US Retail Sector - Who will come out on top?

The news on Amazon’s acquisition of WholeFoods two weeks ago made headlines in the business world as it turned up the heat on traditional retail giants and threatened to disrupt yet another well-established sector. We wanted to analyze the latest revenue figures to understand the real threat Amazon poses to this industry. We first looked at the top U.S public retailers (with revenue >$20bn in 2016), excluding Walmart, in order to focus on the retailers that are most prone for disruption or already disrupted by Amazon. We later then shifted our attention to the battle of the two giants, Amazon vs Walmart.

The graph below shows the 2016 revenue figures for the US retail companies, Amazon, Costco, Kroger, The Home Depot, Target, Macy’s and Sears.

As the graph demonstrates, Amazon comes out on top, recording revenue of $136 billion in 2016, followed by Costco and Kroger with $116 billion and $110 billion in revenue respectively. Macy’s and Sears make up the tail end with only $26 and $22 billion in revenue in 2016.


The next graph shows the revenue trend from 2013-16 of these retailers.

Even though the 2016 revenue figures of Amazon, Costco and Kroger are relatively similar, the cumulative annual growth rates (CAGR) vary widely across the retailers. While Amazon is exhibiting a CAGR of 16% since 2013, The Home Depot trails behind with 5% and Costco and Kroger with 3% CAGR each. If Amazon continues to grow at this rate, it will soon leave the other retailers far behind. It seems that all three retailers will have to innovate to boost their growth figures and catch up with Amazon again. Target’s growth was almost flat at 1% and Sears and Macy’s were the only retailers to exhibit negative growth rates, shrinking by 12% and 2% respectively since 2013.


Apart from revenue, we also wanted to analyze employee figures to see whether the same disruptive trends among US retailers prevailed.

The following graph shows the 2016 employee figures of the top 7 retailers, excluding Walmart.

From the graph we can see that Kroger and The Home Depot led the pack in terms of employee numbers, with 443,000 and 406,000 employees in 2016. Amazon came in third place with 341,000 employees. Similar to revenues, Sears and Macy’s made up the tail end with 178,000 and 148,000 employees, while Costco had the lowest employee number with 126,000 people, surprisingly enough, given the retailer came in second in terms of revenues in 2016.


We also analyzed the employee trend in the past 3 years to complement the revenue trend analyzed above.

The following graph exhibits employee growth in the past 3 years.

The employee trend graph reflects many of the same trends as seen in the revenue trend graph. For instance, Amazon continues to be the highest growth company in terms of number of employees, recording a CAGR of 30% since 2014. The company is followed by Kroger and The Home Depot, with 6% and 3% employee growth rates respectively. Finally, Sears' employee number remained unchanged between 2015 and 2016, while Target, Macy’s and Costco all showed negative employee growth with CAGRs of -2%, -4% and -14% respectively. Again Costco is an interesting case here, as it has recorded positive revenue growth of 3% but downsized its employee force by 14%, indicating the company is taking active measures to optimize its operations.


Next, we focused on Amazon and Walmart, as we believe that the retail battle will be ultimately fought out between these two companies.

In 2016, Walmart recorded over 3.5 times higher revenues than Amazon, or $482 billion. This shows that currently, Walmart still has the upper hand in traditional retail, but when looking at growth rates, we can see that Amazon is slowly closing in on the retail giant.


The below graph shows the revenue growth rates in the last 4 years.

From this we can see that Amazon has been outpacing Walmart since 2013, slowly decreasing the revenue gap between the two competitors. So while Amazon still has a long way to go, Walmart will most likely face a credible threat in the future, if the company doesn’t take active measures to counter Amazon’s advances.


Next we looked at the employee figures of the two retail giants to understand whether similar trends could be seen in their respective workforces.

The first graph shows the employee numbers in 2016.

Walmart still has a large lead over Amazon in terms of employees, employing 2.3 million people in 2016, the largest employer worldwide. In 2016, Amazon had 341,000 employees. The amount of people at Walmart’s disposal will allow the company to fight a long war of attrition against Amazon over resources.


Next we analyzed the employee growth trend of the two giants.

As seen above, Amazon still has a long way to go to catch up with Walmart’s multimillion workforce. However, as with revenue, Amazon is currently outpacing Walmart with employee growth of 30% vs 1%.


In conclusion, Amazon’s aggressive push into the retail sector through its WholeFoods acquisition should be a wake-up call to all the players in the market. The company has already outpaced Costco and The Home Depot in terms of absolute revenue figures and revenue growth rate, and most likely has its eyes set on Walmart’s empire next. The company has also been actively boosting its workforce, recording a 30% growth rate in the past 3 years. Unless Walmart starts pushing an aggressive innovation strategy, the company may fall prey to the same fate as its retail peers. 

To get a detailed comparison across all 8 retail players, click here



About Craft:

Craft is a machine-learning powered data and analytics platform building the ‘Source of Truth’ on companies, and mapping the global economy. We organize data from thousands of sources to provide comprehensive, up-to-date sector and company profiles, ranging from early-stage to the largest companies in the world.

As the economy, and nature of work continue to undergo massive transformation, Craft’s mission is to provide context and freely available tools to help people discover and evaluate companies and opportunities. Our platform is used for market and sector research, customer lead generation, competitive analysis and career search.

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