Credit: Shutterstock photoThe U.S. retail industry is filled with big box retailers who are taking away the lionAAAs share of the industryAAAs total revenues. We have Walmart ( WMT ) sitting at the top of the big box pile with nearly half a trillion dollars in sales, while Target ( TGT ), the second largest big box retailer, had $73.78 billion last year. On the other side thereAAAs club warehouse leader Costco ( COST ) with $116.199 billion last year, while Amazon ( AMZN ) and Kroger ( KR ) brought in $107 billion and $109.83 billion.
ThatAAAs nearly a trillion dollars worth of sales from just five retail companies operating in various niches. Put in perspective, thatAAAs somewhere between the GDPs of Indonesia ($937 billion) and Mexico ($1.01 trillion).
There is a reason why these five companies are at the top of the retail pile: There is something unique about each company even though the primary objective for all of them is to sell as much as possible. Walmart is synonymous with rock-bottom pricing; CostcoAAAs membership loyalty is the envy of every company in the world; Amazon is the king of click sales and doorstep delivery; Kroger is an expert in bringing multiple brands to stand under a single roof; and Target has always stood out with their quality and customer service.
There is also one more element that unifies all these companies, and it is is their wafer-thin operating margins. Walmart and Target sit between 6 and 7%, while Costco and Kroger margins hover around 3% and Amazon right below that. Volume is the name of their game, and theyAAAre good at it.
But which of these retailers has the momentum to come out on top over the next two decades? ThatAAAs the question IAAAd like to explore in this article. In the short-term, none of them is small enough to just ride off into the sunset as it were, so we have to look at a much longer timeline.
Walmart
The company commits to the lowest price possible every single day on each item it sells. It even throws you the bold challenge that if you are able find something cheaper elsewhere, Walmart is ready to match that offer. Though there is an asterisk symbol right next to the sentence on WalmartAAAs page , it doesnAAAt even matter. The idea is to position the company as the place with best possible price, and when thatAAAs backed by nearly half a trillion dollars worth of goods sold every year, it's not easy for anyone to compete with it on an even scale.
But on the flip side, the very name AAAWalmartAAA carries somewhat of a negative aura around it. In nearly every new country it tries to enter, it's known as the AAAsmall business killers.AAA Not a very good introduction. And thatAAAs also why the U.S. is still its biggest market and always will be until it learns to tread softly in new markets. As such, the company has yet to prove its worth outside the country.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
