The U.S. Retail market reached $5.5 Trillion in 2016 from all sources – Auto Dealers, Supercenters, Restaurants, Online retailers, even Pet Stores. This year’s increase of $172B was more than 2015’s $118B as the decline in Gas Station revenue slowed. (Data courtesy of the Census Bureau’s Monthly Retail Trade report)
In this post we will try to narrow the focus to the top 100 Retailers in the U.S. Market – the headliners. These 100 companies account for 38% of the total retail market! How did they perform in 2016 vs 2015…and of course, which ones sell Pet Products? Remember, according to the 2012 Economic Census, over 2/3 of the Pet Products in the U.S. are sold outside of Pet Stores. The Top 100 group accounts for a huge share of these sales. This report is crammed with data, but we’ll try to break it into smaller pieces with regular observations. All of the base data on the Top 100 comes from Kantar Research and was published by the National Retail Federation (NRF).
Let’s start with an overview:
- The Total Retail Market grew $172.4B in 2016 – Up 3.2%, considerably better than the 2.3% growth in 2015.
- The Top 100 grew $70.8B (+3.5%), better than the overall market but down from (+4.9%) in 2015.
- The Top 100 accounts generate $2.1T in revenue, 37.6% of the total U.S. retail market.
- Let’s pare it down a bit. If you take out Auto, Restaurant and Gas Station sales, the “target” retail market for our industry is $3.3 Trillion. – about 60% of the total market.
- Removing the Restaurant & Gas Station sales from the Top 100 numbers – at $1.91T, they still account 34.7% of the Total U.S. Market and…
- 58% of the $3.3 Trillion target retail market.
The Top 100 is obviously critically important, and it’s still outperforming the overall market…barely. We need to remember that the “Top 100 club” is in fact a contest. Every year companies drop out and new ones replace them. This can be the result of mergers, acquisitions or simply slumping sales. Changes of note in 2016:
- 4 Supermarkets from the 2015 list were “combined” into 2 in 2016 – Kroger acquired Roundys and Ahold bought Delhaize (Food Lion). In these cases, I combined the historical sales to give a better picture of the actual growth.
- We also lost 2 companies from the list due to declining sales – Barnes & Noble and Chipotle.
- That left space for 4 new additions:
- Ulta Salon – a cosmetics and fragrance retailer that is “taking business” from traditional department stores.
- Petco – We now have 2 Pet Chains in the Top 100 U.S. Retailers!
- Sprouts – A natural grocery store chain
- CKE Restaurants ( Carl’s Jr, Hardees)
Now let’s start “drilling down” on the Top 100. Here’s a summary of Regular and Online Retailers versus the bundled total for Restaurants & Gas Stations.
- Regular & Online Retailers have 58.6% of the stores but account for over 92% of the business.
- All of the $ growth is coming from Regular & Online Retailers as restaurants are down -3.5% (a big turnaround from 2015 when restaurants led the way with a 6.4% increase)
- Reg/Online Rtlrs had a +3.7% increase in $ales – $69B (Much lower than last year’s +4.8%; +84.7B)
- +1.7% growth in stores – also a significant drop from +2.9% in 2015 and + 6.9% in 2014.
Now that we have an overview of the Top 100, let’s take a look at the “targeted” retailer segment. There are 82 total companies. How many are buying and selling Pet Products? This will reinforce how Pets have become an integral part of the American Household and how fierce that the competition for the Pet Parents’ $ has become.
- Of 82 possible companies, 66 are selling some mixture of Pet Products in stores and/or online.
- Their Total Retail Sales of all products is $1.8 Trillion which is…
- 93% of the total business for Regular & Online Retailers in the Top 100
- 32% of the Entire $5.5T U.S. Retail market – from 66 Companies who sell Pet Products.
- 54 Cos., doing $1.6T in sales are selling pet products off the retail shelf in 138,000 stores – 3800 more than 2015.
- Online only is another Story –
- Amazon accounts for $15.4B (97.7%) of the entire online only increase.
