What is a specialty department store?

When customers shop for products, they often have a number of different retailers with various business models to choose from. At the two extremes of the spectrum are specialty stores that only sell products within a given category and general retailers, or department stores, which sell a much wider range of goods. Specialty stores have certain advantages for owners and customers, but they also pose possible drawbacks.

Advantage: Specialization and Expertise

One of the key benefits of a specialty store is its focus on a single class of products. This gives owners and employees a chance to develop expertise and a reputation for knowledge and selection within the store's defined specialty. A specialty store can carry more goods within its chosen category, drawing enthusiasts who can't find what they want specifically at a general retailer. Specialty stores also become gathering places for enthusiasts, especially if owners organize special events and product demonstrations.

Disadvantage: Lack of Variety

By definition, specialty stores lack variety. While they may sell many different specific products, they all fall into a single category or classification. This means that shoppers are only likely to come to the store when they have interest in the type of products it sells. This is a contrast to department stores, which can draw customers in with one type of product and expose them to many other types of products while they shop. Specialty stores can be less convenient than general retailers, driving customers to one-stop options if they are available locally.

Advantage: Knowledgeable Staff

Specialty stores have an advantage when it comes to staffing and training. Employees only need to know or learn about one type of merchandise. For example, a sporting goods store can employ sales staff with backgrounds in team sports and personal fitness. This provides an advantage over general retailers, whose staff are less likely to know about all of the products available to customers. A sporting goods store also can recruit employees by advertising in a fitness magazine, targeting people with an interest in a field related to its products.

Disadvantage: Reliance on Market

Another drawback for a specialty store is its financial reliance on a single market. While department stores can shift their inventories to accommodate changing trends in consumer buying, specialty stores risk alienating customers if they alter their offerings too much. For example, a stationary store will see a dip in sales if customers begin using online cards in place of mailed greeting cards. However, adding office furniture to the store's selection of merchandise would harm its image as a local source for stationary and leave less space for the wide selection of cards that made the store appeal to customers in the first place.

Learning Objectives

• Assess the variety and assortment levels of goods for each type of merchandise retailer

Imagine the difference between shopping at a Macy’s, a Staples, a shoe store, and a Wal-Mart. These retailers all differ in their assortments and you likely wouldn’t buy everything you need from just one of them. Obviously a shoe store would not be the place to go for groceries, but it would be a good place to find a new pair of sandals. We will examine the differences in assortment and variety between different types of merchandise retailers below.

Department Stores

Department stores offer a broad assortments of products with multiple departments separating product categories. Their assortments have depth within each category and they have some variety, but usually focus mainly on soft goods such as apparel and bedding, but some hard goods, like appliances, are usually included as well.

Category Specialist

As the name suggests, category specialists are retailers that specialize in one category of products. These categories are fairly broad, such as clothing or hardware. Think of stores like Office Depot or Toys R Us that clearly have a specific type of product they’re selling, but still have a very broad assortment with lots of depth within that category.

Specialty Stores

Specialty stores, like category specialists, have a specific type of product that they sell, but specialty stores are even more particular than category specialists. While category specialists sell products of a certain category, specialty stores are much more product-specific. They don’t have much in the way of variety, but their assortment is very deep. Specialty stores would include florists, locksmiths, and hardware stores, among others.

Full Line Discount Stores

Full line discount stores are retailers that provide name-brand products at a lower cost than other stores. They make money by keeping sales high in order to be able to sell name-brand products at a lower cost than elsewhere. This system also necessitates lots of variety and a wide assortment so that sales can be driven up more easily.

Drug Stores

Drug stores don’t stock a wide variety of products, but have depth in their assortment of health products. It’s important for them to have this depth because they have to compete with other larger super center stores that have pharmacy departments.

Off-Price Stores

Off-price retailers offer high quality products at cheap prices. They buy from other retailers that overbought, manufacturers that overproduced, retailers selling their remaining inventory that is going out-of-season, and in other similar ways. Their assortments are primarily soft goods and because of the nature of their purchasing system, their inventory is inconsistent. T.J. Maxx and Marshalls are examples of off-price retailers.

Practice Questions

Contribute!

Did you have an idea for improving this content? We’d love your input.

Improve this pageLearn More

What is the meaning of specialty stores?

What is the difference between a specialty store and a department store?

What is a specialty store example?

What determines if a company is a specialty store or not?