Stores.org recently released their annual report on the Top 100 retailers in the US and its a great reminder of the economic impact these organizations have on our economy and the incredible opportunity they represent to companies providing solutions in this vertical market. It came as no real surprise to see Wal-Mart, Kroger and Target take the top overall spots based on combined sales of over $450B across the 10,000+ stores they operate in the US.
As we analyze the list there are three very interesting trends that emerge:
1. Sales per store really matters - retailers are constantly trying to figure out how to drive more sales per store and the retail winners show their dominance in this category. Just looking at the top 3 we see a huge disparity with Wal-Mart at $71M, Kroger at $22M and Target at $38M. Not only does Wal-Mart dominate the retail category for overall revenue and number of physical stores, but they do an excellent job of sales per store. The overall category leader for sales per store is Costco with over $143M in sales per store...an astronomical number and speaks to the massive volume they are able to turn. Along the same lines there is another trend of moving to smaller store formats, which is a bit counterintuitive to growing sales per store. The article points out that less than 1/3 of all Best Buy stores are located in the US but account for over 72% of the total retail square footage for the entire company. Best Buy, like many of the pure play electronic retailers before them, has come under pressure from their online competitors and is looking to smaller format stores to compliment their online presence. As retailer focus more of multi-channel selling it seems that the store is becoming more of a compliment to the online channel and vice versa.
2. Advanced use of customer data is driving results - retailers who take advantage of loyalty data and can personalize offers will be the winners. From a vertical standpoint, Kroger's continues to show strong results despite other grocery stores lagging. The article points out that their use of customer data is a key contributor and the ability for Kroger's to target offers and promotions that are tailored to the individual shopper may be the major differentiator. As we see more traditional retailers incorporate traditional online tactics, like targeting, into their normal offline business processes we can expect to see similar gains.
3. Online is growing REAL fast - Amazon entered into the top 20 this year and had amazing growth rate of 46%. Online still represents a small fraction of all retail sales (less than 10%) but it the fastest growing channel for most retailers. Retailers are acquiring pure play e-commerce companies, investing heavily in their on-line presence and even acquiring social media companies to help advance growth in this area. As the investment grows in this sector the retailer is going to have to ensure a consistent customer experience across their different channels and figure out how to integrate the best of the online and offline worlds.
In aggregate these 100 retailers represent over $800B in annuals sales, 200,000 store locations, and millions of jobs in the US alone. There are new trends amongst these top retailers like multi-channel shopping that will have lasting impacts on our economy as well as how people will shop in the coming years.