- Many Traditional Retailers who only sell Pet Products online are closing stores and losing ground in the total Retail “race”. Not carrying Pet Products could be another indication that they are “out of tune” with America
- Their Total Retail Sales of all products is $1.8 Trillion which is…
Sales for Retailers with pet products remain strong. Also note that the store count totals are only for the Top 100 and include only 2 Pet Chains and 1 Farm Store Chain, as they were the only companies to make the list. Pet Products are sold in thousands of other retail outlets – 20,000 more grocery stores, 10,000 more pet stores, 16,000 Vet Clinics plus…. A reasonable estimate would be that there are 200,000 outlets selling pet products in the U.S. plus… the internet.
Before we analyze the whole list in greater detail let’s take a quick look at the Top 10 retailers in the U.S.
- They do $1 Trillion in Sales
- 51.5% of the Top 100’s Revenue
- 19.5% of the Total U.S. Retail Market
- It’s the same list as 2015 although 6 changed rank
- Target had the only negative performance
- 8 Retailers produced 29.2% of the increase for Total U.S. Retail
In the next part of the report we will look at the detailed list of the top 100. First, we’ll sort it by retail channel with subtotals in key columns. Then we’ll break it into smaller sections for comments. At the end of the post there will be a download link for an Excel file with the data. This will allow you to sort it as you choose…by rank, alpha, pet/nonpet…it’s your call.
I have not done a lot of highlighting however:
- Pet Columns ’16 & ‘15 – a “1” with an orange highlight indicates that products are only sold online
- Rank Columns – Change in rank from 2015: (Remember 4 from 2015’s list were consolidated into 2 in 2016. There were also other acquisitions of companies not in the Top 100 which can cause a big improvement in rank)
- Up 4-5 spots = Lt Blue; Up 6 or more = Dk Green
- Down 4-5 Spots = Yellow; Down 6 or more = Dk Pink
Let’s get started. Remember online sales are included in the sales of all companies.
- Drug is still strong. However, acquisitions are a big factor. The Walgreens and Rite Aid merger fell apart but CVS acquired Omnicare and the pharmacies in Target Stores.
- The Traditional Department store segment overall continues its decline. There are a couple of exceptions in some “high end” stores. However for most, the trend is down.
- Sears (includes Kmart) and Macy’s remain the 2 big “red flags” and more store closings are planned.
- Although many carry a few pet items, generally online, this channel has never fully embraced Pet Products.
- Much of the growth in the Convenience Store Chains in the Top 100 in recent years has come through acquisitions. In 2016 there was a reduction in store count so overall sales were basically flat.
- Military Commissaries have added locations in recent years. Sales are finally catching up with a 9.1% increase.
- The Auto Parts Stores are a mixed bag, with all chains opening new stores. Only Advance is underperforming in sales. With the continued growth of the Pet Travel product category, it is somewhat surprising that everyone’s offering of Pet items continues to be so small. This could be an opportunity.
- Among Apparel retailers, the value outlets continue to show strong growth. All three of these chains carry pet products. The big increase at Ascena came solely from the acquisition of Ann Taylor and Loft.
- Want proof of the evolving face of U.S. Retail? – Amazon sales are up 91.3% in 3 years!
- The Phone People – Verizon and Apple, continue to grow. However, not a good year for AT&T.
- Barnes & Noble dropped off the list in 2016. Best Buy, Toys R Us and Gamestop continue to decline.
- Signet Jewelry made the list in 2014 by acquiring Zales. After an initial drop in sales, they rebounded – up 10.7%.
- Mass Merchants’ growth percentage is subpar and is being driven by Wal-Mart and Costco.
- Wal-Mart is the “big dog” and their 2.7% increase in 2016 is slightly above recent years. Sales in SuperCenters continue to grow but “regular” Discount Department Stores are losing market share. This impacts the overall business in both Wal-Mart and Target.
- Target sales are down almost $4B. Sales have been flat in the last 2 years, but in 2016 turned down – sharply.
- Costco continues its spectacular growth. BJ’s revenue fell $2B. They are seeking help to improve online sales.
