Big business is as dominant as ever, particularly in the retail sphere. Several huge companies now dominate the business landscape, pulling in billions in revenues, providing jobs for millions, and consistently pushing the envelope in terms of technology and convenience. This has had many benefits for consumers in terms of savings of both time and money, but has also has come with its costs — mostly in less choice, as small businesses and startups face a smaller chance for survival than ever.
As a handful of big companies have pulled away from the pack, there is a clear gulf not only in terms of sheer customer traffic, but on the balance sheet as well.
A recent analysis of the S&P 1500 by USA Today and S&P Capital IQ of the past 12 months shows that even among the upper echelon of American business, there are the elite of the elite — ten companies that are by far and away outperforming all others, and in the process have captured around two-thirds of all revenue generated in the retail sector. You read that right — only ten companies are taking in 66% of all retail dollars in the U.S. There’s a lot to be said about it, but even if you were to take a look at the spending habits of the average American, or even your own routines, it’s probably not all that surprising.
What we’re seeing in the retail sector is indicative of more broad trends in the business world toward consolidation. We’re seeing it in many other areas as well, including the telecom industry, agriculture, and especially the tech sector. By eliminating competition through acquisition or by simply having a broader reach, the country’s biggest companies have been able to build themselves into seemingly impenetrable behemoths.
Can you think of a company that could come around, with the exception of Amazon, and make Wal-Mart executives lose sleep? The companies in question have put together a serious wall of separation, so much so that at this point it’s hard to imagine any real threats to their business. Wal-Mart pulled in $486 billion internationally last year, and it’s hard to think an innovative new approach to retail could threaten its model.
Unsurprisingly, the companies comprising the top ten are those that you would expect. They are huge, multinational corporations that, in many ways, try to be everything to everyone. Take Amazon or Wal-Mart, for example. Both are giant retail businesses that can provide customers with almost anything they need, whether it be groceries or electronics. But they are both rapidly expanding into other areas. Amazon is providing innovative new approaches to delivery and even producing television shows and movies, and Wal-Mart is looking for ways to loosen Amazon’s death grip on online shopping.
Even companies like Walgreens and CVS, both of which are among the top ten as well, possess similar qualities to their larger counterparts. A Walgreens or CVS store can function as a smaller, more convenient alternative to a grocery or retail store like Wal-Mart, while also providing a slew of medical and pharmacy services in fast order.
In short, it’s not really a mystery as to how these ten businesses have built themselves into the profit machines they are today, as it’s the culmination of long-term strategizing, and continued attempts to expand their business model to service the demands consumers have. With the exception of maybe Sysco, and more specialized companies like Lowe’s or The Home Depot, any of these companies can act as a one-stop shop for a good percentage of consumers.
As for the full list, it can be seen below. Again, these ten companies were found to have siphoned off roughly two-thirds of revenue generated by publicly-traded firms according to a USA Today analysis of the past year. Here they are, ranked in terms of percentage of revenue captured, with Wal-Mart leading the way at more than 25%.
- Sysco: 2.5%
- Lowe’s: 2.9%
- Target: 3.8%
- The Home Depot: 4.4%
- Walgreens: 4.4%
- Amazon: 4.8%
- Kroger: 5.7%
- Costco: 6.1%
- CVS Health Corporation: 7.8%
- Wal-Mart Stores: 25.5%
For further information, including all of the details, head over to USA Today.
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