Each year, Kantar Research publishes a list of the 100 “hottest” operators in the retail market. Judging from the entries in the latest list, several traits are common to many of those retailers that are burning up the scene today.
In particular, the hottest retailers appear to have found a way to appeal to targeted, specific customer niches—regardless of which niche that is. For example, Ascena Retailing Group (#3 on the list) maintains a stable of closely targeted brands: Justice for tweens; Lane Bryant for all plus-sized women and Catherine’s for plus-sized women older than 45 years of age; Dress Barn for mature shoppers; and fashion-forward Maurice’s for 17- to 34-year-old consumers. Under Armour (#7) has consistently focused on offering high-tech, innovative sports apparel; as it seeks to grow, its new product lines of shoes and fashion apparel will appeal to the same market of fashion-forward weekend athletes.
Accordingly, focusing on a particular target market does not necessarily mean limiting growth, as trends in the grocery segment reveal. For example, the New York–based H Mart chain (#13) initially catered to Korean customers in Queens. Now its Asian grocery products are available in stores all along the East Coast, selected Midwestern sites, and newly opening West Coast stores. In first position in the hot retailers list, Albertsons is a vast conglomerate, but it achieved this status by experimenting with several versions first. Once a monolithic operation, Alberstons sold off several pieces of its portfolio about a decade ago. It was able to reassemble many of these elements based on the winning formula it recognized: share costs across the parent company, but encourage localization, even at the individual store offer, to appeal to customers.
Even industry-specific trends seem to reflect this focus on targeting. The housewares sector has grown significantly, hosting both the second (Wayfair) and the fourth (Conn) hottest retailers on the list. Their success appears due to a few factors. The improving economy has led many homeowners to exhibit a greater willingness to spend more money on decorating and furnishing their homes. For Wayfair, the continued spread of e-commerce also has been a boon, benefitting its various online iterations, such as Wayfair.com, the lifestyle site DwellStudio.com, and its flash sale site Joss&Main.com. Finally, as some larger, less differentiated retailers such as JCPenney and Sears have reduced their houseware lines, these specialty retailers have swooped in to grab market share from customers looking for particular, differentiated, unique accessories for their homes.
Discussion Question:
What are some of the “hot” retailers, and what makes them so?
Source: David P. Schultz, Stores, August 1, 2014