What Is Big-Box Retailer?
A big-box retailer is a retail store that occupies an enormous amount of physical space and offers a variety of products to its customers. These stores achieve economies of scale by focusing on large sales volumes. Because volume is high, the profit margin for each product can be lowered, which results in very competitively priced goods.The term "big-box" is derived from the store's physical appearance.
Key Takeaways
- A big-box retailer is a store that occupies a large physical footprint while offering a wide variety of products to its customers, often in bulk.
- Designed to be a one-stop-shop for customers, big-box stores can offer great convenience and value.
- Some criticize big-box stores for displacing smaller mom-and-pop shops and aggressive pricing practices when dealing with vendors and suppliers.
- A big box store's customer service typically pales in comparison to smaller, local businesses.
Understanding Big-Box Retailer
Located in large-scale buildings of more than 50,000 square feet, the store is usually plainly designed and often resembles a large box. Walmart, Home Depot, and Ikea are examples of big-box retailers. Warehouse clubs such as Costco and BJs are the original kind of big-box retailers.
Big box stores offer consumers many benefits, such as low prices, variety, and convenience. However, they often do so at the expense of smaller, local competitors, who find it difficult to compete with behemoth budgets and economies of scale. With the increasing attractiveness of online shopping, box stores face special challenges on how to increase revenues and what to do with their physical facilities.
Big-box retailers are meant to be a one-stop-shop for customers. In Walmart, a customer can find every consumer good from groceries to clothing to technology. Walmart has one of the broadest product mixes of the big-box retailers. Home Depot and Ikea are more focused versions of the same concept. Home Depot carries everything for the DIYer (do-it-yourself) and Ikea does furniture and home décor on a scale that is unprecedented. These and other similar retailers claim to offer great value and selection for a low price, which is what most consumers are looking for.
The success of big-box retailers has segmented retail as a whole. There are big-box stores, and there are niche or bespoke retailers often focused on a few high-end product lines big-box retailers don't bother with. Anything in the middle is squeezed whenever a big-box retailer comes to town.
29.1%
The percent of U.S. retail sales accounted for by 6 big box stores as of 2020.
Big-Box Stores Vs. Small Retailers
The original big-box stores like BJ's, Costco, and Sam's Club lure customers with the promise of saving by buying in bulk. But do they really pay off for the average consumer, or can you get better deals by shopping at smaller retail stores and local shops? Is shopping big worth it for you? Here are five pros and cons to consider.
- Price: this is the biggest factor most of us consider when choosing where to shop. Big-box stores offer their most attractive discounts onbig-ticket items, undercutting specialty stores and smaller retailers. So yes, you can save hundreds of dollars on electronics, appliances, and other major purchases. But not everything inbig-box storescarries a deep discount or is even better priced than the local supermarket, butcher, or clothing store. Once they have you in the store, they're counting on you to purchase other items that aren't deeply discounted and that you might not even need. When you're in a big-box store, your best bet is to buy what you came for and avoid browsing around. Check out the weekly specials in your neighborhood market or discount store and collect their coupons. You may find you'll get a better deal on some items.
- Quantity: Big-box stores typically carry items in extra-large sizes. Real bargains can be had by purchasing bulk non-perishable items like paper goods. Food items with a long shelf life such as soda, canned goods, or jumbo bags of frozen chicken wings are usually well priced. That works for large families, but it might not be worth it for singles or small families. And it doesn't often work well at all for people who live in small spaces with limited storage.
- Membership Fees: Warehouse clubs charge yearly membership fees, usually $60 to $100 a year. That fee gets you in the door. If you have a large family and shop frequently, the money you save over the course of a year should easily cover the cost of the membership fee. If you don't frequent the store, your fee may not be recouped, and you're better off shopping at smaller retailers and local markets.
- The Shopping Experience: Big-box stores attract big crowds, which can mean long checkout lines and mobbed parking lots. Sometimes fighting the crowds is worth it. If it weren't, retailers wouldn't be able to count onBlack Fridaysales to get them through the fourthquarter. But sometimes the struggle isn't worth it, not to mention the time and stress.
- Customer Service: When it comes to customer interaction, big-box stores are very different from your typical Main Street shop. Some big-box stores don't spend much on customer service. The few employees on the floor are kept busy re-stocking the shelves. For that matter, their customers typically aren't so much interested in chatting with the sales associates as they are in making their purchases. If you're confident being on your own, the big-box store is the place for you. Some shoppers like the personal attention and expert assistance that mom-and-pop stores and specialty shops can offer.
