2021 Hot 25 Retailers

It’s true: For some, 2020 was a decidedly good year. That’s especially the case for smaller startups and companies with venture capital funding that were able to break through with explosive expansion.

But considering the year everyone else had, would it be a surprise that Wine.com might top the list of U.S. sales growth?

“Wine, generally speaking, is an emotional purchase,” says David Marcotte, senior vice president for Kantar. “People want to look at it, engage with it or collect it.”

The pandemic, however, shifted that dynamic and strengthened the demand for buying it online. The result: Wine.com saw 99.4 percent U.S. sales growth, with $329 million in 2020 sales nationwide, up from $165 million in 2019. The company — with backers such as Goldman Sachs Asset Management’s private-credit group and Baker Capital — claimed the leading spot on a list of 25 retailers with the most significant U.S. growth compiled by Kantar.

NRF’s annual Top 100 list is based on sales rankings; there’s also a list of segment Power Players, those with U.S. sales equal to or greater than 10 percent of the sales of the category leader. But the top 25 in growth looks solely at sales increases versus 2019.

Behind Wine.com, then, is Overstock.com, with 74.7 percent U.S. sales growth, followed by online fashion retailer Boohoo Group in third place with 60 percent growth. Overstock saw $2.55 billion in sales in 2020, up from $1.459 billion in 2019, while Boohoo saw $308 million in 2020, up from $192 million in 2019.

Growth in home and pets

Amazon.com came in at seventh place with 33.7 percent U.S. sales growth. It is, Marcotte says, “an extraordinarily large company, and the percentage of increase was impressive in that context.” Amazon saw U.S. sales of $187.3 billion in 2020, up from $140 billion in 2019; its already-present membership base and reputation for having whatever might be needed certainly helped.

Also impressive to Marcotte, however, was the progress of home improvement companies such as Ace Hardware (No. 14, at 25.5 percent U.S. sales growth), Lowe’s (No. 15, at 23.8 percent) and The Home Depot (No. 18, at 21.3 percent).

Then there’s Tractor Supply Co. (No. 12, at 26.8 percent growth), with roughly half of its sales in pet and animal categories.

“In retrospect, those were all areas of very strong growth last year,” Marcotte says. “But going into the year? I would not have predicted any one of those to be above, say, 5 or 6 percent growth.”

With home supply stores, “You have a significant investment into the home, which started during this event, and then you have this surge into home ownership,” he says. “If you’re spending the money to buy a house right now, you want to fix it up. You’re just emotionally more engaged with it. So, there’s a long-term effect to home improvement.”

As for Tractor Supply, the pet category “clearly exploded during 2020. But Tractor Supply creates an interesting hybrid,” Marcotte says.

“Everybody talks about cats and dogs, but horse ownership went up, too. I live in horse country, so we pay attention to this. But they also do home and garden. They do outdoors. Their motto is, ‘For Life Out Here.’ That was a lot about what 2020 was. And as people moved further into it, their strategy of moving into the suburbs, to go for smaller farms, ranches, but also to get into a different kind of pet market, has been extremely successful. I don’t see that changing in the near term.”

Growth in the pet category isn’t likely to shift, either. “Years ago, somebody told me that the difference between pets and babies was that ‘babies’ are only babies for about four years,” he says. As they get older, “You don’t spend on them the same way. But pets are forever. Ten, 12, 15 years, and they may die, and then you get another one. Once you get people owning pets, it’s hard to break.”

The physical/digital relationship

Changing consumer demand influenced many companies on the list, including smaller ones like Boohoo that were able to find new ways to cut through the noise. “Billboards don’t work really good when everybody is in lockdown,” Marcotte says. “But social media does.” During the pandemic, people didn’t have alternatives to discourage them.

Five years ago, NRF’s list of top 100 fastest-growing retailers saw Blue Apron, Wayfair and Ascena Retail Group in the leading three spots. (Of them, only Wayfair is on this year’s list, coming in at No. 4, with 54.6 percent U.S. sales growth.) Back then, it was said that the secret to sustained growth going forward was “a symbiotic relationship between digital and physical retailing.”

“I don’t think that’s changed too much,” Marcotte says. “I think, actually, the secret going into 2021-22 is having a profitable mix of digital and physical. Last year, you could do anything you wanted to. As long as you were able to get product to a shopper, you could make money. As we get more and more competitive pressure coming to be, and shoppers get more price sensitive, then you have to start looking at profitability more intensely.” And that, he says, is already becoming apparent.

“You know, everybody wants free home delivery, but that’s an extraordinarily expensive thing to do. So, should I use financial incentives to steer them to the store to pick it up? Should I make sure they understand the actual cost of delivery to the home? If people are willing to pay it, by all means, I’m willing to go there. But if not, maybe I need to explore that side of it,” he says.

“That doesn’t mean I drop digital. I don’t drop ecommerce. It just means I need to address how to actually have it make money.”

Expansion and differentiation

Pure and simple, Marcotte says, “2020 is an outlier year. And as a retailer, I’m going to look at that, and say, ‘There are some elements of the different dotcoms that exploded that maybe I should look at. Maybe I should expand my offerings to reflect that better.’”

Recently, while in a home improvement store, Marcotte found it interesting how it was “covered in household detergents and displays”. Manufacturers of those products are investing heavily, he says, “because they feel like people will be there anyway, and it’s a pretty good place to buy household goods.” 

Retailers are currently considering which channels to “nudge into,” he says, for expansion and differentiation.

That said, all of the companies on the list have a strong brand identity. Consider, for example, 1-800-Flowers.com, Inc., Boxed.com, Dollar General, Lululemon and Ollie’s Bargain Outlet.

“I’m not sure I would say that’s a surprise, but it is something that stands out,” Marcotte says. “They went into 2020 with a strong identification already. From there, their growth built out very quickly. For the most part, these companies did not need to build new capabilities to grow in 2020... . They came into the year with the right tools. And that worked out for them pretty good.”

The Kantar-NRF U.S. Hot 25 list is the annual ranking of the nation’s most impactful and fastest-growing retail companies. Rankings are determined by year-over-year percentage increases in domestic sales. The focus on growth rate highlights hot, growing, companies without being overpowered by the largest retailers in the United States. Retailer sales and growth figures are based on Kantar’s Retail IQ integrated research methodology. Kantar estimates sales of privately held companies, franchise sales and domestic sales when the figures are not self-reported. This removes the impact of the companies’ investments in international operations from the growth rankings to give a true perspective on the situation in the U.S. retail market. To learn more about Kantar’s research and reporting methodology, visit https://retailiq.kantar.com/.