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‘Big Six’ Retailers Dominate Market With Flawless Execution

As most of retail struggles, the top companies are offering the right merchandise mix, level of service and fulfillment capabilities to drive sales.

By Arthur Zaczkiewicz on August 19, 2020

Corp.’s stellar financial performance today reflects an operator firing on all pistons in a market strewn with retail bankruptcies, store closures and COVID-19-related shopper anxiety.

But Target isn’t alone in its success. According to Craig R. Johnson, president of Customer Growth Partners, the Minneapolis-based company is one of retail’s “Big Six” — companies that are outperforming peers due to a variety of reasons.

The six — Target, Walmart, Amazon, Costco, Home Depot and Lowe’s — are all seeing substantial year-over-year gains in sales. “Although many factors are behind the record growth, the Big Six all share common performance drivers,” Johnson told WWD. This includes strong and consistent traffic growth, rising store-level productivity, superior “or much-improved online platforms” and a “balance of discretionary and non-discretionary merchandise” as well as a “strong understanding of their customers’ needs and preferences.”

Johnson estimates that the Big Six collective garner about 29 percent of the total U.S. retail market. While Home Depot and Lowe’s don’t carry apparel, the others are actively eating up market share in the segment as smaller specialty apparel chains have faltered.

The macro-economic picture also bodes well for the “Big Six.” While unemployment remains high, wages and salaries are stable, and expected to tick up when July’s numbers are released. “Meanwhile personal savings rates are still at a very healthy 19 percent [for June],” Johnson told WWD.

“Retail sales are also bolstered by the steep decline in spending on travel, entertainment and restaurants,” he added.

But how long will the Big Six dominate? For Target, at least, it could be a long time. In a report from Telsey Advisory Group, analysts at the firm cited Target’s “impressive” results as reflective of the company’s “omnichannel strategies, superior execution, and benefits from U.S. government stimulus checks.”

Most eye-popping was Target’s online sales gain of 195 percent as “Target leveraged its store infrastructure to fulfill approximately 90 percent of digital sales, with increased demand for drive-up (growth of over 700 percent) and in-store pick up (growth of over 60 percent),” the analysts said.

“Beyond these near-term trends, we believe Target is well-positioned to continue to gain market share, supported by ongoing strategies — price investments, private brands, remodels, small-format stores, fulfillment/supply chain enhancements, loyalty programs, and Target-plus marketplace — and retail consolidation,” Telsey Advisory Group analysts said.

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