Retail market in the USA to reach USD 4.2 T by 2023

Retail sales hit a record of $6 trillion in 2018, according to the U.S. Census. That’s better than the pre-recession high of $4.4 trillion spent in 2007. It’s also a 50% increase from 2009’s record low of $4.06 trillion.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Retail sales occurs when a business sells a product or services to the individual consumer for personal use. The transaction itself can occur through a number of different sales channel such as online, in a brick and mortar storefront, through direct sales or direct mail.

The term retailer is typically applied where a service provider fills the small order of a large individual, who are end users, rather than large orders of a small number of wholesale, corporate or government client. Shopping generally refers to the act of buying products.

Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Retailing regularly happens in retail locations or administration foundations, however may likewise happen through direct selling, for example, through vending machines, door-to-door sales or electronic channels. Despite the fact that retail is regularly connected with the buy of merchandise, the term might be connected to specialist organizations that pitch to buyers.

Retail specialist organizations incorporate retail banking, the travel industry, protection, private medicinal services, private schooling, private security firms, legitimate firms, publishers, public transport and others.

For instance, a travel industry supplier may have a retail division that books travel and convenience for buyers in addition to a discount division that buys squares of settlement, friendliness, transport and touring which are therefore bundled into a holiday tour available to be purchased to retail travel specialists.

Some retailers badge their stores as “wholesale outlets” offering “wholesale prices.” While this practice may encourage consumers to imagine that they have access to lower prices, while being prepared to trade-off reduced prices for cramped in-store environments, in a strict legal sense, store that sells the majority of its merchandise direct to consumers, is defined as a retailer rather than a wholesaler. Different jurisdictions set parameters for the ratio of consumer to business sales that define a retail business.

All the business that sells goods and services fall under the umbrella of retailing. Due to the increase of internet users, many online shop has been emerged as providing services to customers via internet. This is also known as online retailing. An online shop evokes the physical analogy of buying products or services at a regular “bricks-and-mortar” retailer or shopping center; the process is called business-to-consumer (B2C) online shopping.

When an online store is set up to enable businesses to buy from another businesses, the process is called business-to-business (B2B) online shopping. A typical online store enables the customer to browse the firm’s range of products and services, view photos or images of the products, along with information about the product specifications, features and prices.

Online stores typically enable shoppers to use “search” features to find specific models, brands or items. Online customers must have access to the Internet and a valid method of payment in order to complete a transaction, such as a credit card, an Internet-enabled debit card, or a service such as PayPal. For physical products (e.g., paperback books or clothes), the e-tailer ships the products to the customer; for digital products, such as digital audio files of songs or software, the e-tailer typically sends the file to the customer over the Internet.

The largest of these online retailing corporations are Alibaba, Amazon.com, and eBay.

Market Overview

The United States has well-established distribution channels for all types of retail companies. The retail services industry provides an openly competitive environment that fosters strong business operations and spurs innovations that increase efficiency and reliability.

Total sales from the nearly 3.8 million retail establishments in the United States reached about $3.68 trillion in 2018.
Consumers spent $517.36 billion online with U.S. merchants in 2018, up 15.0% from $449.88 billion spent the year prior, according to a new Internet Retailer analysis of industry data and historical U.S.
Retailers employ almost 30 million, and support more than 42 million jobs in the U.S.
According to the National Retail Federation, retail industry sales are expected to increase 4.4 percent, with e-commerce retail sales expected to grow 10-12 percent in 2019.

Numerous opportunities for growth exist in the U.S. retail market for retail providers of all sizes, including individual direct marketers or direct sellers, small- to medium-sized franchise unit owners, and large “big-box” store operators.

As retail collides with adjacent consumer-focused sectors, the industry continues to experience ongoing disruption. However, amid all the changes, one thing remains consistent: Consumers are becoming more powerful, with expectations of having it all. 2018 left the industry with a lot to digest—a strong U.S. economy, a record-breaking holiday season, mixed retail earnings, and some high-profile bankruptcies, along with global trade and economic tensions.

