More downward pressures on prices. With KMart entering the fray, discounts will spread rapidly throughout the US. Beware of profit margins.
In an unusual move by a US national retailer, Kmart has launched a discount programme for unemployed people. The plan applies to Michigan, which has the highest unemployment rate of any US state – 14.1 per cent in May, compared with a national average of 9.4 per cent. The Detroit metropolitan area has the highest unemployment rate of any US city, at 14.9 per cent.
Kmart says it will issue people who are registered as unemployed in the state a “Smart Assist Savings” card, valid for six months, entitling them to 20 per cent reductions on Kmart’s private label goods, including toilet paper, baby products, cleaners and some basic groceries.
Spartan Stores, a Michigan-based supermarket chain with 99 stores, has issued several hundred discount cards valid for just over a month to former General Motors employees hit by recent plant closings. The cards offer 10 per cent discount for groceries and 3 per cent for fuel. In May Spartan launched a “Christmas in May” appeal to collect household goods and cleaning materials that cannot be bought under state-funded food stamp programmes for poor families.
In Syracuse, New York, Green Hills, a family-owned supermarket, launched in April what it calls a “Recession Assistance” programme. The store offered registered unemployed customers a renewable 10 per cent discount on weekly shopping orders, using its store loyalty card system.
Gary Hawkins, owner of Green Hills, said he had the idea after seeing “buyer protection” promotions this year from Korean carmaker Hyundai and men’s clothing retailer Jos A Banks. Hyundai offered to take back cars from Americans who became unemployed and cover outstanding loan balances. Jos A Banks’ “Risk Free” men’s suit promotion offered to allow customers to keep $199 men’s suits and receive a rebate on money paid if they became unemployed.
Sears, the department store, has a free “buyer protection” programme for home appliance purchases of more than $399.
Pharmaceutical company Pfizer has said it will offer free medication for up to one year to Americans who have lost jobs and health coverage this year.