Big-Box Retailer Downside
Big box retailers tend to have a negative reputation for two main reasons—one earned and one that is debatable.
- When it comes to dealing with suppliers, big-box retailers are seen as bullies. The volume of purchasing done to fill the shelves at a network of big-box retailers is enormous. This type of scale tends to force any small supplier into exclusively supplying to the big-box retail chain, which opens them up to risk in that 100% of their revenue comes from one company. When you have one customer, it is hard to push back on pricing squeezes when they know dropping you from their product lines hurts you far more than them.
- When big-box retailers move into an area, it is often met by concern from local businesses that can't compete with the vast logistics advantage and purchasing power for lower pricing. Other businesses in the area start to fail because the customers go to the local big-box retailer rather than the local store. In reality, it is the customers that are killing the other businesses because they quite reasonably want to get the best value for their dollars.
Interestingly enough, big-box retailers are experiencing a unique challenge as more of people's shopping dollars are moving from physical stores to online shopping.
Big-Box Example: Walmart
Based out of Rogers, AR, Walmart, Inc. (WMT) operates over 10,500 retail stores in 25 countries and online. Known for its pricing strategy "Every Day Low Price," Walmart aims to provide its customers the convenience of one-stop shopping for low-cost products and services.
Walmart operates three segments of retail establishments: Sam's Club, Walmart International, and Walmart U.S. In the U.S., Walmart operates under three different formats: the Supercenter, Neighborhood Market, and Discount Store.
In the U.S. segment, the Supercenters have the largest footprint (average 182,000 square feet) and offer the most products and services—from groceries to clothing. The Discount Store is the next largest facility (average 106,000 square feet), offering most of what the Supercenter offers, excluding groceries and automotive care. Neighborhood Walmart is the chain's grocery retail option, with the average store measuring 38,000 square feet. The smallest of Walmart's stores, it offers customers pharmacy services, groceries, and other household items.
Walmart's membership-only retail warehouse, Sam's Club, allows its members to purchase products in bulk and enjoy exclusive benefits. Walmart International includes more than than 5,900 retail stores in 25 countries. Much like its U.S. operations, it operates under different formats, such as supercenters and warehouse clubs.
For 2021, Walmart earned $559.2 billion in revenues, a 6.7% increase from 2020. It reported $22.55 billion in operating income, a 9.6% increase from 2020. The increase in revenues stemmed largely from an increase in consumer demand due to the economic crisis and lockdown.
Big-Box Example: Home Depot
Founded in 1978 as a simple hardware store, The Home Depot, Inc. (HD) is one of the world's largest home improvement retailers, with more than 2,200 stores in the U.S, Mexico, and Canada. The typical Home Depot store has approximately 105,000 square feet of indoor retail space and more than 35,000 products available for purchase. Its e-commerce platform features more than 1 million products for purchase.
Home Depot offers products for the do-it-yourself shopper and the home improvement professional. In addition to products, they also provide services, such as installation and repair.
In 2020, Home Depot earned $132.1 billion in revenues, a 19.85% increase from 2019. Its operating income for 2020 was $18.23 billion, a 15.4% increase from 2019. More than 14% of net sales were from online sales, which saw an 86% increase in 2020. This increase was largely due to the lockdown driving customers to alternative shopping methods.
What Does Big Box Mean?
A big box store is a physically large retail store that sells a variety of products to consumers. Many big box stores exist as chains, with locations in various areas.
What Stores Are Considered Big Box Stores?
Examples of big box stores include Walmart, Target, Home Depot, and Lowe's. Each of these retailers has large physical locations and offers a wide selection of products and services for purchase.
Is Costco a Big Box Store?
Costco is a membership-only retail warehouse, with facilities ranging in size from 80,000 square feet to 230,000 square feet. Like Walmart's Sam's Club, Costco is stocked with thousands of various products, from tires to food. It employs more than 275,000 employees and has more than 800 stores worldwide.
Are Big Box Stores Worth It?
Big box stores generally offer lower prices and a wider selection of products than their smaller counterparts. Alternatively, they often dominate the market, making it difficult for small businesses to thrive.
Big box stores' customer service pales in comparison to that of small businesses. Also, not every advertised deal is worth the purchase. For example, a big-box retailer may advertise a low price for bulk orders; however, if you do not need or cannot use all of the product, it becomes a waste of product and money.
