Amazon breaks into the top 10
‘The current retail revolution isn’t about overthrowing the old elite, it’s about the speed with which the old dogs are learning new tricks. Amazon aside, the largest e-commerce merchants remain those that started in bricks-and-mortar. Some 85% of leading e-commerce retailers with bricks-and-mortar stores use those physical units as pick-up locations for consumers who order goods online.’
Top 10 retailers: 1) Wal-Mart 2) Kroger 3) Costco 4) Target 5) The Home Depot 6) Walgreen 7) CVS Caremark 8) Lowe’s 9) Amazon.com 10) Safeway
Sales/stores: #1 Wal-Mart sales of $334.3 billion and 4779 stores; #100 Ingles Markets sales of $3.6 billion and 203 stores
Highlights by retail segment
Grocery: The growth of e-commerce has not had a major impact on grocery because the segment is decentralized. Not including Wal-Mart, no grocery chain has a true national footprint although Whole Foods, Trader Joe’s and Aldi are moving in that direction. But as a merchandise segment, grocery is a driving force with 8 of the top 10 retailers driving significant sales through groceries.
Department Stores: Macy’s leads the segment as it continues to benefit from its reinvention focused on core business strategies creating a competitive advantage based on localization, omnichannel and enhanced customer engagement.
Drug Store: CVS’ US pharmacies are outperforming Walgreens. Both companies are expanding internationally — Walgreens invested in a 45% stake of Alliance Boots GmbH; CVS purchased the Brazil-based Drogaria Onofre chain and is looking for other investments in that country. Rite Aid opened its first new store since 2011 and stepped up the pace of remodeling older units tenfold. After reporting its first profit in six years in FY2013, Rite Aid more than doubled earnings for the fiscal year ended March 1, 2014.
Mass Merchants: Wal-Mart’s growth plans for smaller-footprint stores (Neighborhood Market and Walmart Express) dovetail into its e-commerce strategy by providing customers with ready access to various channels to get what they want, when they want and how they want it. For Target, restoring shopper confidence in its stores along with overseeing the chain’s small-store urban initiative are some of the challenges for its new leadership.
Amazon.com’s Prime has adopted Costco’s fee-based membership model and a number of other retailers have borrowed its “treasure hunt” approach to in-store merchandising. Now Costco finds itself imitating other retailers to “get younger people into the warehouses,” says CFO Richard Galanti. Its challenge is that Millennials are congregating in urban locales, while Costco’s bulk-purchase goods are aimed at car-driving suburban shoppers with plenty of storage space.
Apparel: Traditional apparel retailers like Abercrombie, Aéropostale and Urban Outfitters are taking a beating from fast fashion merchants like Forever 21 and H&M who are able to turn their inventory more quickly and deliver lower priced, fashion-forward styles for teens and young adults.