such factors are directly related to manufacturing costs, and hence were assumed to be related also to the price of the item. It
was found that even such specifications could include
a wide range of qualities, so further steps were taken
to ensure that the items were of similar quality. This
was done by taking thread counts and other measurements, comparing construction details, and, in some
instances, employing personal judgment. The fact
that fabric, style, and workmanship were specified
for each item ensured comparability of appearance,
thus holding taste factors constant.
The seven stores were surveyed to determine the
availability of items that met product specifications.
In general, visual inspection, including the taking
of measurements, was all that was required. In some
instances it was felt that observation alone was inadequate to determine whether the items were of
comparable quality. For these items, several laboratory tests were employed.
An item which met specifications was first priced
in discount stores. Then an attempt was made to
find the same quality item in the department stores.
In the non-chain stores it was often necessary to
price items in the basement departments. In all cases
if more than one item was found which met specifications, the volume seller was priced. The volume seller
was selected because it represented the item most in
demand by the consumer.
Doran, same reference as footnote 5, pp. 59-62; Rachman and Kemp, same reference as footnote 5, p. 8;
Rich and Portis, same reference as footnote 5, p. 114.
47
All items were priced for a four-week period in
September. This period was selected after consultation with store buyers and managers. They were
naturally not informed which items were to be selected for pricing. Stores had a good stock of fall
merchandise at that time, and there were no white
sales or end-of-season sales. Pricing was done once
a week and on the same day each week. In addition,
all newspaper advertising for the month was checked
to ensure that any price changes or sale announcements were taken into account.
Results
Preliminary investigation revealed that price comparisons could be made for only a limited number of
items. The results are given in Table 1.
Non-comparable Items
The first group refers to those items which were
excluded from the price analysis on the basis of
insufficient or inadequate data. These were: men's
business suits and golf jackets; women's blouses and
brassieres; girls' school dresses and robes; and infants' sleepers. One discount store did not carry
men's suits, while another store did not have suits
which met the grade two tailoring requirements of
the specifications. Golf jackets were available in all
stores, but it was not possible to find a comparable
quality product (similar fabric, style, and workmanship ) in all seven stores. It was interesting to note,
however, that four of the stores did carry identical
trolf jackets, each under a different private label,
with prices ranging from $6.97 in a discount store
to $11.00 in a department store. Wide variations in
sizes, quality of fabric, and workmanship made it
impossible to price the other items.
It was not possible to determine by inspection
whether the second group of items—men's work
trousers, boys' undershorts, infants' blankets, and
bath towels were of similar quality. The work
trousers were laundered once and rated for appearance against the Monsanto plastic standards. They
differed so greatly in appearance after one wear and
washing that no further tests were carried out; they
were excluded from the price analysis. Several laboratory tests were performed on boys' undershorts,
infants' blankets, and bath towels. The results indicated significant quality differences between the
various brands tested, and they also were excluded
from the price analysis.
The test results also demonstrated a relatively
weak relationship between price and quality. In
some instances the higher-priced merchandise received lower ratings than the less expensive merchandise. While such results must be regarded as
tentative in view of the limited number of tests performed, they do suggest that the consumer cannot
always rely on price as a measure of quality. The
same conclusion was reached by Cole and Oxenfeldt
Journal of Marketing, April, 1969
48
TABLE 1
RESULTS OF COMPARISON SHOPPING
Item
Category
Non-comparable items
Visual Inspection
Laboratory tests
Item, as a percentage
of consumjer expenditures for soft goods
Men's business suits
Men's golf jackets
Women's blouses
Women's brassieres
Girls' school dresses
Girls' robes
Infants' sleepers
Men's work trousers
Boys' undershorts
Infants' blankets
Bath towels
20
Total
Comparable items"
Men's shirts
Men's socks
Boys' dungarees
Women's hose
Women's sweaters
Girls' slips
Children's slacks
Diapers
Sheets
Total
16
Grand Total
36
"Since comparability was determined on the basis of visual inspection it is possible that laboratory tests might have revealed some
important quality differences.
in their studies of the relationship between product
quality and price."