Are Big Box Stores Good or Bad for Small Communities?
Critics of big box stores argue that these giants deplete natural resources and eliminate open space, traditionally used for farming and wildlife. When big-box companies enter small communities, they often do so to the detriment of the small business. Small businesses, with their limited budgets, are no match for big box stores that have more room to negotiate with suppliers and offer more products at lower prices.
Alternatively, big box stores can provide small communities with additional jobs, boosting their economy and improving citizens' standards of living. They can also provide products and services not ordinarily accessible from existing establishments.
FAQs
Examples of big box stores include Walmart, Target, Home Depot, and Lowe's. Each of these retailers has large physical locations and offers a wide selection of products and services for purchase.
What is an example of a big-box retail store? ›
Examples of big box stores include Walmart, Target, Home Depot, and Lowe's. Each of these retailers has large physical locations and offers a wide selection of products and services for purchase.
What is the difference between a big and small retailer? ›
One of the biggest differences between big box stores and small, local businesses is that big box stores are built on a business model that requires them to order large quantities of every product they carry.
Is Costco a big-box store? ›
Warehouse club stores are another category of big-box general merchandise stores, such as Sam's Club, Costco, and BJ's Wholesale Club. They require membership to purchase and often require purchasing larger quantities of goods at once.
What is the difference between big-box and small box? ›
The expression "small-box retailer" contrasts with the more often used "big-box retailer." A small-box retailer operates a retail business out of a small storefront, whereas a big-box retailer sells more product under one roof in a larger retail facility.
Is Target a big-box? ›
Target Is a Standout Among Big-Box Retailers.
What makes a big-box store? ›
A big box store is a very large Brick and mortar retail location which sells a variety of merchandise, usually at a low price. Big box stores are also sometimes referred to as superstores or supercenters. Big box stores are often arranged into departments, due to a large amount of merchandise sold there.
Is Walmart a big retailer? ›
Retail companies sell a huge variety of products and services to consumers. They conduct their sales at brick-and-mortar locations and/or online. Retail sales are part of consumer spending. The biggest retail company, with TTM revenue of $600.1 billion, is Walmart.
Is Amazon a bigger retailer than Walmart? ›
Amazon.com, Inc. (NASDAQ:AMZN) and Walmart Inc. (NYSE:WMT) are the two largest retailers in the world by Market Cap. On a strictly retail revenue basis, Walmart is much bigger than Amazon with retail revenue of $600 billion versus AMZN's $280 billion.
Is Amazon a large retailer? ›
Key Takeaways
Amazon is the world's largest online retailer and is rapidly growing its footprint in other areas such as physical retail stores, subscription services, and web services. Amazon's retail store rivals include Target, Walmart, Best Buy, and Costco.
Home Depot stores are also large-format and are categorized into departments and categories. The retailer aims to carry all the relevant products related to the specialty they specialize in, which is home improvement. Other Examples of Big box retailers include IKEA, Target, Costco, Best Buy and Kohl's.
What type of store is Walmart? ›
Walmart began building Supercenters in 1988 and are around 182,000 square feet employing about 300 associates. Walmart Supercenters offer a one-stop shopping experience by combining a grocery store with fresh produce, bakery, deli and dairy products with electronics, apparel, toys and home furnishings.
What type of retailer is target considered to be? ›
Target is a general merchandise retailer with stores in all 50 U.S. states and the District of Columbia. Our tagline is "Expect More. Pay Less." We've been using it since 1994!
What is a small vs medium vs large box? ›
Standard box sizes
Small — Measure around 16" x 12" x 12". These are ideal for packing things like books, CDs and DVDs, and kitchen gadgets. Medium — Measure around 18" x 16" x 18" and are great for things like towels and decorative items. Large — Measure around 18" x 18" x 24.
What size is a large box at Lowes? ›
Lowe's 24-in W x 18-in H x 18-in D Classic Large Cardboard Moving Box with Handle Holes.
What is an advantage of a big-box retailer? ›
Big-box stores offer their most attractive discounts on big-ticket items, undercutting specialty stores and smaller retailers on price. So yes, you can often save hundreds of dollars on electronics, appliances, and other major purchases if you shop at a big-box retailer.
What are big box retailers otherwise known as? ›
A big-box store (also supercenter, superstore, or megastore) is a physically large retail establishment, usually part of a chain of stores.
