2023 Hot 25 Retailers

NRF’s annual look at the fastest-growing U.S. retailers
Sandy Smith
NRF Contributor

It’s somewhat fitting that as NRF’s Hot 25 Retailers was being finalized, the United States was experiencing record-setting heat.

But in their own way, the Hot 25 were more like summer days dotted by a cool breeze. There’s nothing scorching here. Consider this: In 2022, all 25 retailers on the list saw sales growth above 25%. Harbor Freight Tools, which was the hottest of the hot in 2022, saw growth above 93%.

2023 Hot 25 Retailers List

NRF's Hot 25 Retailers ranks the nation’s fastest-growing retail companies.

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In 2023, only the top six saw growth above 25%. That doesn’t diminish Chedraui’s staggering 137% growth, thanks largely to its acquisition of Smart & Final stores. Nor does it diminish Harbor Freight Tools, which again made a Hot 25 appearance after nearly doubling in 2022 and adding another 13% growth for 2023’s list.

About half of the players were repeat Hot Retailers, and many of the trends are the same as shown in NRF’s 2023 Top 100 Retailers. In some ways, those trends are even more pronounced here.

David Marcotte, Kantar senior vice president, dissects some of what he’s seeing as a result.

Growth = M&A

The pandemic was stressful for many retailers, a time which “was the best and worst for all retail,” Marcotte says. Now that we’re largely past the pandemic, signs of stress are starting to show. For many retailers — particularly in segments like grocery — it has shown up through mergers and acquisitions.

Mexican grocer Chedraui wasn’t the only grocer in a buying mood. Raley’s, which had 100 grocery stores mostly in Northern California and Nevada, moved into Arizona, New Mexico and four Tribal Nations in a merger with Bashas’ Family of Stores at the end of 2021. That was enough to land the combined grocer at No. 2 on the Hot 25, with 74% growth.

Superior Grocers, a Southern California grocer, added 22 Numero Uno stores. The Hispanic grocery stores pushed Superior to No. 6 on the list, with 30% growth. 7-Eleven digested its mid-2021 acquisition of Speedway, which pushed it to nearly 14,000 stores and a 30% growth rate, landing the company at No. 5.

Starting to notice a theme? Many of the biggest movers on the Hot 25 have food as a significant aspect of their wares, whether grocer, convenience or warehouse store. If wine is added to the mix, fully half of the Hot 25 are in the food and wine categories.

“If you look at the growth in grocery, it’s almost all M&A,” Marcotte says. “That both shows the strength of the sector and some of the stress.”

With the rapid growth of retail media — particularly strong in grocery — those companies that were able to “invest heavily” in this area were able to drive up revenues. “Retail media, with its ability to connect with shoppers on all levels, is very profitable and can add up to 2% of your operating margin,” Marcotte says.

“But — and the but is a big one — it takes a lot of investment. If you’re not a big player, that plays out. That’s one of the things driving this activity.”

Not all are growing through mergers or acquisitions. Grocery Outlet (No. 13), Publix (No. 18), Schnucks (No. 21) and H.E. Butt Grocery (No. 25) have grown largely by slowly expanding their strong regional footprints and adding services like delivery. The same can be said for warehouse stores BJ’s Wholesale Club, which ranked No. 7 on the list, with almost 23% growth, and Costco, No. 12 with 17% growth. Total Wine & More (No. 15) also has seen significant organic growth as well.

Grocery may be the canary in the mergers and acquisition coal mine, Marcotte believes. “It’s clear that companies that are making moves are igniting some of their growth.” He anticipates more M&A in 2023.



Ecommerce on the list

Chewy.com stands in opposition of two trends around the Hot 25: M&A and fewer online-only players on the Hot 25. Petsmart spun Chewy.com off in early 2021, but Chewy continued to grow, seeing a nearly 14% increase to land it at No. 19 on the Hot 25.

Chewy and Wine.com (No. 17) are the only pure-play ecommerce retailers to make the Hot 25 this year. That’s somewhat consistent with last year’s list, which saw the online wine delivery service as the sole ecommerce representative.

Chewy stands out for another reason, though: “Chewy has done a superior job of connecting with shoppers on a very emotional basis,” Marcotte says.

“Pets are very emotional, and they are able to tap into that, while at the same time being able to build a subscription base for predictability. They’ve had some issues of margin, but growth isn’t the issue. The main competitors … have not been able to gain that emotional engagement. If you look at their marketing, direct mail, communication that comes with the deliveries, it’s all emotional.”

Home is where the growth is

Unsurprisingly, the home sector saw tremendous growth during the pandemic when we were all trapped in our homes and noticing lengthening to-do lists.

Last year’s hottest, Harbor Freight, remains on the list (No. 22) and is joined by paint-centric retailer Sherwin-Williams (No. 23). Both succeed by balancing customer bases of avid do-it-yourselfers and contractor accounts.

“Harbor Freight sees opportunistic buying from pros and Sherwin-Williams has significant corporate accounts with corporate builders,” Marcotte says. “That’s powering a lot of their numbers.”

Adding to the interest in improving our domiciles: Leslie’s Poolmart, which came in at No. 20 with nearly 14% growth.

Laughing in the face of recession

Even as there is discussion of a recession and inflation continues to bite budgets, there were those who had money to spend — and luxury retailers showed it. Tiffany & Company, the 186-year-old retailer, makes an appearance on the list, coming in at No. 16 with 14% growth.

“We’ve seen this before,” Marcotte says. “People with money went to retailers that were happy to take their money. It’s not as drastic as it was in 2009 and 2010, but young people with disposable income are interested in getting quality goods. Last year, some of these retailers were successful because their inventory was never at risk. They had product to sell.”

With so many obstacles in 2022 — including that difficulty in acquiring product — it’s clear that retailers that made the Hot 25 were successful in part because of luck and in part because of smart business strategy.

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