The fact that non-comparable items accounted for
more than half the total number of items selected
suggests that comparison shopping by the consumer
is not possible for many soft goods. This result may
explain, in part, the findings of a recent study that
only 40% of shoppers shop in two or more stores
for soft goods.'" If the consumer has no basis for
making price comparisons in different stores, then
the costs of interstore searching are likely to far
outweigh the benefits.
«
Comparable Items
It was possible to make price comparisons for the
following items; men's business shirts and socks.
^ Cole, DeBoer, Millican, and Wedding, same reference
as footnote 6, pp. 16-17; A. R. Oxenfeldt, "Consumer
Knowledge: Measurement and Extent," Review of
Economics and Statistics, Vol. 32 (November, 1950),
pp. 300-314.
i"W. P. Dommermuth and E. W. Cundiff, "Shopping
Goods, Shopping Centers, and Selling Strategies,"
JOURNAL OF MARKETING, Vol. 31 (October, 1967), pp.
32-36.
boys' dungarees, women's hose and sweaters, girls'
slips, children's slacks, diapers, and sheets. Even for
these relatively staple items, however, technological
advances created some problems. Toward the end of
the pricing period, polyester cotton sheets with a
permanent press finish were becoming more popular
than regular cotton percale sheets which were priced
for this study. Men's shirts with soil release finishes
were replacing shirts without this particular finish.
There was reason to believe that a longer pricing
period might not have been feasible because of the
rapidly changing character of the merchandise.
Prices for each item were averaged over a fourweek period and price relatives then determined using
discount store average price as a base (100). Average and median price relatives for department stores
amounted to 114.51 and 111.87 respectively, indicating that department store prices are 12% to 15%
higher than discount store prices. This is in agreement with the conclusion of Silberman." However,
comparison of average prices for each item revealed
no significant difference in price between the two
C. E. Silberman, "The Revolutionists of Retailing,"
Fortune, Vol. 65 (April, 1962), pp. 101-102.
Price Variations for Soft Goods in Discount and Department Stores
49
TABLE 2
TABLE 3
COMPARISON OF AVERAGE PRICES OF SELECTED SOFT
Goons IN DISCOUNT AND DEPARTMENT STORES"
WEIGHTS ASSIGNED TO INDIVIDUAL SOFT GOODS
Item
Discount
Stores
Men's shirts
$3.72
3.67
3.99
Men's socks
0.64
0.78
0.79
Boys' dungarees
2.97
2.97
2.97
Women's hose
0.68
0.85
0.88
Women's sweaters
5.57
4.97
3.97
Girls' slips
1.78
1.94
1.77
Children's slacks
Diapers
Sheets
2.71
2.97
2.97
3.57
3.59
2.91
2.43
2.57
2.79
Department
Stores
$3.98
4.99
3.99
4.00
0.64
1.00
0.75
1.00
2.98
3.36
3.50
2.50
0.98
1.49
1.35
1.00
5.98
5.98
4.00
5.50
1.99
1.89
1.62
2.00
3.98
2.99
2.99
3.00
3.59
3.39
3.95
3.98
2.49
2.69
3.29
3.19
Item
Weight'
Men's shirts
Men's socks
Boys' dungarees
Women's hose
Women's sweaters
Girls' slips
Children's slacks'
Diapers
Sheets
0.11
0.11
0.12
0.26
0.10
0.07
0.07
0.08
0.08
"Weights based on the 1966 BLS weights.
"A difficulty arose in the case of this item since it
had not been selected for pricing for the December 1966
Consumer Price Index. Since such items are selected on
a probability basis and children's slacks would have been
included in the EC-34 other apparel commodities expenditure class, it was decided to assign one-seventh of the
aggregate for EC-34 as weight.
TABLE 4
COMPARISON OF SOFT GOODS MARKET
BASKET BY STORE TYPE*
Discount
Departm.ent
$21.28
21.60
20.66
$23.54
25.88
23.35
23.25
"Using the F test, there was a significant difference
between the means at the 0.05 level.
"Using the F test, there was no significant difference
between the means at the 0.05 level.
groups of stores. The results are given in Table 2
in which prices for each store have been arrayed in
the same order for each item.
