Big Retailers Trending Small

big retailer trending small imageWhen the STORES 2012 Top 100 Retailers were announced recently, there were few surprises. Compiled by Kantar Retail and sponsored by American Express Merchant Financing and SAP, the list of 100 businesses was topped by Walmart, whose reported profits soared above even first runner-up, Kroger. ranked 15th, and remains the dominant online merchant; QVC remains peerless as a multichannel home shopping model, crossing television and Internet lines; and Toys ‘R’ Us is still the last survivor of toy superstore retailing. While Walmart thanks unbeatable prices for its popularity, Kroger attributes its success to sound knowledge of its customer base, and aggressive campaigns of promotions and deals. The list is largely unchanged from last year, save for a position swap between number nine retailer, Sears Holdings, and number 10 Best Buy, but trends are becoming clear. There are a few lessons independent retailers can learn from big box stores, but there is also evidence to show that those top 100 retailers would like to feel more independent, or at least be perceived that way by consumers.

Either in spite of, or because of steady employment growth in the private sector, the nation’s economy as measured by the gross national product grew by nearly two percent during the measured period. As a result, America’s leading retailers were able to resume or continue a more normalized pricing system. Keeping prices steady and offering periodic sales, discounts and promotions has treated number two retailer, Kroger, quite well. Additionally, “retailers have employed a number of tactics,” writes David P. Schulz of STORES. “New classifications of merchandise are introduced, multichannel initiatives are reinvigorated, and investments are made in businesses seemingly unrelated to retailing.” In essence, big box retailers are making bold moves to shake up business and attract attention. And it’s working.

Kroger is being recognized as an innovator in non-food merchandise sales in its supermarket settings. Approaching its inventory from a fresh angle may have as much to do with its fiscal success as promotions and pricing, which may be encouraging news to retailers. In the case of Kroger, the grocer has continued to gradually add home furnishings to its Marketplace stores, allowing the company to become more diverse. The more convenience customers are offered, the better the sales.

An interesting trend that became apparent as a result of research for the Top 100 is that the dominant retailers actually want to give customers the feeling of more intimate shops. Walmart CEO, Mike Duke, reported to STORES that the company’s top priority was to take action on the, “tremendous opportunity to grow in the United States through supercenters and new store formats,” such as Walmart Express, a smaller, faster and more specialized version of the tried and true supercenter. The Express stores will deliberately target rural areas otherwise poorly suited for typical Walmart centers, as well as urban communities where there is little space for the giant. Similarly, number 10 retailer, Best Buy, has made moves to provide customers with a more homegrown experience. Officials of Best Buy remarked that the company is increasing its presence in, “small format stores like Best Buy Mobile, and moderating large-format growth.” Bryan Gildenberg, CKO for Kantar Retail, suggests that this trend is likely to continue and pick up speed, resulting in retailers having broader portfolios of stores with different and smaller fingerprints. Big boxes are doing their best to be smaller, more personal and more available, which results in stores that resemble those of independents.

Though annual revenue may vary enormously, the common denominator that the Top 100 retailers share with all others is the desire to act on consumer attitudes in such a way as to attract buyers. With local convenience and financial comfort being driving forces for today’s consumers, the STORES Top 100 are hinting that bigger is not unanimously better.