May 9, 2000
Paul Solman of WGBH- Boston looks at the big business of small budgets. The profits of Ames and downscale department stores.
SPOKESMAN: Introducing Martha Stewart's everyday baby, baby collection.
PAUL SOLMAN: Discounting is going upscale. Martha Stewart has a whole baby boutique at K-mart. Target's ads for its designer housewares-- that's a toaster-- are so hip, they hop. Both K-mart and Target think that times have changed, and that in this booming economy, they need to target well-heeled customers who've benefited most from the boom. But which is the fastest- growing, most successful discounter in the land? Decidedly down-market Ames.
SPOKESMAN: Welcome, bargain hunters. Ames has a great offer on something everyone in your family can use.
PAUL SOLMAN: Unassuming Connecticut-based Ames may not look like it, but it's a chain on a tear. It just opened its 460th store, is cloning itself nationwide, its stock is up a Yahoo!-like 1,000+ percent since 1996.
SPOKESMAN: We thank you for choosing Ames.
PAUL SOLMAN: Yet Ames targets a segment of shoppers the economic boom has largely ignored: Working-class women with below average household incomes, $25,000 to $35,000 a year.
WOMAN: Total is $108.17. I need at least $11 for deposit.
PAUL SOLMAN: 80% of these shoppers pay cash. Many, like Mildred Jones, buy on layaway: A cash installment plan.
MILDRED JONES: This is my place. My kids call me "the layaway queen of Ames." And this is where I come, and my stuff looks just as good as theirs. Getting it right here, a little cheaper, it lasts just as long. Now matter how much you pay for something, if you don't take care of it, it's not going to last.
PAUL SOLMAN: The working class elderly are another Ames target. The company offers Gold Cards featuring 10% Tuesday discounts to seniors, who qualify at the tender age of 55.
SPOKESMAN: You want a cookie to go with that?
PAUL SOLMAN: Millie Kazekous is a discount pro.
MILLE KOZIKAS: $4.
PAUL SOLMAN: And it's on sale, so you get it for half of that. So it's $2?
MILLE KOZIKAS: $2, plus your senior discount.
PAUL SOLMAN: So I'm down to... So it's a $1.80.
MILLE KOZIKAS: Yes. That's a good deal.
PAUL SOLMAN: Now Ames seems to have perfected the formula for its target customer. Bright lights and big signs ease navigation: No pastels, no petites. Ames sells more women's plus sizes than any other discounter. The men's department features "one for the big guy."
JOE ETTORE, CEO, Ames: We've even gone so far to put in some bigger sizes in children's wear.
PAUL SOLMAN: Ames CEO Joe Ettore.
JOE ETTORE: And there's not another discount store in the country that carries "boy's huskies" or "girl's perfect plus," as we call it. And, you know, these are children that perhaps are just a little bigger-sized than what the normal size range is. Well, what does that mean? They're not supposed to get dressed?
PAUL SOLMAN: Ettore shops the world for bargains, squeezing vendors, like those in the far East in 1998, say, when economies and currencies there tanked. He passes on every penny he saves, he says, to his customers.
PAUL SOLMAN: This is $119.
JOE ETTORE: That's five pieces. Yeah, five pieces. That's four chairs and a table for $119.
PAUL SOLMAN: Come on, are you serious?
JOE ETTORE: Yup.
PAUL SOLMAN: Unbelievable.
PAUL SOLMAN: Some of the buys are name brands, like Century car seats. Most aren't. The Ames shopper doesn't seem to care, so long as the price is right. Like sneakers for $14.99.
BRUCE GAUDETTE: These are the ones I buy, right here. The gray ones.
PAUL SOLMAN: Uh-huh.
BRUCE GAUDETTE: And I have them, I get maybe three years out of them.
PAUL SOLMAN: And it says wind... something. Windstream.
BRUCE GAUDETTE: They're very sturdy, they are.
PAUL SOLMAN: But don't you feel sort of...
BRUCE GAUDETTE: Not me.
PAUL SOLMAN: Left behind by all the people with the brand-maker sneakers?
BRUCE GAUDETTE: Nah.
|In search of the high-end?|
PAUL SOLMAN: Now when it comes to Ames's discount rivals, it's not as if they've been entirely missing the boat, by charting a new upscale course.
ANNOUNCER: Sail over to K-mart now.
PAUL SOLMAN: Both K-mart and Target have been successfully attracting wealthier customers. And no wonder.
ANNOUNCER: Time for the fun to shine...
PAUL SOLMAN: In recent years, 90% of all the new wealth created in America has gone to the top 20% of the population, with the bulk of that wealth concentrated in the top 1%. And since such inequality has been a big aspect of this boom, we in the media have dutifully followed the money, looking up the economic ladder ourselves. In the last year or so, the NewsHour has reported on high- end real estate brokers, high- flying day traders, dot.com entrepreneurs, all apparently raking it in. And we've explored with economist Robert Frank the phenomenon that he has dubbed "luxury fever," ever more conspicuous consumption by so many Americans as they try to vie with those who are consuming the most conspicuously at the very top. Thus, a paradoxical punch line, that the economic boom has left most of its beneficiaries dissatisfied, increasingly envious of those doing even better than they. Now, by that logic, we figured, those who have benefited least from the boom, the bottom %50 or so who shop at discount stores, should be the most envious of all. But at Ames, the order of the day was happiness.
