The Top 100 Retailers List for 2011 from Stores Magazine was recently released and discount operator, Wal-Mart, is again at the number one spot with $307 billion in total US retail sales for 2010. That’s a whopping $229 billion more than #2 retailer, Kroger, who pulled in a less than comparable $78 billion in US Retail Sales. Not to mention, Wal-Mart had more US sales in 2010 than companies 2-5 on the list combined!
So, what does this mean for retailers everywhere? Can any other company hope to make a dent in the “Retail Giant’s” earnings? How do you compete with a company that has trademarked and then perfected the saying “Save Money. Live Better.” One thing is for sure; American’s are drinking Wal-Mart’s kool-aide. We want to cut costs in any way possible and Wal-Mart does it best. Wal-Mart not only sells it all, they sell it ALL for less. So is any retailer really trying to defeat the beast, or only looking to tame it? In my opinion, it looks like a race for second place.
A few months ago, I wrote a blog entitled “Can you do it all?” I addressed three major competition factors for all companies: Price, Service, and Quality. Many retailers try to do it all, or at least compete on two of the three factors. Conversely, Wal-Mart competes on price alone, despite promoting quality. So, what does this tell retailers? Are they trying to do too much? Yet, what if all retailers competed on price alone? The market would most likely be over-saturated and Wal-Mart would be forced to share…unfortunately, reality is that smaller businesses cannot compete with Wal-Mart’s economies of scale. While I am a firm believer in a free market, I also think Wal-Mart should be challenged a bit for the top spot; after all, as consumers, we appreciate the competition!
Most of the retailers on the Top 100 are not trying to directly compete with Wal-Mart. Abercrombie & Fitch, Michael’s, and other “niche retailers” are not and would never try. They instead are seeking market share their own way, by fulfilling more specific consumer needs. This does pose an interesting question: As American’s continue to value price over quality or service, is the sky the limit for Wal-Mart?
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