The lack of significance may be explained by the
fact that price variations within each group are
nearly as great as price variations between different
store groups. This suggests that selection of a particular store rather than a particular store group may
be the determining factor in obtaining price discounts. As Table 2 indicates, the same store does
not necessarily have the lowest prices for all items.
With the exception of department store #2, each of
the stores has at least one item which is in the lowest
price category.
Prices for all nine items were also combined using
1966 BLS weights so that the relative importance
of each item in the family budget could be taken into
consideration. The weights are given in Table 3.
Since the nine items represent only 16% of consumer
expenditure on clothing and household textiles, the
resulting estimate represents only part of the soft
goods market basket. In view of the fact that less
than 50% of the items investigated in this study
could be compared, however, the feasibility of obtaining price quotations for the entire soft goods
market basket is open to question.
The partial soft goods market basket for each
store is given in Table 4. The price relative for the
partial soft goods market basket (using the discount
store average price as a base) is 113.31, a little less
than the average of the price relatives for the individual items. In contrast to the results for the individual items, there is a significant price difference
between the two groups of stores as evidenced by the
F value. This discrepancy is attributed to the reduction in price variations which occurred when prices
for the nine items were combined to obtain a soft
goods market basket. Confirmation of the market
basket result is also supplied by the fact that when
the stores are ranked in terms of price for each item
and an average rank for each store obtained, the
three leading stores are discount stores.
Journal of Marketing, April, 1969
50
Conclusions
The present study was concerned with an increasingly important area of discount merchandising—
apparel and household textiles. The objectives of
the study were to determine the feasibility of making price comparisons for soft goods and to compare
prices in discount and department stores.
It was possible to make price comparisons for less
than half the total number of items investigated.
Problems were encountered in finding items of like
quality due to wide ranges in style, fiber content,
construction detail, and workmanship. Fashion and
technological change also made it difficult to find
identical items in each of the seven stores for any
length of time. For some items it was not possible
to determine by inspection whether or not they were
of similar quality, and laboratory tests were performed. The results indicated that price alone could
not be taken as an indication of quality. The problems of a complex consumption technology, mentioned
by Lancaster, undoubtedly exist today for textile
products.!- Rapid technological change will result in
inefficient consumption unless it is accompanied by
adequate information concerning product characteristics. The uncertainty caused by lack of product
knowledge may explain, in part, the growth and
'2 K. Lancaster, "Change and Innovation in the Technology of Consumption," Atnerican Economic Review,
Vol. 56 (May, 1966), pp. 14-23.
popularity of large-scale retail organizations which
have established minimum performance requirements
for the products they sell and on whose judgment the
consumer has come to rely.
The results of the price analysis for those items
that could be compared showed no statistically significant difference in price between the two groups
of stores for the individual items. When the items
were combined to obtain a partial soft goods market
basket, however, there was a significant price difference. In addition, when the stores were ranked in
terms of price for each item and an average rank
obtained for each store, the three leading stores were
discount stores.
On the basis of this study, one might conclude
that savings are possible for the consumer who shops
in discount stores even though they do not always
offer the lowest-priced items. Since price comparisons could be made only for those items which appeared similar, it is not surprising to find that discount stores with their policy of "discount" pricing
tend to offer lower-priced merchandise than department stores. A more interesting question concerns
the price policies of discount stores for those items
of merchandise which cannot be compared. A study
of the relationship between price and quality of soft
goods is necessary if we are to obtain adequate information concerning the merchandising policies of
different retail outlets. Such a study is also essential if we are to assist the consumer in making
correct decisions in the marketplace.
Alpha Kappa Psi Foundation Award
for 1968
Charles S. Goodman was voted the 1968 Alpha
Kappa Psi Foundation Award for his article DO THE
POOR PAY MORE? which appeared in the January,
1968 issue of the JOURNAL OF MARKETING, Vol. 32,
pp. 18-24.
The winner is Professor of Marketing at the
Wharton School of Finance and Commerce of the
University of Pennsylvania. He received his BS and
MA degrees from U.C.L.A. and his PhD from the
University of Michigan.
The Alpha Kappa Psi certificate of award, as well
as a cash award of $200, will be presented to Dr.
Goodman at the June, 1969 meetings of the American
Marketing Association in Atlanta.