The retail trends and major retailers in the USA

1. Overview: The retail industry in the US

2. Index:
• RETAIL in the 21st Century
• Global powers of retailing – Geographical analysis
•Top 10 retailers by product sector
•General trends in US retail sector
•Organized and Un-organized retail
•US Economy and its impact on Retail Industry
•Gas price impact on retailers
•Contribution of various sector in retail trade
•Food retailing in 21st century
•e-commerce
• Major retailers in US
•Customer shopping behavior –multi-channel shopping
•Most valuable brands in the US, 2012
•Scope of analytics in retail industry
•Appendix

3. RETAIL in the 21st Century
With the advancement in technology, globalization and the ever increasing
competition retail is not just selling of goods to the end-user, its more about the
overall shopping experience and customer satisfaction.
In era of fierce competition, retailers have to deal with the following barriers to
growth in order to be successful:
• Lack of customer demand
• Pricing pressures
• US dollar strength
• Lack of qualified workforce
• Staying on top of emerging technologies
• Labor costs
• Inflation
• Energy prices
• Regulatory and legislative pressures
• Risk management issues
• Volatile commodity
• Customer satisfaction

4. Global powers of retailing – Geographical analysis
US retailers occupy a market
share of 32.4% and account
for 2/5th of the sales across
the globe
For 81 US retailers in the top
250 retailers across the globe
13.3% of their business
comes from foreign
operations and rest 86.7%
from US itself
Source: Deloitte Global Retail report 2012

5. Top 10 retailers by product sector
Source: Deloitte Global Retail report 2012

6. General trends in US retail sector
Trends in the retail environment are governed by the changing nature of US consumers
and technological advancement and competitive response to these changes
The most important consumer trends affecting retail are:
a) the size of two age cohorts- Baby boomers & Generation Y (Baby Boomers represent 44% of the US
population, hold 70% of US disposable income, and buy 49% of total consumer-packaged goods (CPG))
b)the growing ethnic diversity of the US population
c)the increasing sophistication of the shoppers
(a) (b) (c)
Consumers in this group are
Retails targeting baby boomers Rather than being assimilated
looking for more unique and
focus on improvement in in in the dominant US culture the
personally meaningful
convenience and quality of diverse ethical and racial
lifestyles and they have varied
shopping experience and groups are proud of their
needs for different shopping
offering wellness products. cultural identities and desire
situations.
to maintain a connection with
Eg. They want to buy basic
Retailer targeting Gen-Y their heritage. This retailers
consumables goods at low cost
attempt to build honest have to tailor their offerings
but when it comes to
personal relations with the based on the needs of these
decorating the house they are
customers in this segment as groups.
looking for a retailer that
they are less responsive to Eg. Hispanics have become
provides best solutions and
mass media advertising as the the largest minority group in
services.
are knowledgeable and the US, so Wal-mart has an
This self-expression shopping
independent in their choice of entire department dedicated
mode is ego-intensive and
products. to Hispanic dairy
emotional.

7. Organized and Un-organized retail
Retailer have responded to the consumer trends by:
a) Reducing their costs to increase the value delivered.
b) Targeting the needs specific to various customer segments.
c) Offering personalized shopping experience.
The advent of customer centric retailing has made the retail sector more and more
organized leading to decline of unorganized or traditional retail in the US
Contribution to Sales in 2012
ised
15%
Organised
Retail
85% Unorganised
Retail

