story by Kim Souza
Retail is a competitive game and staying ahead of the pack is a constant challenge that Wal-Mart doesn’t take lightly despite its gargantuan size.
The Bentonville-based retailer is still four times larger in total sales that its closest brick and mortar competitor, Target. When comparing against the largest pure grocery retailers, Wal-Mart also ranks No. 1, behind Kroger who has held the No. 2 spot for the past four years, according to STORES’ 2013 Top Retailers List. This year’s data published in the July issue of STORES magazine, was compiled by Kantar Retail.
Last year Walmart U.S. reported sales of $328.7 billion, Kroger posted sales of $92 billion and Target had $71.96 billion in top line revenue. The much talked about competitor Amazon, ranked No. 11 with $34.416 million in U.S. sales, but continues to be one to watch in the coming years.
“The evolution of consumer expectations, the emergence of new business models and the proliferation of new technology have set retailers on a course of reinvention,” said Susan Reda, editor, STORES Media. “Success is contingent on innovation, relevancy and personalization, and many of the companies on the Top 100 list have embraced those imperatives. There’s no such thing as status quo anymore; we live in a world where shoppers expect seamless personalized experiences across every transaction. It’s both enormously challenging and tremendously exciting.”
One of the more telling facts in the data is the annual growth rates of companies already mentioned along with a few other Wal-Mart competitors.
Wal-Mart’s mature format grew sales at 4%, with a 3.3% increase in the number of stores across its U.S. footprint, while all of its chief competitors did better.
Broad merchandise competitor Target’s sales grew at a 5.1% rate last year and company added less 1% in new stores.
Grocery giant Kroger grew sales at 6.6% and did so with 1% fewer stores than the previous year.
Wholesale club competitor Costco, which ranks No. 4 on the total list, grew sales by 10.6% last year, adding 2.4% more clubs.
Low price competitors Dollar General and Family Dollar also outperformed Wal-Mart in terms of total sales growth, but it took them adding more stores to accomplish the goal.
Dollar General’s sales rose 8.2%, but the discounter added 5.7% more stores last year. Meanwhile Family Dollar added 6% more real estate and grew total sales revenue by 9.2% from the prior year.
Amazon has zero stores but grew its total sales by 30.4% last year, which was enough to push the ranking up four spots this year to No. 11.
"In many ways 2013's list will be remembered as the last one without Amazon in the Top 10," said Brian Gildenberg, chief knowledge officer of Kantar Retail. "Increasingly today's winning retailers are winning through deep understanding of connection to their shoppers across all touchpoints, and then either intense specialization against specific categories and needs or a deep granular understanding of what their shopper wants as a total solution".
TRAJECTORY TO 2020
Because of Wal-Mart’s mature status as the biggest retailer, it continues to grow at a smaller rate in part because of brand saturation and the constant threat of other retailers nipping away at marketshare.
Over the next seven years, the retail landscape is expected to transform itself as more online sales become the standard. Analysts agree Wal-Mart has been making many of the necessary investments to better compete in a omnichannel environment, which other competitors like Dollar General and Costco have not done enough of thus far.
Given the current trajectory Wal-Mart would have roughly $444.4 billion in annual U.S. sales by 2020, enough to maintain the No. 1 rank among its competitors. Amazon would rank No. 2 with $215.12 billion sales if maintaining the 30% annual growth rate through 2020.
Kantar analyst Leon Nicholas has said the largest threat to Wal-Mart’s continued No. 1 spot is its mature status. And this is why the retailer continues to look for opportunities to grow revenue via strategic partnerships that provide consumers services like banking, wireless mobile and life insurance.
Carol Spieckerman, CEO of New Market Builders, is among those who believe Wal-Mart does not take it’s No. 1 spot for granted.
She said Wal-Mart has pursued new frontiers into digital, mobile and social spaces “earlier and with more verve than its rivals.”
“The sheer number of initiatives that Walmart has undertaken over the past couple of years and its willingness to challenge legacy systems make it a fascinating study in retail future-proofing. As the world’s largest retailer hits the mid-year mark, much can be learned from the way it has gone about building its platform on several fronts,” Spieckerman recently noted in her blog.
She said since Wal-Mart moved beyond the home-office model to set up a satellite tech lab known as @WalmartLabs, at least five other large retailers (Target, Home Depot, Staples, Tesco and Marks & Spencer) have followed suit.
Spieckerman notes the pace of Walmart’s subsequent technology acquisitions and solution launches remains unprecedented in retail. Shopycat, Polaris, Get on the Shelf, and Goodies are just a few of the technology innovations and campaigns that have been developed and launched in the two years since @WalmartLabs was established. In the past three months the retailer has added to its brain trust with the acquisition of three more startups: Inkiru, One Ops and Tasty Labs.
“Walmart’s mold-breaking decisions to infuse its e-commerce organization with outside talent and to shun micromanagement and proximity demands in favor of empowerment and autonomy have garnered game-changing results,” Spieckerman notes.
CEO Mike Duke said last month that e-commerce sales rose 30% in the first quarter and sales online sales volume is expected to hit $10 billion this year.
Spieckerman said Wal-Mart’s investments are also helping to usher million of users to new technologies.
2013 Top Ranking Retailers (by revenue)
1 Wal-Mart $328.704 billion, up 4%
2 Kroger $92.165 billion, up 6.6%
3 Target $71.960 billion, up 5.1%
4 Costco $71.042 billion, up 10.6%
5 Home Depot $66.014 billion, 6.4%
11 Amazon $34.416 billion, up 30.4%
26 Dollar General $16.022 billion, up 8.2%
42 Family Dollar $9.311 billion, up 9.2%