A Goldman Sachs chart I saw recently, a 10-year progression of the world’s 10 biggest companies, seems a perfect at-a-glance picture of how the retail world, as we always knew it, has been turned on its head.
In 2005, Walmart was the fifth-largest company in the world, nestled among a bunch of manufacturers, financial services firms and oil-and-gas companies. It was by far the biggest retailer in the world.
Analysts marveled at its decades-long offensive strategy of destroying the competition by anticipating and grabbing the best outlying locations, creating a pricing strategy that was impossible to beat, leveraging its suppliers and creating an astounding distribution system to keep its monstrous superstores filled with merchandise.
Everyone else played defense. Not Walmart.
For the following six years, Walmart toggled between fifth and sixth on the Goldman Sachs chart, inexplicably dropping off the list in 2007 and 2008, but back to the number five spot in 2009 – perhaps the growing recession was driving shoppers back into its warm, Everyday-Low-Prices embrace. That same year, Apple made its first appearance, toward the bottom of the list.
By 2010, Apple had surged to third. The following year, it gained the top spot, and has held it ever since.
Walmart was off the list in 2011, showing up again in 2012 (ninth), and held eighth in 2013 and 2014.
Which brings us to 2015, the final column in this Goldman Sachs table. Apple is still first; Walmart has dropped off the list again; and – in its very first appearance on the list – Amazon sits at number six.
Also in the top 10 are Alphabet Inc. (second), the new parent company of Google and its various subsidiaries; Microsoft Corp. (third); and Facebook (seventh).
If anyone needs an objective reminder of how the digital service sector has taken over the world, this is it.
And what about Walmart? It’s not that failure to appear on a list of the 10 largest companies in the world means disaster for the world’s biggest retailer. Walmart is still nearly a half-trillion-dollar company.
But the reversal between Walmart and Amazon is yet another dramatic example of what’s happening to retail. Amazon has been nimble, risk-taking and smart, anticipating by more than a decade the shift from the Internet as an information source to an interactive commercial medium.
Walmart has tried to play the Amazon game, venturing internationally, building up its online presence, concentrating on getting product into consumers’ hands efficiently. But, make no mistake, it is “the Amazon game.”
And the emergence of Apple is another canary in the coal mine for Walmart. Walmart’s strength had been, in large part, its safe, unexciting, everything-for-everyone approach to merchandising. Apple shows that there’s still a place for focus, creativity and creating product and a shopping environment that stirs aspiration and imagination.
The world doesn’t always spin fast – but it never stops turning.
As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20 years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.