Jinjoo Lee of The Wall Street Journal reports that big retailers like Costco, Walmart, and Amazon now control 17% of U.S. retail sales, up from 11% in 2014. Smaller retailers, including supermarkets and dollar stores, are losing market share as these giants invest heavily in technology, offer lower prices, and build strong customer loyalty. This dominance makes it harder for smaller retailers to compete or survive. Lee writes:
Big retailers already dominate Americans’ lives. Their grasp on consumers is only getting stronger.
The three biggest retailers by revenue in the U.S.—Costco, Walmart and Amazon —accounted for about 11% of total retail sales back in 2014, based on their reported figures measured against national retail sales data from the Commerce Department. Their share of the market has been growing since then. In their last three reported quarters, the behemoths selling everything from groceries to appliances made up about 17% of retail sales and roughly 57% of retail sales growth over that period.
Supermarkets have been a chronic casualty of the big retailers’ rise. Grocery stores accounted for about two-thirds of food-at-home spending in the U.S. in 2000, but their share shrank to 54% in 2023, according to the U.S. Department of Agriculture. Over the same period, warehouse clubs and supercenters such as Costco and Walmart nearly doubled their market share to 23%. Amazon hasn’t grown its share of the grocery market much, but it captures a sizable share of everything else: About three-fourths of U.S. households have Amazon Prime, its paid membership program, according to a 2024 survey from Evercore.
Among some recent casualties are dollar stores, which industry analysts say are losing share to Walmart. The big-box retailer has drawn low-income consumers with a membership program that is half-price for those on government assistance. […]
It will be a challenging catch-up game for the rest. The three big retailers spent an estimated $47 billion on capital expenditures in 2023. That is about four times what Target, Best Buy, and the two largest supermarket chains—Kroger and Albertsons —collectively spent. […]
It is no surprise that investors are flocking to the biggest companies, too. As a multiple of forward earnings, shares of Walmart and Costco are on average 80% more expensive than a basket of retailers in the S&P 500. Historically, they commanded a roughly 40% premium on average.
It is getting harder and harder to build a convincing case for shopping at—or investing in—smaller retailers.
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