8. General Retail Industry trends
Targeting needs of specific customer segment and
Cost reduction personalizing the shopping experience
US retailers have focused on reducing their While focusing on cost reduction retailers have
operating costs through the following: also developed offerings directed towards the
need of specific customer segments
 Economies of scale: Many US retailer have Eg. – National retail chains have long adjusted
realized scale economies through aggressive assortment based on climate.
internal growth and acquisition BestBuy is promoting high end entertainment
 Supply Chain: Retailers are managing their systems in the areas with professional high income
supply chain by collaborating with vendors to households, whereas stores in areas busy with
effectively engage in joint forecasting and planning suburban mothers dedicate more inventory to
 Big Boxes: Faster growing retailers involve larger a merchandise products like learning softwares and
store sizes eg. Supercentres feature softer colours and , a children’s play area
 Centralization: Retailers have now centralized and children’s technology department etc.
buying functions and use information systems to
tailor assortment to local tastes Retailers are building and organizing customer
Analytical Methods: While many of the these databases that integrate information about all of
approaches to cost reduction have reached a point the contacts the retailer has with the customer-
of diminishing return for the most sophisticated contacts in store, via Internet , call centers etc.
US retailers , a promising new era involving use of By analyzing such data retailers are able to devise
analytical methods is evolving. customer specific shopping occasions and product
By using analytical methods retailers can optimize offerings.
their decisions regarding Inventory
management, forecasting sales, campaign
management etc.

9. US Economy and its impact on
Retail Industry

10. Over the past few years consumers’ sense of financial security has clearly
been shaken and the US economy is still in the recovery phase.

11. Impact of recession on consumers
Source: Nielsen Homescan, 52 w/e 10/1/2011 v/s 10/3/2009, excludes gas only and Rx only trips

14. Contribution of various sectors in retail trade, 2012
Food based retailing accounts for 24% of retail trade followed by
Motor vehicles (18%)
Food services & drinking Total retail trade
11% in 2012 - $4.89
Non-store retailers Motor vehicle Trillion
9% 18%
Food and beverage
General merchandise stores
stores Gasoline 13%
13% stations
11%
Motor vehicle Furniture and home furnishing Electronics & Appliances
Building material Food and beverage stores Health and personal care
Gasoline stations Clothing & accessories Sporting goods
General merchandise stores Miscellaneous store retailers Non-store retailers
Food services & drinking
Source: http://www.census.gov/retail/marts/www/marts_current.pdf

15. Food retailing in 21st century
The business of retailing food is going through dramatic, if not revolutionary, change.
The causes are simple and complex, visible and hidden.
 The singular force driving the revolution is the consumer. The consumer’s market
power is growing strong and ingrained.
 Competition has never been more vigorous with more than a dozen types of retailers
vying for market share. Food retailers today include conventional
supermarkets, superstores, supercenters, membership clubs, combination (food and
drug) stores, natural and organic outlets, limited assortment stores, convenience
stores, dot-coms and gasoline stations. Consumers have never had more choice in
variety, value, nutrition and quality.
 The competition includes restaurants, especially fast food, which are near the
milestone of controlling half the $1 trillion market for food sales. Dual-income couples
and generations X and Y are fueling steady sales growth in “food away from home.”
„ Also driving competition is the minimal growth of the U.S. population. Today, food
retailers can grow only by taking business away from competitors.

