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What’s Causing the Margins to Shrink in Fashion Retail?

fashion retailThe fashion industry has undergone significant changes over the past few years. Today, fashion is much more than just functional clothes; it is an expression and extension of oneself. It is the same idea that is driving purchases in the fashion industry. An average person now owns more cloth than what they used to a few years back. The increase is not only seen in volumes but also in variety, as people will have a collection for partywear, formals, casuals, beachwear, and sportswear. The rise of e-commerce has also contributed to the growth of fashion retail. Such impressive growth of the apparel industry has also brought about its fair share of challenges to the retailers. With so many apparel options available across thousands of brands, it becomes hard to predict customer preferences. The fashion retail industry is also facing challenges such as:  Contact US

Top Challenges in Fashion Retail


Top Retail Stores Dominating the US Market

Retail stores are an integral part of the people’s lives as they are highly dependent on such outlets for their groceries, consumables, and other household requirements. The popularity of retail stores is so widespread that consumers prefer traveling few miles to retail stores to do their monthly grocery shopping instead of visiting the nearby mom and pop store. Although the emergence of e-commerce and technology has been threatening the profits of retail stores, they are still standing firm with more than 90% of the shopping taking place offline. Top retail stores in the US stock a wide variety of options including consumer electronics, clothing, furniture, medicines, and home improvement tools. Here’s a list of top retail stores dominating the US market:IR_Brochure

#1 – Walmart

Walmart has become a household name in the US and is easily recognizable all across the world. Sam Walton opened the first Walmart store back in 1962, in Rogers, Arkansas. The company reported revenues of $485.9 billion for the year 2017. Walmart operates a total of 5,412 retail units all across the US. Walmart has also prioritized its online shopping portal to tackle the e-commerce giant Amazon and offer services like free two-day delivery. Retail stores such as this employs about 1.5 million people in the US.

#2 – Costco

Globally, Costco is the second largest retailer. It is also the world’s largest retailer of organic foods, choice and prime beef, wine, and roasted chicken. By operating 514 warehouses in the United States, it serves its large customer base of 90 million Costco members. Costco was also the first company to go from zero to over $3 billion in sales in under six years.

#3 – The Kroger Co.

The company started in 1883 with Barney Kroger investing his life-savings of $372 in opening a grocery store in Cincinnati. Today, The Kroger Co. operates about 2,800 retail stores in 35 states with annual sales of more than $115.3 billion. Their store format includes superstores, supermarket, department stores, convenience stores, and jewelry stores.

#4 – The Home Depot

The Home Depot started out in Atlanta with the help of investment banker Ken Langone and merchandising guru Bernie Marcus, Arthur Blank, and Pat Farrah. Currently, it operates 2,200 retail stores in about three countries. Recently, the U.S. Environmental Protection Agency (EPA), recognized the company with 2017 WaterSense Sustained Excellence Award for promoting the importance of water efficiency to its customers. Also, this year, they partnered with Google to integrate their product offerings into Google Assistant.

#5 – Walgreens Boots Alliance Inc.

Unlike other retailers on the list, the first retail store with the name Boots store was opened by John Boot in Nottingham, UK. The company Walgreens Boots Alliance Inc. now owns Walgreens, Boots, and other pharmaceutical manufacturing companies. The retail store specializes in pharmaceutical products and runs several online stores such as,, and

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Retail stores Vs. E-tail: Major Barriers and Top Benefits

The concept of retail stores or the brick and mortar model has been in existence from time immemorial. But with digitization spreading like forest fire around the globe, new models of trade and commerce famously termed as e-tail has taken birth. Like two sides of a coin, both retail and e-tail have their respective perks and drawbacks. While ease and convenience are the key factors that give e-commerce an edge over retail stores, the lack of touch and feel and the risk involved is a significant drawback of going digital. What are the other critical points of difference between these two models of shopping? Let us find out:IR_Brochure

Personal Assistance

Many times, especially while shopping for clothes or electronics at retail stores, we seek assistance from the store consultant for opinions and more information about the products before making a purchase. This is one of the key factors lacking in the case of an e-tail model. While making a purchase online, the customers have to go by the information given on the online shopping portal and trust their intuitions to make the right purchase decision.

Deals and Offers

As you may be aware, the cost of setting up retail stores are much higher when compared to that of e-commerce. This is one of the primary reasons why you will find more attractive price cuts and offers in an online shopping platform when compared to retail stores selling the same products. For the price conscious customers, the digital shopping model is nothing less than a boon.

The Conversion Rates

Digitization has given birth to new models of marketing and advertising as well. Though in many cases, online advertisements have been found to have a comparatively more extensive reach, the conversion rates of e-commerce sites are much lesser. In a regular retail store, out of the number of customers who walk in, the conversion rate or the sale rate is much higher when compared to the e-tail platform.

The Power of Choice

The players in the e-tail platforms widely exploit the benefits of low set-up costs by giving the customers a wide range of choice and options, which is not very feasible in case of retail stores. This makes online platforms of shopping more attractive and convenient for customers when compared to retail outlets where the alternatives available to them are limited.

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Retailers Taking the Path Less Trodden – Small is Set to be the New Big

Gone are the days when every company in the retail industry aimed at opening a chain of big-box stores with a space of 110,000 plus sq. ft. offering a wide range of products cheaper than other retail stores, aimed at providing a one-stop shopping experience to the consumers and encouraging them to purchase in bulk to save money. The big-wigs of retail and consumer packaged goods (CPG) industry such as Target, Wal-Mart and Best Buy are now taking the path less trodden, literally. These players have joined the latest trend that has taken the retail industry by storm, everyone’s going small – it’s the new big.

The “Smaller is Better” Philosophy

The idea of giant big-box retail industry foraying into the small format stores was something that no one predicted, but today, retailers have begun devising new strategies owing to the ever-changing preferences and shopping habits of consumers. “Why go Small?”, You ask. Here’s why,

  • Small format stores help retail industry venture in space-constrained and overly populated urban areas with little or no competition and
  • It helps retail industry tackle the online competition on various facets such as product assortment and variety, convenience and delivery time.
  • Smaller stores are also expected to yield higher sales per sq. ft. and increase in footfall.
  • These stores can be used to mirror the local needs of customers, with product range and assortment tailored specifically to the demographics of that area.

Small Stores – What’s in it For You?

For decades, the retail scenario in the Americas has been dominated by big-box store giants, but there has been a slow and gradual shift towards the so-called smaller footprint stores. For the consumers, this reeks of higher ‘convenience’ and ‘accessibility’. It means more locations closer to where the consumers are present, thereby translating into a much faster and convenient shopping experience for all. The small-store format is a promise of a quick and easy experience to cajole the consumers to actually make an effort to visit a physical store.

The Big and Small of Everything; Driven by Data

In nearly a decade from now, customers will outgrow the ‘one-size-fits-all’ approach of mass and big-box retail and gradually start seeking for smaller stores that will cater to their individual needs. Thereby making data and insights the secret ingredient for retail success. In order to know their customers and deliver unique and worthy shopping experience, retail industry need to make use of market and customer intelligence that will help them to tackle challenges and achieve growth, innovation and operational efficiency. Retail industry need to assess the competitive landscape and identify the most profitable customer segments and demographics in order to take the big plunge.

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