Following years of unrelenting change, the country’s Top 100 retailers have delivered a surprise: greater consistency than expected. David Marcotte, senior vice president for Kantar, says other than just a few exceptions, “everybody grew, and at more or less the same rate.”
NRF's Top 100 Retailers ranks the industry’s largest companies according to sales.
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The annual list from the National Retail Federation ranks the industry’s biggest players by domestic retail sales. It also considers Power Players in a variety of categories, each with 2022 U.S. sales equal or greater than 10% of the sales of the category leader. Kantar compiles the data.
Walmart takes the top spot on this year’s list with $499.65 billion in U.S. retail sales for the year, growth of 7.8%. Amazon.com follows with sales of $232.46 billion, growth of 6.7%. Costco Wholesale, The Kroger Co. and The Home Depot once again round out the top five, although this year the grocer — thanks to the impact of the supply chain and other factors in the supermarket sector — has jumped a spot above the home improvement store.
Bereft of large shifts and obvious themes, then, Marcotte views this year’s list from a more micro view. Here’s what he sees.
Kohl’s, Dell Technologies and Signet Jewelers were among the year’s anomalies
On the upside, Signet Jewelers continued its growth trajectory by jumping 10 spots on the list to No. 56. That reflects the recent acquisition of Blue Nile and Diamonds Direct, Marcotte says. But it also speaks to supply chain: The size and portability of jewelry means it’s significantly less likely to be impacted by these issues than, say, furniture.
On the downside, Dell Technologies (No. 39) stands out for its drop of 20.3% in U.S. sales between 2022 and 2021. Kohl’s (No. 30) was also notable with a drop of 7.1%, landing at $17.19 billion in 2022 U.S. sales.
As for Bed Bath & Beyond, which was No. 64 on last year’s list and absent from this year’s, “that was absolutely no surprise to anyone, except to the newspapers,” Marcotte says.
Big box and mass see ongoing growth while drug stores endure labor challenges
Growth in the big box and mass merchandise sectors isn’t just in the United States, Marcotte says. It’s international. Simply put, “People are comfortable putting out the membership fee to buy into the value proposition,” he says. This is a dynamic category to watch, well-established in the U.S. but with “a great deal more room for expansion.”
“People are comfortable putting out the membership fee to buy into the value proposition.”David Marcotte, SVP of Kantar
Power Players here include Walmart, Amazon.com, Costco and Target (No. 6). Walmart saw a comp store sales change of 8.2%; Costco saw 10%.
Meanwhile, retailers like CVS Health Corporation (No. 7), Walgreens Boots Alliance (No. 8) and Rite Aid (No. 29) have suffered from a lack of labor. “You cannot run a drug store without a pharmacist,” Marcotte says, “and there’s been a severe shortage of pharmacists in all three chains.” As a result, they’ve shortened hours and closed stores, and that’s reflected in the numbers.
There’s also no cash flow for remodels. CVS and Walgreens have fought staffing challenges by moving aggressively into automated prescriptions, he notes, “but it’s still a tough market.” He expects the relatively soft numbers to continue.
Aldi is still gaining market share through an under-the-radar strategy
Coming in at No. 15, Aldi has seen an 8.1% increase in U.S. sales, at $40.21 billion. It also has seen a 4.3% increase in U.S. stores growth. Marcotte expects the company to expand in the coming year, and perhaps move further up the list.
Many don’t realize that the lower the income of a shopper, the less likely they are to take a risk. “They can’t take chances,” he says. “They need to know what they’re buying, and it’s one of the reasons they tend to be so brand loyal.”
Aldi’s prices, however, are low enough that even those shoppers are more willing to experiment. In addition, Aldi does exceptionally well with store brands and offerings — like German items at Christmas — that shoppers can’t find elsewhere.
International investment in the U.S. is increasingly noticeable
There’s been a general movement of international companies expanding to the U.S., and 2022 was the first year to see it “in higher relief,” Marcotte says. The U.S. is still considered stable, safe and growing. Mexico has taken particular interest; Grupo Comercial Chedraui’s acquisition of Smart & Final Holdings Inc., for example, effective in 2022, has landed the company at No. 57, with 137.3% U.S. sales growth and 205.7% growth in U.S. stores. In 2022, 59% of its worldwide sales came from the U.S.
In addition, Marcotte says, Femsa, which owns Oxxo convenience stores in Mexico, is “very, very bullish on moving into the U.S.” And Cencosud bought into The Fresh Market. “7-Eleven [No. 19] and Circle K [owned by Alimentation Couche-Tard, No. 42] have longstanding international investment in the U.S. That’s not new. What is new is that both are aggressively trying to expand their U.S. footprint.”
Hardware and home improvement have been building in different ways
Power players in this category include The Home Depot (No. 5), Lowe’s (No. 9), Ace Hardware (No. 21) and True Value Co. (No. 73). The Home Depot realized a comp stores sales change of 3.1% and U.S. sales growth of 4.3% in 2022. Lowe’s saw sales growth of 1.8%.
Lowe’s fared better than The Home Depot early in the pandemic, thanks to a mix that included experiential products and décor, as well as its garden centers. But as shoppers have turned toward do-it-yourself projects, that has flipped.
The Home Depot “got its act together very quickly,” Marcotte says, redoing stores, changing the product mix and improving garden offerings. In addition, he says, The Home Depot continues to be the preferred destination for pro shoppers, due to product mix, handling and an aggressive loyalty program. Ace Hardware (No. 21) also has continued to do well.
Marcotte marvels at Tractor Supply Co. (No. 32, with 11.4% U.S. sales growth). The company was greatly positioned at the start of the pandemic; did a “superior job” in the transition from smaller to larger organization; and was the first company to financially reorganize itself to make money during COVID-19.
"They're very smart people," he says. Lowe's has recently announced it plans to move into smaller format stores in rural areas. "One thing most people don't know about Tractor Supply is that about 40% of its revenue is feed," Marcotte says, "cat food, dog food, horse food, cow food, rabbit food, everybody food."
Other odds and ends of note
Camping and outdoors retailers as a whole saw growth in 2022, though Academy Sports + Outdoors (No. 70), long tied to school sports, dropped 10 places with a 5.6% decrease in U.S. sales. The Defense Commissary Agency (No. 95) dropped from No. 88, thanks to fewer military families and veterans. The technology category is feeling the effects of the frontloading of electronics in 2020-2021, and the leisure category remains overall “mixed.”
Additionally, companies moved as much as possible into free cash to help deal with uncertainty at the beginning of the pandemic, Marcotte says. More recently, however, those companies have been working to change that scenario as quickly as possible, especially if the money has been on short-term loans. Interest rates are starting to make a difference.
And one last thing: Organized retail crime continues to impact all of it to an unknown extent.
Retailers have increasingly been tying ORC to weak sales. The industry average for shrink hasn’t shifted much, dropping from the five-year average of 1.5% to 1.44%. That 1.44%, though, amounts to an estimated loss of $95 billion in 2021, according to NRF’s 2022 National Retail Security Survey.
See more insights from Kantar, including from NRF 2023: Retail’s Big Show, here.
At the same time, Marcotte says, “The real impact is harder to measure.” Broader effects include damage to stores, employee turnover, shopper fear “and, too often, intimidation and violence.”
In 2022, swarming attacks re-emerged, and with greater organization. Also of note is the closure of stores in markets that retailers no longer feel are safe. The 2022 National Retail Security Survey also showed that 89.3% of retail organizations had reported a rise of violence within stores.
ORC is a “very old problem,” he says. It’s simply growing increasingly complex.