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2023’s Top 100 Retail Leaders: The Year’s Dominant Forces and Key Trends
As we make our way into the second half of 2023, it’s important to pause and reflect on the state of retail. Based on the data presented by the National Retail Federation (NRF), this year has been replete with innovation and change. Retail continues to evolve at an unprecedented pace, fueled by new technologies, changing consumer behaviors, and the ongoing ramifications of the global pandemic.
The NRF’s recently published Top 100 Retailers list offers a fascinating glimpse into the current retail landscape. This annual compilation ranks the industry’s most influential players, offering a valuable perspective on the trends and strategies that are defining success in today’s volatile marketplace.
2023 Top Retailers Key Details & Insights
Some of the year’s biggest developments so far include:
- Signet Jewelers increased their ranking by 10 spots to No. 56 after acquiring Blue Nile and Diamonds Direct and not suffering as much from supply chain issues.
- Bed Bath & Beyond was No. 64 last year but is no longer in business.
- Dell Technologies has lost 20.3% in sales.
- Kohl’s stands at No. 30 but also lost 7.1% in sales.
- Walgreens Boots Alliance, CVS Health Corporation, and Rite Aid remain high on the list but continue to suffer from a shortage of pharmacists.
- International companies are expanding in the U.S.
- Mass merchandise retailers and big-box sectors are leveraging their membership fees and added perks to keep consumers loyal.
Aldi is strong at No. 15 and increased its sales by 8.1% and store growth by 4.3%, which David Marcotte, SVP of Kantar, believes comes from the fact that shoppers are less likely to take risks if their income is lower. “They can’t take chances,” he says. “They need to know what they’re buying, and it’s one of the reasons they tend to be so brand loyal.” Additionally, Aldi continues to offer some of the lowest prices, a selection of brands, and exclusive items like German products during Christmas.
The home improvement sector continues to thrive, with Lowe’s (No. 9), Home Depot (No. 5), Ace Hardware (No. 21), and Tractor Supply Co. (No. 32) all seeing continued sales growth.
E-Commerce Proves Agility and Resilience Reign
The Top 100 retailers have demonstrated exceptional adaptability and resiliency in the wake of the global pandemic, a recession, and inflation. While physical stores suffered and delivery logistics improved (even as supply chains faced severe challenges), online sales skyrocketed as lockdown measures left consumers with no choice. Now, e-commerce and curbside pickup are part of the new normal.
Retailers like Amazon and Walmart seized the opportunity with their already-vast retail leads, solidifying their positions at the top of the list. Their success can be attributed to strategic investments in digital platforms, a nearly infinite selection of products, and a robust supply chain.
Innovative Use of Technology
Emerging technologies have played a pivotal role in shaping this year’s retail landscape. Many of the Top 100 retailers have integrated technologies like AI, augmented reality (AR), and personalized marketing into their business models, delivering unique and enhanced customer experiences.
Brands like Sephora, which comes in at No. 64 on the list, have made headway with virtual try-on technology, blurring the line between online and in-store shopping. This offers an engaging and interactive shopping experience that caters to consumers’ growing demand for personalization.
The Power of Omnichannel Retail
Finally, the power of an omnichannel approach can’t be overstated. Retailers that ranked highly on the NRF’s list have shown that combining online and offline channels to provide a seamless, unified customer experience is the way forward.
The high-ranking retailers have effectively utilized data from multiple channels to understand their customers better and offer personalized experiences. This has resulted in stronger customer loyalty and enhanced sales, reinforcing the importance of an omnichannel strategy.
In 2023, the retail landscape is characterized by resilience, innovation, and the strategic use of omnichannel approaches. As noted with our Top 10 Largest Retailers list, the NRF’s Top 100 Retailers list is more than a ranking; it provides crucial insights into the strategies and trends that are shaping the retail industry in this dynamic and challenging era. It’s a testament to the retailers that are successfully navigating the complexities of a rapidly evolving marketplace. Looking forward, these trends and success stories are set to define the future of retail.
Discussion Questions
DISCUSSION QUESTIONS: Which retail trends do you see becoming more significant in the 2nd half of 2023?
Poll
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The innovative use of technology highlights all center around improving the customer experience. We’re expecting retailers—online and in stores—to leverage AI and user generated content (UGC) in a big way this year. I also see a renewed focus on RFID, robotics, and AI as well as an increasing trend toward ease of returns. These are keys to success going forward.