- Home Improvement/Hardware is showing continued strong growth by all “players”. The big guys are doing especially well with a $9B combined increase from Home Depot and Lowe’s – both are Top 10 retailers.
- Home Goods sales were flat except for Ikea, whose spectacular growth came as a result of corporate restructuring.
- Tractor Supply continued their strong growth (+8.9%). Their average annual growth rate is 9.5% since 2013.
- Supermarkets – $389B in Sales; 17 Companies; Over 16,500 stores; All Selling Pet Products. This is a very important group for the Pet Industry. With the highest frequency of consumer visits of any channel, the competition is fierce. The mergers and acquisitions continue as companies try to strengthen themselves for the daily battle. This year we saw 4 of 2015’s Top 100 Retailers become 2 as Kroger acquired Roundy’s and Ahold acquired Delhaize.
- The % increase is below average. However, all but 2 cos. are showing sales growth. Kroger’s +$2B leads the pack.
- With only Sprouts joining the Top 100, the number of Supermarket chains dropped to 17, but the store count still increased by 400 over the 2015 group.
- Small Format Value Stores: Overall, this retail channel does more business than Traditional Department Stores.
- Dollar General continues as the top performer, up 7.9%, matching their average annual growth rate since 2013.
- Dollar Tree’s 2015 acquisition of Family Dollar Stores seems to still be producing.
- Only Big Lots performance is subpar, but they have 2 consecutive years with increases after 2 years of declines.
- This retail channel continues to grow in numbers and popularity. They are committed to Pet Products and their focus on value appeals to today’s ever more price conscious consumers. Plus, they are easy to shop.
- Pet Stores – PetSmart’s growth is 3.4%, slightly better than last year’s 3.2%. However, the big news is Petco’s entry into the Top 100. This provides further evidence of the strength of the U.S. Pet Industry.
- Office Supply Stores – This channel is under siege. As store closings continue, retailers are turning to online ordering.
- Sporting Goods – Sports Authority closed in 2016 but the 2 remaining retailers, Dick’s and Academy, continue to show strong growth in both store count and sales.
Restaurants & Gas Stations and the Grand Total
Restaurant & Gas Station Observations
Although restaurants & gas stations aren’t relevant in terms of Pet Products Sales, they are relevant in our daily lives.
- Last year Restaurants had a 6.4% increase, driving the Top 100 $ up. This year’s -3.5% is a big turnaround. However, this is somewhat deceptive. Although sales at Yum are suffering, the big drop is due to a business re-structuring of their franchisees. Without Yum, Top 100 restaurant sales are up 3.4%, basically on par with regular retailers.
Wrapping it up!
The Top 100 got there by producing big numbers so it’s not surprising that their performance exceeds the overall market. Although in 2016, their increase (+3.5%) was only 10% better. In 2015 it was more than double – 4.9% to 2.3%
Pet Products are an important part of the success of the Top 100. Sixty-six companies on the list sell Pet Food and/or Supplies in 138,000 stores and/or online. If we drill down a bit, we get to 54 retailers who stock pet in their stores. This group generated $1.6T in sales. Now, let’s “Do the math”. If we take out the $10B done by PetSmart and Petco and the remaining companies generated only 1.5% of their sales from Pet, we’re looking at $23B in Pet Products sales from only 52 “non-pet store” sources! By the way, the 1.5% estimated share for Pet items is low based on data from the U.S. Economic Census.
Whether you are a manufacturer, a distributor or a competing retailer, monitoring the Top 100 group is important. What happens in this group reflects the evolution of the overall retail market. We see the continuing decline of Department Stores coinciding with the growing popularity of Value outlets. Nothing demonstrates the growing influence of the internet better than Amazon’s continued spectacular growth. The competition in the market is clearly shown in Supermarkets, where 8 Top 100 retailers became 4 in just 2 years through mergers/acquisitions. In business, like in biology, you must adapt to a changing environment or face extinction.
Don’t forget to download the 2016 Top 100 Retailer Excel file to do your own analysisDownload 2016 Top 100 U.S. Retailers List(Excel)