Bolstered by a strong labor market, growth in disposable personal income, and elevated consumer confidence, 2018 was marked by strong retail sales. But the economy may face some headwinds in 2019—making the year one of transition for retailers, who may need bold moves if they want to set themselves up for success in the future.

Yet, at the same time, Amazon and other digital disruptors had a massive run-up in share in a slew of retail categories. Brands are getting into the retail game themselves and going directly to the consumer. The pace of M&A and private-equity activity in the sector has quickened in recent months. Perhaps most telling of all, US retail sales have actually risen: the 2018 total of $3.68 trillion is a 4.5 percent increase from 2017.

With growing penetration of smartphones and mobile devices and the internet services, e-commerce has emerged as a major shopping platform in the world. Although the sector’s market size tripled over the past three fiscal years, internet retailing accounted for a mere 1.5% of the total retail sales in most of the countries all over the world.

Mobile-first sites, dedicated apps, emerging payment methods, and other tools are making shopping on smartphones much easier. It is estimated that e-commerce accounts for nearly one-third of online retail sales in the United States.

Market Risks

As with any business, retail has its risks. A few things to keep in mind:

Competition is rough, especially for the small business. Superstores such as Walmart and internet stores such as Amazon offer a breadth of selection and convenience that is tough to beat, and are frequently able to offer products at more compelling prices.
Changing consumer trends can have an adverse effect on retailers. For example, technology spending is currently dominating softer goods like clothing – the new iPhone is often considered a “must have” as compared to a nice-to-have new shirt.
In certain retail segments even the weather can be risky – consider a clothing store that stocks up on winter inventory only to experience a warmer than expected season. They’re left with overstocked shelves as spring comes in, and might have no choice but to offload product with deep discounts.
Economic stress or uncertainty is a constant risk in the retail sector. Put simply, people spend less money when they’re not feeling confident about their incomes.
Consumers are drawn to retailers who make the experiencing of browsing, shopping, discovering and ultimately purchasing efficient, pleasant and cost effective. The biggest issue for the retailer is to understand how customer gravitation is trending and adapt.
Cyber security is not merely an internal IT risk but a strategic business risk especially for retailers who handle confidential customer data.
Along with Gap and several teen apparel retailers, many companies are also looking abroad for opportunities to introduce or expand their brand. However, retailers who source or sell internationally face significant challenges Eight-in-ten retailers cite international operations risks including managing a dispersed workforce and complying with international laws and regulations like the Foreign Corrupt Practices Act.

Top Market Opportunities

Opportunities for the growth of retail trade varies across metro areas, creating jobs in growing metro areas that are attracting people, jobs, and housing. Factors that will support the growth of retail trade in 2019 are the trend towards integration of online and offline shopping, the development of mixed-use commercial/residential areas that require a strong retail anchor, and the tax incentives for real estate development projects in Opportunity Zone areas.

Amazon’s purchase of Whole Foods and the increasing online presence of warehouse and discount stores demonstrates the growing interconnection between online and offline (physical, brick-and-mortar) shopping. Walmart or Target customers can now order online and have same-day delivery or pick up at a nearby store.

Related Cos., the real estate developer of the Hudson Yards—New York’s biggest mixed-use commercial development that opens in March 2019—just acquired Quiet Logistics, a distribution and logistics company that specializes in catering to primarily online retailers because primary online retailers have also set up shop in Hudson Yards.

Grocery stores and restaurants/fast foods are also offering online ordering and delivery companies (e.g., Uber Eats, Grub Hub) or have tied up with delivery companies (DoorDash for McDonald’s orders ).

The shift from ‘big box’ development to small format stores in urban areas, such as what Walmart and Target are doing in the Washington, DC area, also presents a growth opportunity for brick-and-mortar retailing.

To be able to take advantage of these opportunities, brick-and-mortars will need to enhance their logistics (warehouse, packaging, distribution, last-mile delivery), use technology to improve the customer’s experience at all phases of the shopping experience from product search (e.g., using visual search instead of text search) to the check-out, physical delivery, or pickup, and to understand that the physical store is a place to create brand impact and awareness.