16. Store formats which sell “grocery”
Virtually, every retailer is now selling groceries, and more than a dozen formats are competing
aggressively.
Conventional Supermarket — carries about 15,000 items, including a full line of groceries, meat and produce, with at least $2
million in annual sales.
ƒ Superstore — larger than a conventional supermarket with at least 25,000 items and more nonfoods, such as general merchandise
and health and beauty care (GM/HBC) items.
ƒ Combination Store — a superstore and full-line pharmacy with GM/HBC products accounting for at least 15 percent of sales.
ƒ Super Warehouse Store — a hybrid warehouse/superstore with 50,000-plus items and the full range of service
departments, featuring high-quality perishables and reduced prices.
ƒ Limited Assortment Store — a low-price outlet with minimal service and fewer than 2,000 items. It features numerous private
label products and is popular among food stamp recipients seeking to stretch their limited dollars.
Convenience Store — traditional outlets offer a small selection of dry groceries, beverages, nonfoods and ready-to-heat and -eat
foods. Most are now selling gasoline as well.
ƒ Other Traditional Outlets — these include numerous small, family-owned bodegas and retailers, along with upscale and ethnic
stores that serve specific demographic niches.
ƒ Supercenter — a large food-drug combination store and mass merchandiser. These average more than 170,000 square feet and
typically devote up to 40 percent of the store to grocery items, which are often sold at loss-leader prices.
ƒ Wholesale Club — a retail/wholesale hybrid that offers consumers and small businesses a limited and economical selection of
food and nonfood products. These measure about 120,000 square feet; 60–70 percent of the space is devoted to bulk sizes of
grocery and GM/HBC items.
ƒ Drug — a pharmacy that generates at least 20 percent of its sales from grocery, GM/HBC and seasonal items, often at discounted
prices.
ƒ Mass — a large store selling primarily hard goods, such as clothing and electronics, but also grocery items.
ƒ Dollar Stores — a traditional format that now sells 20–80 percent of groceries and other consumable products at discounted
prices.
ƒ Fresh Organic/Natural — includes traditional retail outlets that place a strong emphasis on perishables and natural/organic stores.
ƒ Military — commissaries run by the Defense Department that resemble conventional supermarkets but are restricted to enlisted
or retired military personnel.

17. Grocery industry market share by format
Source: http://www.fmi.org/docs/media-backgrounder/foodretailing.pdf?sfvrsn=2

18. e-Commerce- “Online shopping”
According to Goldman Sachs, the global e-commerce market could be worth around $1 trillion in
2013. The US is currently the largest e-retailing market in the world with 170 million users
spending on average $1,000 each a year.
According to Forrester Inc., 67% of consumers in the US currently shop online and online sales are
projected to achieve a 10% compound annual growth rate, generating $279 billion by 2015.
“194M Americans, or 90% of the online
population, visited retail sites in December 2012”
~COMMSCORE
“20% of US consumers researched a home-
goods product at a brick and mortar store but
purchased it online in 2011” ~ NDP GROUP
“61% of consumers want e-Commerce sites to
store their personal and payment information to
speed up the shopping process” ~ CAPGEMINI
Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf
http://www.factbrowser.com/tags/ecommerce/

19. e-Commerce- “m-Commerce”
Retailers view mobile commerce not only a sales driver but also a way to engage with specific
audience According to NRF Foundations’ 2011 retail horizons report found 69% of retailers
identified mobile commerce as a top strategic initiative
U.S. mobile commerce to reach
$31 billion by 2016, growing at a
39% compound rate. But the
report says that mobile commerce
is only expected to be 7% of
overall e-Commerce sales by 2016
and only 1% of general retail sales.
“85% of customers use their phone while
shopping in-store” ~JIWIRE
“Wal-mart estimated that of all visits to their
internet shopping site in Dec 2012 was from a
mobile device” ~JIWIRE

20. Customer shopping behavior –
“Multi-channel shopping”

21. What is Multi-channel shopping?
There are, in fact, three different types of activities in which multichannel shoppers typically
engage:
Shopping across a number of different channels (bricks and mortar, online, catalogue, TV shopping
networks, mobile applications, etc.), i.e., choosing the channel that works best for a particular
occasion or type of purchase. Eighty-six percent of our global respondents and 65% of US-based
respondents currently shop across at least two channels, while 25% of global respondents and 21%
of US respondents are using four or five channels to shop.
Buying goods from the same retailer but doing it across more than one channel. Seventy-four
percent of US respondents shop more than one channel, and even in the territory where the
fewest amount of shoppers "least shop" this way – Hong Kong – the percentage is still relatively
high at 45%
Using a number of different channels to make a single purchase. An example of this kind of
transaction is researching a product online and then buying it in store. In fact, more than 80% of all
respondents conduct online research before they buy electronics, computers, books, music, and
movies. Eighty-eight percent of US respondents said that they research a product online via their
PC before buying (vs. 80% globally) ― and 73% of US respondents report that they research online
when buying clothing, footwear, toys, and health and beauty products (vs. 60% globally). In other
words, online research doesn‘t just lead to online purchases, it‘s also critical in leading to purchases
through other channels and in driving traffic to physical brick and mortar outlets.
Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf

