Twenty years ago, music was purchased at the
“record store.” Not any more. Today, CDs can
be purchased at retail stores such as Best Buy,
Borders,Wal-Mart,Sam Goody’s, andDisc
Exchange; through online retainers such as
CDUniverseandCDNow; and as individual
MP3 downloads from services such as Apple’s
iTunes®andReal’s Rhapsody®. The way we
buy goods (and services) has undergone signif-
icant changes and will continue to change with
consumer tastes and technology. For example,
an established retailer like JCPenneyis faced
with a rapidly changing competitive landscape
through the emergence of (1) discount mer-
chandising, (2) category killers, and (3) Internet
retailing.
Over the last two decades, Wal-Mart has
virtually reinvented discount merchandising, thus
becoming the world’s largest retailer. Wal-
Mart’s growth is centered on providing the con-
sumer with everyday discount pricing over a
broad array of household products. Category
killersincludeToys“R”Us(toys),Best Buy(elec-
tronics),Home Depot(home improvement),
andOffice Depot(office supplies), which pro-
vide a wide selection of attractively priced
goods within a particular product segment.
Internet retailers, such as Amazon.com and
Lands’ End(now part of Sears), allow time-
conscious consumers to shop quickly and
effortlessly.
JCPenney has had to adapt its retailing
model in order to respond to all these changes.
JCPenney is competing with the discounters by
providing more assortment and quality than a
discounter, but at a better price than a specialty
retailer. JCPenney deals with category killers
by eliminating hard goods and focusing on soft
goods, such as clothes. JCPenney has had to
adapt its retailing model in order to respond to
these new competitors. The company’s new
business emphasis focuses on providing more
assortment and quality than a discounter, but
at a better price than a specialty retailer.
Merchandising will undoubtedly continue
to evolve as consumer lifestyles and technolo-
gies change in the future. In this chapter, we in-
troduce you to the accounting issues unique to
merchandisers. We emphasize merchandisers
at this point in the text because merchandising
is significant in its own right, and because even
nonmerchandisers have similar accounting is-
sues to those discussed in this chapter.JCPenney
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