Market Trends

Low corporate tax The American government has reduced the corporate tax from 35% to 21% on December 22, 2017. Due to this significant transformation , the retail industry has increased GDP, wages and purchasing capacity of consumer.

High Internet User US is one of the biggest online marketplace worldwide and has 75.23% of internet users in 2018 which is likely to be increased next coming years. They spend on average 3 to 4 hours per day online, which is 21 to 28 hour per week. Consumer spent $513.61 billion online in 2018, up 14.2% from 2017 according to US commerce department.

Demographics A new generation of consumers are reshaping the face of online shopping. America’s 17 to 36 age demographic has increased by half a million since the last census, now representing 30 per cent of the total American population. This group values flexibility and transparency, and embraces new technology and services thus driving the growth in online retailing.

Strong economy USA is the world’s largest economy my nominal GDP and second- largest by purchasing power parity. The US has highly diversified world leading industrial sector. In 2016, it was the world’s largest trading nation as well as its second-largest manufacturer, representing a fifth of the global manufacturing output. The strong economy of US has assisted in driving the growth in retail sector.

Small retailers usually specialize in a niche area of product. Although this can be a strength when consumers are looking for product expertise, small retailers are dependent on a limited range of products to make sales.

The products offered by boutique shops are usually not necessities; therefore, these stores might experience a slump in sales during a time of economic recession. In addition to being restricted to a certain area of goods, small retailers will sell far fewer individual units of an item than a large retail outlet.

Because they will spend less money with their supplier, they often can’t negotiate a price reduction when they procure inventory. As a result, their ability to reduce retail prices is more restricted than a larger store.

Although large retailers benefit from economies of scale, which means they are able to purchase and sell high amounts of product at a smaller per unit cost than independent retailers, companies can expand too quickly.

Companies can become out of touch with the everyday consumer and fail to provide them with the products they want. A chain based on the concept of low prices might do well during an economic recession, but suddenly find its sales decline when consumers have more money and prefer to spend it on quality or unique goods offered by independents

As the retail model continues to evolve, site selection will become increasingly important. Brick-and-mortar locations will continue to shrink in units and in footprint, as retailers cater to changing buying behaviors. Data analytics and demographic data will drive site selection, as retailers endeavor to go where their customers want them to be.

Buying behaviors will continue to evolve as Generation Z (Gen Z) becomes a larger part of the consumer base. As the first truly digital generation, Gen Z will push retailers to new digital platforms to connect with them. YouTube, Instagram and Snapchat accessed by mobile are platforms of choice for Gen Z and they are the most likely group of consumers to purchase on social media, making these platforms very important and introducing a new dimension of omnichannel for many retailers.

Modern marketing makes it necessary for companies in the retail industry to engage with their customers across many different channels. From SMS to email and social media, multi-channel communications are vital to engagement, which, in turn, drives the creation of the perfect customer experience. However, with so many separate channels, it is common for customer data to become siloed.

If all the teams of a marketing department are not communicating effectively and working together, customers can become overwhelmed with conflicting or repeat messages. This flooding of marketing communications can have a negative effect and drive customers to competitors offering a clearer and more congruent message.

Industry Challenges

Labor is a major challenge for retailers, as historically low unemployment and competition from a more flexible gig economy make it difficult to staff both brick-and-mortar locations and fulfillment centers.

Many have experiment with technologies to streamline processes and augment the labor pool. Self-checkout and mobile-checkout has become more prevalent in brick-and-mortar locations as they provide the dual benefit of reducing cashier hours and providing flexibility to put more personnel on the sales floor to assist customers and provide a better shopping experience.

There have been a selective capital investment by retailers. Margin pressures brought by trade wars, rising interest rates and the apparent disinterest of the private equity community have limited access to capital for investment.

That said, retailers will need to continue to invest in technologies that allow them to connect with customers and streamline their operations. Physical store locations will need to be right-sized to fit the new retail model, which in many cases will result in fewer and smaller store locations, reducing occupancy costs and providing cash to fund capital projects.

As online sales growth continues to outpace on-premise sales, the implications of the Wayfair court case has felt by more and more retail organizations. Tariffs and trade wars had drive up the landed cost of many products creating hyper-price-sensitive consumer markets for those products.