In today’s world, you really need to understand your inventory in real time, and the top tier retailers are already benefiting from doing just that. They also understand the cost of people and the benefits of robotics in the workplace, but it always comes back to a laser focus on the wants and needs of your customers that will determine the winners. Good retail is all about customer expectations, needs, and preferences, and today’s tech stack should be focused on all things customer, all the time. It’s all about surviving and thriving during this rapid evolution of tech in the hands of retailers and customers everywhere.
Great points Ken! In primary research recently conducted by Incisiv, the top driver of store systems investments in 2023 is improving inventory accuracy and visibility. With the increase in omni-channel orders fulfilled by store inventory, it is imperative that retailers have extremely accurate inventory to avoid over-promising or under-promising. The technology exists and now is the time to leverage the benefits.
I would hope inventory management becomes #1. I have been noting for decades that retailers are notorious for not understanding inventory management. A retailer that can increase their turns, without losing sales, can dramatically increase their profitability. DRAMATICALLY!
There is a clear correlation across the Top 100 Retailers list between the investments made in digital transformations, agile capabilities, and the corresponding retail sales, revenue, profitability, reduced costs to serve, and growth. The digital transformation imperative remains as critical as ever, as the need to drive outstanding customer experiences is a crucial differentiator between successful retailers and those companies experiencing significant disruptions.
Several dominant forces center around inventory management, accelerated product development cycles, and perpetual inventory visibility across channels for associates and consumers. For livestreaming, social commerce, and ecommerce to succeed, the foundational capabilities around real-time inventory visibility will be as critical as ever, driving the use of RFID even further throughout 2023.
Additionally, the purpose-driven use of AI, automation, and robotics will be emerging forces as retailers continue to seek ways to reduce costs, unlock value, drive customer experiences, and drive growth the profitability. The need to be predictive and prescriptive via a data and analytics strategy will be prominent across 2023’s Top 100 Retail Leader list.
On the digital side, I see providing accurate promises around inventory availability and delivery/pickup dates and times moving further up in the shopping journey. When customers shop, they want to know where and/or when they can get an item. Not showing them until checkout just isn’t good enough anymore. You need to show a detailed promise on the product details page, and let customers see or filter by availability on your category listing pages and search results. Most of the leaders are already doing this. Others will need to keep up.
Impressive. It’s interesting to me that, as big as the Top 100 are, according to NRF’s numbers they still represent just 46% of total retail revenue in North America. As a small CPG retailer myself, it’s encouraging to know that there’s still plenty of room for the little guy with a dream. Most retailers don’t need billions of dollars in sales to be profitable and to make an impact on their communities.
We can’t leave out Generative AI and Predictive AI. Retailers have been using AI for decades, but the new generative AI will be a game changer, and for companies that can harness this capability, we’ll see cost savings and higher margins to offset inflation and other factors. A key factor will be data proliferation which continues to grow by leaps and bounds. Retailers will rely on tech that can help them manage their data (including inventory data) – and those successfully leveraging the tech will be able to stay in the retail game. Retail media will also continue to grow, but may not be at the forefront of retailer focus. There is always something to be said for a new revenue stream, but implementation is not always straightforward. Top retailers will have some advantages, but these companies are also the ones that typically have challenges when it comes to change. Always harder to move a giant ship than a small rowboat. The agility and nimbleness of the organization may eventually decide its fate.
As technology continues to play a greater role and retail media networks change the margin economics of stores, scale will continue to drive outsized advantages for incumbants.
In an increasingly competitive marketplace, I anticipate quite a few trends will gain significance in the second half of this year. As the online market continues to grow, there will be an increased focus on tactics that will support and foster increased brand loyalty like hyper-personalized search results and recommendations, phygital experiences (ie: BOPIS, AR/VR, interactive mobile experiences and digital coupons) and AI implementation.
In addition, we’re already seeing omnichannel initiatives give way to unified commerce. By having a single platform that serves as a single source of truth for the entire organization’s customer data, retailers are better able to offer a superior customer experience, and this technological migration will continue.
For the remainder of 2023 and as we look towards next year, retailers should bet on machine learning and AI technologies to help analyze data from multiple channels at scale. ML algorithms can help retailers optimize assortment, innovation, pricing, inventory levels, and supply chain operations.