What makes Target different from Walmart? ›
Walmart controls supercenters sometimes over 180,000 square feet, aiming to offer the lowest price possible. Target runs large stores as well, but they are more focused on profit margins through the supply chain, which is why they are able to post lower revenues but higher profit margins.
What are the sizes of big-box? ›
Each Big Box measures 8' x 5' x 7' (L x W x H exterior) and can typically hold up to one and a half rooms of contents. Should you need additional space, multiple Big Boxes can always be delivered.
What defines a box store? ›
a retail store that sells a limited assortment of basic grocery items, often, as at a warehouse, displayed in their original cartons in order to lower costs and prices.
What is Retail Packaging? Retail Packaging is a custom designed package for a product. It incorporates your business's logo, brand colors, copy, and message on the outside (and inside) of the box. This helps your brand stand out in stores and encourages brand loyalty for customers.
Who is the biggest retailer? ›
What type of retailer is Amazon? ›
Amazon.com, online retailer, manufacturer of electronic book readers, and Web services provider that became the iconic example of electronic commerce.
What is the largest store in the United States? ›
Macy's Herald Square is the largest department store in the US, with 1.25 million square feet of retail space across 12 floors.
When did Walmart become the largest retailer? ›
By 1990, Walmart is the nation's No. 1 retailer. As the Walmart Supercenter redefines convenience and one-stop shopping, Everyday Low Prices goes international.
Why is Walmart the largest retailer? ›
Focus on providing value to customers
Walmart has always focused on providing value to its customers by offering low prices and a wide variety of products. This has helped it to become the largest retail giant in the world.
Who was the biggest retailer before Walmart? ›
For a stunning four-decade stretch, A&P (as it is popularly known) would hold its distinction as the nation's largest purveyor of goods. It started to founder only in the 1960s after the two brothers who guided it all those years died and their successors strayed from the company's low-price formula.
Who is the single largest retailer of its kind in the United States? ›
This ranking depicts the leading 100 American retailers in 2021, based on U.S. retail sales. Once again, Walmart was the leading American retailer. That year, the company accounted for retail sales of about 460 billion U.S. dollars. Walmart was founded by Samuel Moore Walton (1918-1992) in 1962.
What is an example of a retailer? ›
Examples of retailers include supermarkets, department stores, specialty stores, convenience stores, and online stores.
What retailer has the most stores in the US? ›
Dollar General operates the most stores in the United States, with 17,348 currently in operation.
Smaller store locations means lower rents, fewer employees, and less inventory-on-hand – overall it means lower overhead. With the right mix of product in-store, a smaller format store can often mean a more efficient sales strategy.
Is Kmart a big box store? ›
Kmart Corporation (/ˈkeɪmɑːrt/ KAY-mart, doing business as Kmart and stylized as kmart) is an American retail company that owns a chain of big box department stores. The company is headquartered in Hoffman Estates, Illinois, United States.
Why are big box stores able to sell goods at prices so low that other smaller stores Cannot compete with them? ›
Highlight Your Value (Instead of Your Prices)
Large scale retailers can charge lower prices for their goods because they can buy their products in bulk from wholesalers. It's difficult for smaller shops to compete with a big box store's price points — so you shouldn't try.
What are small stores called? ›
boutique. noun. a small fashionable shop, especially one that sells clothes.
What type of store is Home Depot? ›
Today, The Home Depot is the world's largest home improvement retailer with approximately 500,000 orange-blooded associates and more than 2,300 stores in the U.S., Canada and Mexico.
What type of store is Tjmaxx considered to be? ›
TJ Maxx (stylized as T•J•maxx) is an American department store chain, selling at prices generally lower than other major similar stores. It has more than 1,000 stores in the United States, making it one of the largest clothing retailers in the country.
What type of retailer is Kohl's considered to be? ›
Kohl's (stylized in all caps) is an American department store retail chain, operated by Kohl's Corporation. As of December 2021 it is the largest department store chain in the United States, with 1,165 locations, operating stores in every U.S. state except Hawaii.
What type of retailer is Macys? ›
We are a modern department store, and through our celebrated nameplates Macy's, Bloomingdale's and Bluemercury, we help our customers express their unique style and celebrate special moments both big and small, wherever and however they shop.
What size is considered a small box? ›
Postal box - small size 12 x 7 x 4 cm.
What are the 3 dimensions of a box? ›
Measure a Box for Shipping FAQ
To calculate the size of a box, you need to measure the length, width, and height of the box. Multiply the three measurements together to get the volume of the box in cubic units.