Retail has complex operations and managing its internal communication is not an easy task. This challenge is mainly faced by large-scale retail companies with multiple divisions. Inefficient communication between divisions can disrupt the business processes.

Consumer behavior changes very quickly. Now with the growth of eCommerce, consumers have plenty of choices before making a purchase decision. Although eCommerce has a dramatic impact on consumer behavior, but reports show that consumers still love to make purchases for most products in-store. They usually go to the internet to search for product information and compare the price, but would still buy it offline.

Technology Trends

Technology plays a mighty role in retail success. Various technologies contributed in every stage of the shopping journey in stores. Similarly, when it comes to online shopping, technology drive from browsing to point-of-sale, and shipping to check out, supply chain, payments and much more.

Buy online, pick up in-store (BOPIS) is a good example of an area of innovation that is not new to retail, but could be set for a mass-market breakout in 2019. Several large retailers adopted BOPIS early on, and have continued to refine their approaches and develop new ideas for how stores should be designed and store operation transformed around the concept.

Walmart, for example, has placed pick-up towers in stores and explored how BOPIS can be enhanced when paired with other technology innovations, like driverless vehicles that could bring customers to stores for order pick-up.

Visual search, in particular, is becoming a more frequent component of mobile app experiences, in everything from the apps of social networks like Pinterest, Snapchat and Instagram that adopted the technology early on to those of retailers.

When used via mobile, it can be an omnichannel enabler, assisting consumers in app-based purchasing and driving social commerce, but also bringing them into stores — especially when searching for an image of a specific item shows which nearby stores might have that product.

Many of the store warehouse have robot for supply chain and logistics. Now the companies have started using drone for the supply of product to its customer.

In late 2017 and early 2018, an initial round of AR features in mobile apps targeted buyers of furniture and home decor, giving them a way to visualize those items in their own home environments. But, there are signs that AR and VR will be leveraged in stores and could figure prominently in omnichannel shopping and store operations.

At the present rate of development in the retail industry, keeping up with the technological advancements is imperative for retail stores. Transformation of payment processing and customer demand seems to be fueling the no line, on-demand, or prepaid (online) options of completing in-store purchases.

Digital wallets are now replacing slow legacy payment systems. Without the right technology in place, retailers won’t be able to offer these payment methods, potentially losing a chunk of your customer base.

Pricing Trends

Margins for retail businesses are extremely variable. Dollar stores, for example, generally have low margins and aim for high sales, while stores selling luxury items will sell far less product in a given time period, but can expect profit margins to be considerably higher.

Pricing usually falls into one of two types:

“Cost-plus” prices are set by the retail store based on a markup over their cost to purchase inventory.
“Suggested retail” prices are determined by the manufacturer and are often printed on the product. Retailers can discount from the Manufacturer’s Suggested Retail Price (MSRP), but not generally mark prices up.

Regulatory Trends

Retail is the largest private employer in the United States, directly employing 29 million people. Generating $1.2 trillion in labor income, the retail industry accounts for an average of 20% of jobs in every state. 40% of the retail workforce is employed at small businesses.

US government has implemented 35% tariff on Chinese import which directly increased the retail products.
The new government policy has reduced the corporate tax from 35% to 21 % on December 22, 2017.
With the Supreme Court decision in South Dakota v. Wayfair Inc. on June 21, new issues have been raised for operations with e-commerce sales. The standard prior to this decision gave states tax authority based on physical presence. The case challenges South Dakota’s application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state.

Other Key Market Trends

The increasing strength of online sales is a major driver in the retail industry. Retailers that have only online sales or an efficient physical and online sales process can keep overhead costs low and are poised to continue to gain.

Consumers today are increasingly empowered by the use of online tools and technologies, many of which have come about only in the last ten years. They now have a voice, and often a very loud and powerful one.

Through review sites (such as Trip Advisor and Yelp), online industry forums and blogs, or social media (Facebook and Twitter), consumers can and do broadcast their opinions. Collectively, these channels wield a tremendous amount of influence—not only on the choices of other consumers, but also on retailers themselves.

