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            April 20, 2008




            Discount stores cater to bargain hunters
            Discount retailers do well in a slow economy as consumers try to save.
            Deborah Alexander
            Staff writer

            Maxine Ferlicca of Chili is always on the lookout for a bargain.

            With children ages 2, 5, and 17 at home, Ferlicca, the assistant manager for First Niagara in
            downtown Rochester, shops for groceries in bulk at BJ's Wholesale Club and Sam's Club.

            Last fall when Stein Mart, the designer discount retailer, announced it was opening a store in Pittsford
            Plaza, Ferlicca was ecstatic.

            She tracked the days when the store would open on the Jacksonville, Fla., company's Web site.

            "I like quality discount clothes," Ferlicca said. "I like quality clothes at good prices, which makes it even
            better."

            Like many consumers in today's economy, Ferlicca is looking for ways to save money as energy and
            food prices climb.

            Discount retailers tend to do better in a slow economy and consumers are the primary beneficiaries
            with more options to shop, according to Mark Zupan, dean of the Simon Graduate School of Business
            Administration at the University of Rochester. In a down market, consumers seek ways to stretch their
            budgets, Zupan said.

            "For discount retailers, their viability depends on being able to weather this downturn," Zupan said.
            "Energy costs soak up so much of consumers' money and the cost of doing business has gone up."

            Whether the economy is up or slowing down, there is always a market for discount retailers, according
            to Amit Batabyal, the Arthur J. Gosnell professor of economics at the Rochester Institute of
            Technology .

            Batabyal said there are three groups of consumers. The purchases of those who are well off are
            unaffected by the economy and they continue to spend. Next is the consumer who regularly shops at
            discount stores. When the economy is in a downturn, the discount retailer takes on greater importance
            for this consumer. And finally, the consumer who shops both luxury and discount stores. This consumer
            will switch their allegiance from luxury to discount when the economy is not doing well.

            "Discount retailers tend to cater to the necessities which are purchased whether the economy is doing
            poorly or doing well," Batabyal said.

            Stein Mart, Ollie's Bargain Outlet and PriceRite are the most recent discount retailers to open stores in
            the Rochester market. Because of the relationships all of these companies have with manufacturers
            and vendors, they can offer savings to the consumer.




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            Stein Mart sells current season moderate to better clothing for women and men at 20 percent to 60
            percent less than department store prices. Ollie's specializes in brand name merchandise —
            overstock, closeout, surplus and salvage — that is 50 percent to 70 percent off the retail price.
            PriceRite is known for its fresh produce department and no-frills store setting — products stacked on
            pallets rather than shelves, shoppers bagging their own groceries — to help keep overhead down and
            pass on the savings to shoppers.

            During tough economic times in the past, consumers did not shop discount, according to Stein Mart
            spokeswoman Kathy Schwartz Lussier.

            "Now they look to Stein Mart for that value," Lussier said. She describes the chain, which will operate
            284 stores in 31 states by May 1, as a discount store in a department store setting.

            The Ollie's Bargain Outlet stores that opened in Greece and Henrietta last fall are among the top 20
            percent of the 59 locations the company operates, according to president and chief executive Mark
            Butler.

            "The stores have absolutely exceeded our expectations," Butler said.

            The store merchandise can change from week to week and month to month because of the deals the
            company can make.

            "You never know what you're going to find when you walk into one of our stores," Butler said.

            "When the economy is tough, consumers are more diligent in looking for bargains," he said. "When the
            economy is vibrant, the manufacturers are much more willing to turn inventory to make a deal with us.
            We prosper in good times and bad."

            As gas prices have increased over the past few months, Bob Stevenson, a former Rochester city
            councilman, said he tries to group his trips together.

            Stevenson said he was thrilled when the PriceRite opened last month in the former Wegmans Food
            Markets store at Driving Park and Dewey avenues.

            The neighborhood had been without a grocery store for nearly a year. The opening of the PriceRite
            store was the 33rd location for the Edison, N.J., chain and its first entry into the western New York
            market.

            "The savings are very good," said the 79-year-old Rochester resident. "PriceRite doesn't have every
            size of everything, but it does offer some competition for existing stores."

            PriceRite is proposing a second grocery store on the northeast corner of Culver Road and University
            Avenue to be built by the end of the year.

            DALEXAND@DemocratandChronicle.com




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