Big-Box Stores Rule Top 10 List

Wal-Mart's No. 1 Rank Shows U.S. Goes for Price

For years I've used Stores magazine's annual list of the nation's 100 biggest retailers as a reference guide. But when I perused the most recent rankings last week, I began to wonder what the top 10 retailers on this list say about us as shoppers and about the state of retailing in America.

What's clear is that we are a nation of shoppers that is both empowered and stuck -- stuck with chains that aren't that great but that are so ubiquitous we have no choice but to shop there. On the one hand, we're getting low prices and lots of selection from the world's biggest array of discounters offering the most products at the lowest prices. On the other hand, when it comes to the most basic retail need -- food -- the supermarket chains on the list leave quite a lot to be desired.

"Discount -- that has become the mantra of today's shopper, regardless of income or education," said Wendy Liebmann, founder of consulting firm WSL Strategic Retail.

Five of the retailers in the top 10 are low-priced, big-box chains. Ten years ago, only two such formats were in the top 10: Wal-Mart (now No. 1) and Kmart (now off the top 10 at No. 14). Shoppers have been voting with their feet and spending more of their money at chains that stretch a dollar as far as possible. On the flip side, the casualties of the top 10 from a decade ago include more traditional retailers such as J.C. Penney and May Department Stores, which were ranked sixth and ninth, respectively, in 1994, but have slipped to 15th and 21st now.

Wal-Mart and its influences generate a lot of negative publicity, and the chain does have real flaws, both as a retailer and a corporation. But some industry observers say the positive impact of the company on American shoppers can't be overlooked.

"I fundamentally believe that Wal-Mart has made a middle-class lifestyle possible for at least one, if not two, generations of Americans who, unlike their parents, are having to spend huge sums of money on medical insurance and the cost of housing," said Paco Underhill, president of retail consulting firm Envirosell and the author of several books on why and where people shop. "That money has had to come out of something, and Wal-Mart has helped American families not be downwardly mobile."

But if shoppers have succeeded in shaping the retail landscape according to their increasingly limited budgets, they have been far less successful in creating the supermarkets of their dreams.

Though the grocery industry historically has been a niche business that operates regionally, catering to local tastes and interests, it is becoming much more national in focus. That's why Kroger (No. 3), Safeway (No. 7) and Albertsons (No. 8) are among the nation's biggest retailers.

But while a big discounter can offer better prices the larger it gets, many supermarkets suffer from size. Trying to fight Wal-Mart and its growing food business, supermarket chains have been expanding across the country by acquiring other small operators, while also catering more to Wall Street. The result is enormous grocery retailers that are focused like never before on cutting costs (that is, service), standardizing their merchandise (reducing variety) and centralizing operations (reducing local control). It's okay if you're selling diapers and batteries, but a big, boring supermarket leaves the typical customer cold.

"It's Wall Street and Wal-Mart -- they've got the supermarkets in a sandwich on all kinds of levels. It's not a very glamorous industry right now," said Jeff Metzger, publisher of Food World, an industry trade publication.