Gone are the days when a bad shopping experience remains isolated to an individual’s circle of friends and family. Negative reviews are now in the public domain, easily accessible by anyone, and occasionally result in a retailer changing a particular service or policy. Proactive retailers would do well to monitor the Web for chatter about their brand, and reach out to customers either to address complaints or acknowledge compliments.

More and more retailers are adopting a robust and cohesive strategy in data analytics and management. From running a more efficient supply chain to streamlining store operations to engaging customers and building loyalty, data is at the core of any viable retail operation. With this demand comes an increase in the volume, power, and complexity of data sources and applications.

In the brick-and-mortar stores, mobile payment options are becoming increasingly important to younger shoppers, as are in-store mobile devices such as mounted iPads helping consumers find what they’re looking for.

Smaller retail stores are now shying away from deep inventories with a broad selection of products and are instead focusing on a narrower spread of specialty items. Since shoppers can access such a wide swath of products online, retailers are finding strength in focus.

Above all, retailers are focusing on a frictionless shopping experience – whether it’s ordering online and picking up in store, easy payment options, a top-notch customer service experience or any number of other strategies.

Business improvements could also help physical stores to compete with online retailers. Dynamic pricing, for example, allows product cost to change with demand throughout the day. Social media helps stores see which items are popular, so they can feature them more prominently in their displays.

Market Size and Forecast

Retailing is undergoing two significant shifts. The first is technological, and the other a result of changes in consumer behavior. Stores that understand and overcome both shifts will thrive. Retailers that don’t will go the way of Circuit City, Borders, and Blockbusters.

Online retail has grown 300% between 2000 and 2018, according to the U.S. Commerce Department. During the same time period, department store sales have dropped almost 50%. In 2019, 5,994 stores closed in the first three months. That compares to 5,864 for all of 2018. The hardest-hit were Payless, Gymboree, and Charlotte Russe.

Retail operating income is expected to grow five per cent to six per cent in 2019. Sales growth is predicted to range from 4.5 percent to 5.5 percent. Reduced inventories and improved lead times have helped stabilize merchandise margins.

Air freight demand has slowed as companies have increased lead times on import orders, allowing them to opt for cheaper ocean cargo. Operating income for discounters and warehouse retailers is forecast to increase about 2.4 percent in 2019 after a strong gain in 2018.

Among apparel firms, nearly all rated companies will show some form of profit growth in 2019, with the majority exceeding six per cent growth.

Market Outlook

The positive outlook for the US retail industry reflects increasing topline growth and operating profits as companies’ investments to improve both the online and in-store shopping experience continue to gain traction.The improvement has been spurred by a very strong macro-economic environment, with improving consumer confidence and low unemployment.

2018 left the industry with a lot to digest—a strong U.S. economy, a record-breaking holiday season, mixed retail earnings, and some high-profile bankruptcies, along with global trade and economic tensions. To stay competitive, many retailers have shifted their investment strategies over the past 10 to 20 years.

They’ve moved from growth via new stores to growth via big investments in all areas of the business—for example, launching new digital sales models, acquiring other businesses, or transforming their fulfilment processes. The cost to increase market share continues to grow, and many retailers find themselves in a precarious position as they try to figure out how to win battles on multiple fronts.

Retail operating income is expected to grow five per cent to six percent in 2019. Sales growth is predicted to range from 4.5 per cent to 5.5 percent. It expects the overall economy to gain an average of 170,000 jobs per month in 2019, down from 220,000 in 2018, and that unemployment – currently at 4 percent – will drop to 3.5 percent by the end of the year.

The Retail Industry was valued at USD 3.3 trillion in 2018 and is expected to register a CAGR of 4.94% during the forecast period (2019 – 2023), to reach USD 4.2 trillion by 2023. Meanwhile, the online retail market is expected to grow at a CAGR of 16% through 2023 to reach USD 832.23 billion.

Growth in online sales will continue to outpace overall retail growth as more companies harness the online channel. Although still only around 15% of total US retail sales, online sales will grow to about 20% of total sales in the next five years. Amazon will continue to dominate in e-commerce, but brick & mortar companies will gain more of the online market share as they set up their own platforms.