22. Top 5 retailers in US
Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf

23. Retailers in US having only online presence
Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf

24. Most valuable brands in the US

25. Most valuable brands in the US (2012)

26. Most valuable brands in the US (2012) Continued..
Source: http://www.interbrand.com/Libraries/Branding_Studies/Best_Retail_Brands_2012.sflb.ashx

27. Brands new to the list
Source: http://www.interbrand.com/Libraries/Branding_Studies/Best_Retail_Brands_2012.sflb.ashx

28. Brands that dropped off

29. Scope of analytics in retail industry- A KPMG Survey
KPMG’s survey reflect the response of 100 retail executives from large($ 100 million +
annual revenue), U.S. based companies. 35% of responders work for companies with the
annual revenue more then $10 billion while 41% represent companies with the annual
revenue between $1 Billion and $10 Billion and rest 24% with the revenue in $100 Million to
$1 Billion range. 74% companies are publically held and 26% privately
Source: http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/2012-kpmg-retail-outlook-cautious-optimism-in-style.pdf

30. APPENDIX

31. DEFINITIONS
Unorganized retail : - The traditional formats of low-cost retailing, for example, the
local corner shops, owner manned general stores, convenience stores, hand cart and
pavement vendors, etc.

32. Top 15 retailers in US in 2011
2011 USA Retail Sales Growth Worldwide Retail USA % of Stores Growth
Rank Company Sales ($000) ('11 v '10) Sales ($000) Worldwide Sales 2011 Stores ('11 v '10)
1 Wal-Mart $316,083,000 2.6% $453,976,000 69.6% 4,423 1.4%
2 Kroger $85,491,000 9.1% $85,491,000 100.0% 3,574 -1.0%
3 Target $68,466,000 4.1% $68,466,000 100.0% 1,763 0.7%
4 Walgreen $66,330,000 8.3% $68,233,000 97.2% 7,651 2.6%
5 Costco $64,221,000 8.9% $89,054,000 72.1% 425 3.2%
6 The Home Depot $62,075,000 3.1% $70,391,000 88.2% 1,963 -0.2%
7 CVS Caremark $59,688,000 3.9% $59,786,000 99.8% 7,345 1.8%
8 Lowe's $49,282,000 2.3% $50,207,000 98.2% 1,712 -0.6%
9 Best Buy $37,551,000 1.2% $50,705,000 74.1% 1,443 10.0%
10 Safeway $36,923,000 5.6% $41,884,000 88.2% 1,453 -0.7%
11 McDonald's $34,172,000 5.5% $85,941,000 39.8% 14,087 0.5%
12 Sears Holdings $33,837,000 -4.3% $39,365,000 86.0% 3,489 0.1%
13 SUPERVALU $29,297,000 -3.6% $29,297,000 100.0% 2,466 1.6%
14 Publix $26,967,000 7.6% $26,967,000 100.0% 1,198 -0.9%
15 Amazon.com $26,397,000 42.5% $47,715,000 55.3% - na
Source: Deloitte Global Retail report 2012

33. Top 250 performers statistics
World top 10 RETAILERS
Country 2010 group
Rank Company of origin revenue (US $ mil)
1 Wal-Mart US $421,849
2Carrefour France $121,519
3Tesco UK $94,244
4Metro AG Germany $89,311
5Kroger US $82,189
6Schwarz Germany $79,199
7Costco US $76,255
8The Home Depot US $67,997
9Walgreen US $67,420
10Aldi Germany $67,112
Out the the Top ten retailer in the world five
namely, “Walmart” ,“Kroger”, “Costco”,
“The Home Depot” and “Walgreen” belong to
the US
Source: Deloitte Global Retail report 2012