Despite frequent claims of their impending obsolescence, brick-and-mortar retail stores continue to thrive in the United States. Physical stores still account for a substantial 85.2% of annual retail sales in the US, as opposed to the 14.8% garnered by online sales as of 2022. This represents a 1.1 percentage point increase in online sales compared to 2021. The ongoing prominence of these physical outlets in the retail landscape underscores the enduring appeal of in-person shopping experiences and the ability of traditional retailers to adapt and integrate new technologies.
The Enduring Relevance of Physical Stores
One key factor in the sustained success of traditional retail stores is the ability to strike a balance between embracing digital advancements and preserving the intrinsic value of physical shopping spaces. Technological innovations such as online-offline commerce integrations and grab-and-go solutions offer conveniences that enhance the in-store experience. This shows that the survival and even thriving of brick-and-mortar stores are not solely dependent on maintaining old-school practices but rather augmenting them with modern technology.
Consumers continue to appreciate shopping in physical stores due to several significant advantages. The tactile experience of being able to view, try out, and immediately purchase goods remains unmatched by online platforms. Personalized assistance from sales staff and the instant gratification of acquiring products right away are aspects that in-person shopping uniquely provides. These benefits contribute to an engaging and efficient shopping experience that keeps customers returning to physical stores, defying predictions of their decline.
Walmart: The Retail Giant
Walmart stands at the forefront as the largest retailer among brick-and-mortar giants. With a market capitalization of $372.91 billion, the company’s monumental success is reflected in its impressive worldwide retail sales of $430.82 billion in 2020 and a staggering $526 billion in 2021. Remarkably, 87.19% of Walmart’s revenue in 2021 came from offline stores, highlighting the pivotal role that physical retail continues to play in its business model.
Since its inception in 1962 by Sam Walton, Walmart, headquartered in Bentonville, AR, has expanded its footprint to over 11,000 stores globally. The company’s extensive product range, along with its strategy of low pricing, has played a crucial role in its sustained dominance. Moreover, Walmart has successfully navigated the digital shift by enhancing its e-commerce offerings while maintaining a dominant presence in the physical retail market, attesting to its adaptability and foresight in an ever-evolving retail landscape.
Costco Wholesale: Membership-Only Success
Costco Wholesale exemplifies the success of the membership-only warehouse model, with a market capitalization of $215.55 billion. In 2020, the company reported worldwide retail sales of $121.22 billion, which saw a significant increase to $189.42 billion in 2021. Notably, 94.87% of Costco’s revenue came from offline sales, reaffirming the strength of its physical retail operations. The company’s business model thrives on bulk buying and lower overhead costs, translating into lower prices for consumers.
Founded in 1983 by James Sinegal and Jeffrey Brotman, Costco operates over 800 warehouses globally and has attracted more than 95 million members. Central to Costco’s appeal is its lucrative membership model, which not only drives customer loyalty but also ensures a steady stream of revenue. The company’s ability to maintain low prices through effective bulk purchasing, coupled with the extensive range of products available in its warehouses, has solidified its position as a leading retailer.
The Home Depot: Leader in Home Improvement
The Home Depot easily claims the title of the largest home improvement retailer in the US with a market capitalization of $291.48 billion. The company reported worldwide retail sales of $121.26 billion in 2020, which surged to $149.41 billion in 2021. A significant portion, precisely 86.3%, of its sales in 2021 were from offline stores, showcasing the importance of physical retail in its operations.
Founded in 1978 and headquartered in Atlanta, GA, The Home Depot operates over 2,200 stores across the nation. The retailer’s extensive product range is crafted to meet the needs of both DIY enthusiasts and professional contractors, offering building materials, tools, home decor, and more. The Home Depot’s commitment to providing high-quality products at competitive prices, combined with excellent customer service, has fortified its position as an indispensable player in the home improvement sector.
The Kroger Co.: Supermarket Giant
Kroger stands as one of the largest supermarket chains in the United States, operating over 2,700 stores across 35 states. With a market capitalization of $33.81 billion, the company reported worldwide retail sales of $131.57 billion in 2020, which increased to $136.49 billion in 2021. A substantial 90% of these sales were derived from offline stores, underscoring the critical role of physical retail in Kroger’s business model.
Headquartered in Cincinnati, OH, Kroger offers a diverse range of products, including fresh produce, meat, dairy, household items, and pharmaceuticals. Its own brand lines, such as Simple Truth and Private Selection, alongside services including online ordering and delivery, make Kroger a key destination for grocery shopping. The company’s extensive network of stores and commitment to providing a wide variety of quality products further cement its status as a leading supermarket chain.
Walgreens Boots Alliance: Leading Drugstore Chain
Formed by the merger of Walgreens Co. and Alliance Boots GmbH in 2014, Walgreens Boots Alliance is esteemed as the largest drugstore chain in the US. The company boasts a market capitalization of $28.75 billion and reported worldwide retail sales of $104.70 billion in 2020, which rose to $121.2 billion in 2021. An impressive 98.2% of these sales came from offline retail, showcasing the critical role of its physical stores.
Operating over 8,200 stores across all 50 states, Walgreens Boots Alliance offers a vast assortment of products, from prescription medications to health supplements and beauty products. The company’s global presence extends to over 25 countries, where it continues to provide affordable healthcare solutions. Walgreens Boots Alliance’s steadfast dedication to health and wellness, coupled with its extensive retail network, underscores its position as a foremost drugstore chain.
Traditional Retail’s Resilience
Despite predictions of their decline, brick-and-mortar retail stores continue to flourish in the United States. Physical storefronts are still responsible for a significant 85.2% of annual retail sales in the country, whereas online sales account for 14.8% as of 2022. This reflects a modest 1.1 percentage point increase in online sales compared to the previous year, 2021. The ongoing relevance and success of these physical stores highlight the enduring appeal of in-person shopping. Many shoppers prefer the tangible experience of examining products firsthand, enjoying the immediacy and social interaction that online shopping lacks. Moreover, traditional retailers have demonstrated resilience and adaptability by embracing and integrating new technologies, such as in-store kiosks, augmented reality, and other digital enhancements to improve customer experience. Thus, the robust performance of brick-and-mortar stores underscores their vital role within the retail landscape, proving that they are far from becoming obsolete.