Technology Roadmap

Technology has been evolving rapidly and using those technology has been the major concern in retail industry. To gain maximum benefits and sales, many retailers are using different technology and some of them are :

1 Inventory tracking:

Electronic Data Interchange (EDI): Direct computer-to-computer transactions from the store to the vendors’ databases and ordering systems.
Wireless hand-held inventory units: Take inventory and download the data to a database at headquarters.
Universal Product Code (UPC): Product identification system using bar code and unique numbering.
Automatic replenishment: Manages restocking of what’s been sold.
Virtual shelves: Intranets between retailers and vendors that expedite communication and on-time replenishment.

2 Customer Service

Customer Relationship Management (CRM) software: Allows retailers to track customers.
CD-ROMs at the register: Let sales associates make special orders on the spot. Also deliver sales training to sales associates on the floor.
In-store interactive kiosks: Provide customers with product details.
Smart registers/point-of-sale (POS) terminals: Print coupons and reports, calculate frequent shopper discounts, capture customer profile information, schedule work hours and serve as store-to-headquarters email terminals.
Signature-capture technology: Used at the POS terminal for credit card transactions. Receipts are retained electronically.
E-commerce technology: Helps retailers and shoppers interact any time, anywhere.

3 Data Warehousing

Executive Information Systems (EIS): Produce graphs of complex data that help retail executives make business decisions

Similarly new technologies like robots, drone, e-commerce anti fraud tools, virtual assistant and blockchain/bitcoin are widely been used in many retail industry mainly in online business. For instance, Several retailers and other brands are making this migration, though it has been led for some time by Amazon, which now has around 45,000 robots working in warehouses and other aspects of supply and logistics.

Distribution Chain Analysis

The retail industry has entered the enormous transformation.With broader retail market growth at a pace of three percent annually, many retailers are finding themselves in an uphill battle to profitably expand growth and market share.

Giant retailers like Walmart and Amazon both share common principles in utilizing supply chain management to support their business strategies. They focus on one stop shopping experience, whether it is through on-shelf availability at the store level or having products within the distribution network available for delivery to online retail customers.

Additionally, the two companies focus on operational efficiency to lower costs and then pass those savings onto customers in order to promote growth. Also, they both understand the importance of profiling to balance supply chain initiatives of lowering costs while maintaining a high level of service.

Finally, the success of their supply chain is due to using their IT capabilities for better visibility and efficient process enablement, vendor collaboration initiatives, and the ability to leverage scale.

Competitive Landscape

Lack of specialist coherence, or representative turnover, is one of the serious issues looked by the retail business in USA.
Retail organizations are normally occupied with rivalry with each other, and this challenge can make value wars, compelling a need to keep tight power over stock and other significant information.
The retail business all in all is generally reliant upon the financial prosperity of the country. As the country thrives and individuals have more cash to spend, the retail business for the most part prospers. Be that as it may, in increasingly troublesome monetary occasions, the retail business is frequently looked with potential shrinkage.
Margins for the most part normal somewhere in the range of 30 and 40 percent, however it relies upon the business – a few, similar to supermarkets, have far lower edges, yet depend on volume to compensate for any shortfall, while others sell far lower volumes, yet depend on higher overall revenues.
The US business is profoundly thought: the eight biggest organizations represent almost 100% of industry income.
Due to higher market penetration of giant retailers like Walmart, Kroger co, Amazon, ebay etc, the market is very competitive and risky.

Competitive Factors

The retail market has always been a competitive one. There are 3.8 million establishment of retail store in US, so to compete with them one has to have a strong retail marketing plan to stay ahead. The retailer must need to know the ideal customers for your products.

For brick and mortar store one has to observe and pay attention to people walking in the store and take note of what they purchase. For online store you can use analytics to get demographic data about your customer.You can also use your social media accounts and look at your followers to get a better understanding of your customers.

As technology is evolving and there are lots of new innovation , the retailer need to Know about the latest technology and invest in those innovation , thus helping them to get ahead of the competitions.

