Top 100 Retailers (2008)
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Whatever it is that’s happening out there now, retailers have been there before. The case can be made that retailers are more experienced in dealing with bumpy economies than congress, the white house — or anyone looking to take up residence in either of those places.
“Keep your inventories trim” may not sing like “keep your powder dry,” but it is part of the collective lore of retailing to plan for the worst, hope for the best and wait until the back half of the year. There will always be a Christmas; it’s just that sometimes you don’t get what you wish for.
One thing retailers are loath to do is raise prices to their customers. Even as their own costs go up, retailers make sure their own operational houses are in order. Such tactics include streamlining operations, reducing part-time staff hours, conserving energy, buying locally to save on transportation costs and offering incentives to keep customers engaged.
Retailers are eternally optimistic: Why bother to open the shop door otherwise? That’s why the most successful retailers are the ones that keep planning for a better day. To wit: Wal-Mart continues its “green,” organic and natural initiatives, all the while reaping benefits from its everyday low-price strategy in a tight economy.
In the same vein, Kroger knows people have to eat no matter the economic environment, so its customers won’t be abandoning it anytime soon, especially since the supermarket chain was among a handful of retailers offering shoppers a bonus if they were willing to convert their tax refund or stimulus checks into Kroger gift cards.
The 2008 version of the STORES Top 100 Retailers study reflects many of the changes that will ultimately define this era. For the first time, the retailing of digital downloads and personal telecommunications devices by non-traditional retailers are included. Technology companies such as Dell, Apple and its iTunes Store are represented, as are wireless communications providers and handset sellers Verizon and AT&T.
Wal-Mart remains the No. 1 retailer by revenues — a position it isn’t likely to cede any time soon as it alone accounts for 21.7 percent of aggregate Top 100 sales. Change is afoot, however, as CVS has vaulted into the No. 3 spot as a result of its acquisition of Caremark, reflecting the evolution of the health and wellness industry as served by drug stores. Home Depot managed to hold on to the No. 2 spot despite the depressed state of the housing market, while Kroger, the supermarket leader, slipped one place to No. 4.
Mass merchants are well represented in the Top 10, with warehouse club operator Costco Wholesale ranking fifth, Target sixth and Sears Holdings — parent of Sears, Kmart and several chains of hardware and home furnishings stores — in the eighth position. No. 7 Walgreen has been displaced as the volume leader among drug store companies, though it has been beefing up via acquisitions. Rounding out the Top 10 is SUPERVALU, which this year has its wholesale and distribution business included in total revenues.
As a group, the Top 100 Retailers rang up sales of $1.74 trillion last year, in part by tapping into the trends coursing through the economy. As Experian Consumer Research recently reported, energy drinks, online socializing and banking and being “green” are in, while what’s out includes dining out and spending more on clothes than one can afford.
Retailers grasp this. Video game merchant GameStop, ranked No. 47 among the Top 100 Retailers, saw sales jump 33.4 percent last year (to more than $7 billion) while earnings soared 82.2 percent — and that doesn’t include the release of this year’s monster-selling game, “Grand Theft Auto IV.”
Perhaps no retailer embodies societal cross currents as much as Amazon.com, which pushed its way into the Top 25 this year on the strength of a 38.5 percent increase in sales. Amazon has always been more about the future than the past or present: recall that Time named founder and chairman Jeffrey Bezos its Man of the Year in 1999, years before the company turned a profit. Amazon is about staying current and keeping on top of things such as digital downloading and reducing the price of its Kindle e-book reader without abandoning loyal customers who still prefer to read hard copy, listen to music on CDs or watch DVDs.
The STORES Top 100 Retailers are ranked by sales volume — including foreign revenues — as reported in SEC filings, public statements by the companies and, where noted, estimates based on STORES research. All of the companies are U.S.-based with the exception of convenience store operator Alimentation Couche-Tarde, most of whose operations are in the United States and with financial statements denominated in U.S. dollars.
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