Priority Mail® Medium Flat Rate Box
11 inches x 8½ inches x 5½ inches (top-loading) - Perfect for model cars, shoes, and taller items. 13⅝ inches x 11⅞ inches x 3⅜ inches (side-loading) - Ideal for garments, board games, books, and other relatively thin items.
What is considered a large box for UPS? ›
Large Package Surcharges
For domestic shipments, a package is considered a "Large Package" when its length (longest side of the package) plus girth [(2 x width) + (2 x height)] combined exceeds 130 inches or its length exceeds 96 inches.
How are box sizes listed? ›
When you tell us the dimensions of the box, they need to be in this order, Length x Width x Depth.
How big is a UPS large box? ›
UPS Express Box
Large pack : 18” x 13” x 3” (45.7 cm x 33.0 cm x 7.6 cm) and it can take up the weight of up to 30 lbs.
Is Costco considered a big-box store? ›
Warehouse club stores are another category of big-box general merchandise stores, such as Sam's Club, Costco, and BJ's Wholesale Club. They require membership to purchase and often require purchasing larger quantities of goods at once.
Which big-box store is best? ›
5 Big-Box Stores That Are Still Worth Shopping At
- Walmart. Walmart may not have always had the best reputation, but it's a store worth shopping at for many reasons. ...
- Target. Target is a close competitor to Walmart, but it's also worth a visit. ...
- Costco. Costco is beloved by customers for good reason. ...
- Lowe's. ...
- Big Lots.
a retail store that sells a limited assortment of basic grocery items, often, as at a warehouse, displayed in their original cartons in order to lower costs and prices.
Which type of shopping center is comprised of big box stores? ›
A power center is a large (250,000 to 750,000 square ft.) outdoor shopping mall that usually includes three or more "big box" stores.
What is the large retail store in us? ›
The biggest retail company, with TTM revenue of $600.1 billion, is Walmart.
What are small retail stores? ›
Small store means a retail or wholesale establishment that sells goods or provides services to consumers and occupies under four thousand square feet of retail or wholesale space, excluding storage space, and is not one of a chain of stores.
Yes Amazon is big but Walmart is bigger, twice the size. In 2019 Walmart generated $514 billion in revenue while Amazon generated $281 billion. If you take a closer look you will see that Amazon actually only holds an estimated 6% of the retail market in the United States.
Which type of shopping center is the smallest? ›
Neighborhood Center
A neighborhood center is your smallest kind of shopping center. Stores are centered around a supermarket, usually in a line or L-shape.
Why is it called a box store? ›
The physical appearance of the stores gave rise the term big-box since they are built like a box. These stores are set up in large buildings with more than 50,000 square feet of space and are often plainly designed. Examples include Walmart, Home Depot, Ikea and many others.
Is Kmart a big-box store? ›
Kmart Corporation (/ˈkeɪmɑːrt/ KAY-mart, doing business as Kmart and stylized as kmart) is an American retail company that owns a chain of big box department stores. The company is headquartered in Hoffman Estates, Illinois, United States.
What is the 3 box rule in retail? ›
The Rule of 3 explained
Call it the magic number of the retail industry: Displaying your products in sets of three will most effectively catch your customers' attention and ingrain the product in their minds. That's because three is a nice, small number that won't overload people's cognitive functioning.
What is a medium box store? ›
You might call them the the Goldilocks of retail. The medium-box store occupies a niche in between the big-box store and the high-end specialty store, often owned by a sole proprietor with deep knowledge and a broad selection of a fairly narrow product.
What does small box mean? ›
small box definition, small box meaning | English dictionary
1 comparatively little; limited in size, number, importance, etc. 2 of little importance or on a minor scale.
Who is a large retailer? ›
Large-scale retailers deal in a large stock of goods and purchase goods in bulk. They require huge investment. They are generally located at a central place or in shopping centers. A large number of customers visit these showrooms.
Is Costco the largest retailer? ›
Costco has 304,000 employees, with 203,000 of those working in the U.S. Costco generates $222.7 billion of revenue annually. Costco is the sixth-largest retailer in the world and the third-biggest in the US, behind Walmart and Amazon.
Is Target the largest retailer? ›
As of 2023, Target operates 1,948 stores throughout the United States, and is ranked No. 32 on the 2022 Fortune 500 list of the largest U.S. corporations by total revenue.