Key Market Players

Walmart

Walmart is the American multinational retail corporation that operates hypermarkets, discount department stores and grocery stores. It was founded by Sam Walton in 1962 headquartered in Bentonville, Arkansas and incorporated in October 31, 1969. As of January 31, 2019, Walmart has 11,361 stores and clubs in 27 countries, operating under 55 different names.

Walmart is the world’s largest company by revenue—over US$500 billion, according to Fortune Global 500 list in 2018 as well as the largest private employer in the world with 2.2 million employees. Walmart was the largest U.S. grocery retailer in 2019, and 65 percent of Walmart’s US$510.329 billion sales came from U.S. operations.

Kroger Co.

The Kroger Co., or simply Kroger, is an American retailing company founded by Bernard Kroger in 1883 in Cincinnati, Ohio. It is the United States’s largest supermarket chain by revenue ($115.34 billion for fiscal year 2016), the second-largest general retailer (behind Walmart)[4] and the seventeenth largest company in the United States.

Kroger is also the fifth-largest retailer in the world and the third largest American-owner private employer in the United States. Kroger is ranked #17 on the Fortune 500 rankings of the largest United States corporations by total revenue.

As of March 2019, Kroger operates, either directly or through its subsidiaries, 2,764 supermarkets and multi-department stores. Kroger’s headquarters are in downtown Cincinnati. It maintains markets in 35 states and the District of Columbia, with store formats that include hypermarkets, supermarkets, superstores, department stores, and 253 jewelry stores (782 convenience stores were sold to EG Group in 2018).

For the fiscal year 2017, Kroger reported earnings of US$1.907 billion, with an annual revenue of US$122.662 billion, an increase of 6.4% over the previous fiscal cycle. Kroger’s shares traded at over $142 per share, and its market capitalization was valued at US$24 billion in October 2018.

Amazon

Amazon is an American multinational technology company based in Seattle, Washington that focuses on e-commerce, cloud computing, and artificial intelligence. Amazon is the largest e-commerce marketplace and cloud computing platform in the world as measured by revenue and market capitalization. Amazon.com was founded by Jeff Bezos on July 5, 1994.

Amazon is the largest Internet company by revenue in the world and the second largest employer in the United States. For the fiscal year 2017, Amazon reported earnings of US$3.03 billion, with an annual revenue of US$177.866 billion, an increase of 30.8% over the previous fiscal cycle.

Since 2007 sales increased from 14.835 billion to 177.866 billion, thanks to continued business expansion. Amazon’s market capitalization was valued at over US$803 billion in early November 2018

Strategic Conclusion

In order to win in this era of disruption, retailers can no longer rely on the traditional talent profiles; they need to hire the would-be disruptors. This means acquiring new skills, including data science, software development, and advanced analytics. And as retailers expand into becoming service and experience providers, they’ll also need expertise in new industries.

Finding best-in-class talent is tough, not least because retailers are competing with direct-to-consumer companies, energetic start-ups, and tech giants—all of which tend to be more appealing to the most in-demand talent profiles. Even the hottest retail brands may not be perceived as desirable employers, as they’re tainted by the retail industry’s reputation of being old fashioned and slow. An additional challenge for retailers is that talent is concentrated in the major coastal cities.

Technology and advanced analytics represent massive opportunity in retail. Advanced analytics should inform retailers’ decisions across the value chain—from targeted pricing and promotions to smarter category management and localized assortment planning.

It’s critical for retailers to cultivate strong risk-identification and risk-management capabilities and to create and prepare for a variety of scenarios systematically; taking lessons from the banking sector could be one idea.

And retailers must develop strategies for data protection and digital resilience, the hallmarks of which include an engaged and aware frontline staff, differentiated protection for the most important assets, and active defenses that can be deployed in real time.

Appendix

B2C : Business to Consumer
B2B: Business to Business
FDI: Foreign Direct Investment
IT: Information technology
GDP: Gross Domestic Product
BOIPS: Buy Online Pick up in Store
EDI: Electronic Data Interchange
UPC: Universal Product Code
POS: Point Of sale
EIS: Executive Information System