A betting man would have lost his shirt. Anyone with good sense would have thought the likes of K-Mart and the late Montgomery Ward would have thrived in the economic downturn of the past two years.

Shoppers naturally should be drawn to the discount proposition in uncertain economic times, right?

Turns out, there are things that even the most frugal shoppers won't do to save a buck.

You Marked it at U-Markit

When I was a kid, my cash-strapped parents found creative ways to stretch $528 a month across four kids, a car payment and a miniature schnauzer.

One such endeavor was a trip to U-Markit. In the days of retail grocery before the price scanner, U-Markit's management decided to dispense with the individual price labeling on products, as well as the traditional rows of neatly aligned packages and cans. After all, these were very expensive, labor-intensive efforts.

U-Markit threw out all aesthetic considerations and simply left products in their shipping boxes on stark warehouse shelving. Next to each shelf was a grease pencil for shoppers to mark the posted price on each product.

What I remember most is that U-Markit smelled odd. Of the top things that consumers look for in a grocery store, an odd smell is not one of them.

That was our one and only visit to U-Markit. Years later when I became marketing director for a national shopping center company, I recalled the fateful shopping trip and I asked my mother why we never went back.

She said, "It required way too much effort and was a filthy, awful place. Besides, we discovered FedMart.

The Evolution of FedMart

I remember FedMart as a remarkable place that sold more than just groceries; it sold clothing and even some home furnishings -- very unusual back then. It offered an assortment of national brands and private label FedMart-branded products.

No funny smells, no grease pencils. Compared to U-Markit, FedMart was a cleaner and more dignified discount retail experience.

Eventually, FedMart became Price Club, which eventually merged with Costco. And in the current economic downturn, Costco is thriving.

Admittedly, membership warehouses are poised for prosperity in hard times. Buying in bulk can save the typical family hundreds of dollars each year. And yet, Costco offers products that most consumers would never consider--like $4,000 flat screen televisions and $30,000 diamond solitaires.

But what about K-Mart and Montgomery Ward? Weren't they ripe for the price-conscious consumer?

Dignity Is the Key

A substantial part of the American psyche is connected to the concept of economic prosperity. Accordingly, the ability to acquire brands of quality is a vital part of most shoppers' consciousness.

It's also important to note that recoveries from economic recessions historically have been attributed to consumer spending. Yet despite economic hard times, the consumers still long for quality brands and the esteem they carry.

Most consumers are okay with buying off-price; and buying off-brand is okay with consumers in selected categories. In tough times the handbag may still say Prada, but it's okay if the T-shirt and socks are from Kohl's.

Savvy shoppers pick and choose their battles. And this too is reflected in where they choose to shop.

For retailers, two critical areas of concern arise when courting consumers during tough times: The brands retailers choose to carry and the quality of the retail experience.

Epitomizing these two ideals is Target. Target has defined a new retail category of "dignified discount" by paying careful attention to brand affiliations and putting into practice some of the most sophisticatedly simple merchandising in retailing today.

An antithesis to struggling K-Mart, Target offers a stunning array of the most respected brands in a shopping experience that treats consumers with consideration and intelligence.

Merchandising is clean and uncluttered. Color, lighting and iconography are used to bring feng shui into the discount space.

Granted, not every shopper demands that her children's toys come from such renowned designers as Philippe Starck, but it's nice to know that Target has brought the opportunity to the masses.

And where else but Super Target can a shopper stop by the in-store Starbucks to sip a caramel macchiato, while buying Starbucks beans in the coffee aisle, and cruising by the freezer section for some Starbucks ice cream?

Truth is, it's been a long time since anyone bragged about shopping at Montgomery Ward. And today, many consumers would cringe if caught buying Martha Stewart towels in a K-Mart.

Such retailers often fail to respect consumers and don't fully invest in the consumer-centered research required to build a shopping experience that is meaningful and renewable.

Want to bolster consumer confidence, increase purchases and foster loyalty? Retailers should provide consumers with the opportunity to practice frugality in a way that doesn't seem frugal, while lifting the perception of their quality of life. Such retailers as Target, Kohl's and Costco are providing consumers with a dignified shopping experience at a time when it is hard to be a consumer.

And as long as they do that, consumers will thank them from the bottom of their wallets.

Mitch McCasland mitch@brandinquiry.com is the founder of Brand Inquiry Partners (www.brandinquiry.com).

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