MUSIC PLAYING: You are my sunshine my only sunshine you make me happy...
PAUL SOLMAN: The merchandise was happy, and so were the shoppers, and not just with the store.
SHARI ATWATER: We're very happy with what we have.
PAUL SOLMAN: But don't you have some sense of being left behind by the economic boom of the last few years?
SHARI ATWATER: Not really. Not really.
PAUL SOLMAN: Are you one of these people who's envious of the guys who have the BMW's and the dot.com guys, and everything.
ED SCHWARTZ: No, I'm happy with my Escort. It gets me from place to place.
BRUCE GAUDETTE: I'm very happy with what I have, and I always will be. I figure I'm a very lucky man.
PAUL SOLMAN: Okay, we wondered, why are these people so satisfied? Well, one line of research has identified a huge market segment of Americans called "belongers," working-class people who, for the most part, are content with their economic lot in life.
SHARI ATWATER: I'm happy with what I have.
PAUL SOLMAN: But why? Well, says advertising executive Pat Greenwald, they avoid envy by sticking together as far away as possible from those at the top.
PAT GREENWALD, Advertising Executive: This is 38% of the U.S. population, and these belongers turn out to be the happiest of all the groups in this research, because they don't have the pressures of the city life. This is the white picket fence group, in the sense that they live a very predictable, dependable, reliable life: The family, the Kiwanis, the Elks.
|Belongers: America's happiest people|
PAUL SOLMAN: In short, says Pat Greenwald, belongers stick to their knitting. And she thinks Ames, which sells more yarn than any retailer in America, is thriving precisely because it knows belongers.
PAT GREENWALD: It's more yarn than I've seen in my whole life.
SHOPPER: This is craft items from the craft department.
PAUL SOLMAN: Belongers, among other things, do it themselves. Uh-huh.
SHOPPER: This one says, "I love my garden." And this one's "gone fishing." (Beep)
SPOKESPERSON: Lenny, call 7-1-1-1.
PAUL SOLMAN: According to Pat Greenwald, Ames isn't simply successful because there are lots of people in the working class. It's that by avoiding any hint of luxury fever, Ames lures so many who are immune to it.
PAT GREENWALD: This store seems to have a feeling for this kind of consumer.
PAUL SOLMAN: One reason for Ames's feel for its customers may be that executives like number-two man Rolando DeAguiar started out modestly themselves.
PAUL SOLMAN: You came from Cuba.
ROLANDO DE AGUIAR, Executive Vice President, Ames: Havana, you know. My parents didn't have two wooden nickels to rub together when I first got here. And basically a lot of the folks who are customers in these stores remind me of the way my parents were and I was 30 years ago.
PAUL SOLMAN: Even CEO Joe Ettore started out buffered from the lifestyles of the rich and famous.
JOE ETTORE: When I grew up in Jersey city, I wasn't unhappy because I was in Jersey City and not in Saddlebrook, New jersey. I mean, I didn't know. First of all, I had never heard of Saddlebrook, and all I knew was Jersey City. And so, I knew, being realistic, I knew that's where I was going to live. And I also knew that my father wasn't going to have a Cadillac in those days, because only rich people had Cadillacs in those days. So I don't think we thought about it. I don't think we got caught up in it. And maybe that's the same thing today.
PAUL SOLMAN: Now Ames paid Joe Ettore $6.8 million last year alone. Considering his humble origins, big surprise that he's relatively happy. But then it seems, so are his shoppers, for what may be a relatively similar reason. They, too, compare themselves, not to the upper crust, but well, to their relatives: Their parents, in-laws, neighbors-- their fellow belongers. And relative to those benchmarks, in this growing economy, they've been doing just fine.
SHARI ATWATER: We are much better off than our parents were in life. We give our children so much more than we were given as children.
SHARI ATWATER: I'm a lot better off than my parents were.
PAUL SOLMAN: But what about compared to what you had, I don't know, 20 years ago, 25 years ago, you doing much better than you, yourself?
SHOPPER: Oh, yes, yes, yes. Definitely.
PAUL SOLMAN: But we've saved the last word for layaway queen Mildred Jones. Better off today than yesterday? Than her parents were? Absolutely. But Mildred Jones seems to have transcended the comparisons that foster envy, in what struck us as a rather enviable way.
MILDRED JONES: I can't compare myself to anybody anymore. Comparing is just going to make it harder for you. Because if you always try to compete with somebody else, you're never going to be able to be there. In my heart, I'm already there.
PAUL SOLMAN: Ames shopper Mildred Jones says she's already there, at a place we might all aspire to, if only we let down our pretensions every once and a while.
MUSIC PLAYING: You are my sunshine my only sunshine you make me happy when skies are gray you'll never know, dear how much I...