Retailer Secrets of Revenue Growth
Whether you strive to win a sport championship, a music competition, or a spelling bee, winning requires you to do the same thing: You must out-perform your rivals. Moving up in the annual list of the Top 100 Retailers by revenue share is no different. Yet finding ways to out-maneuver competitors in the retail world requires more than just great products, it requires innovation.
What’s the secret to growing revenue in 2022 and beyond? The rules of competition keep changing in retail. If you’re not a rule-maker, that means you’re a rule-taker. The best way to change the retail game is to change the rules in your favor. Rule-makers innovate faster, better, and in different ways to out-smart and out-execute their rivals. By innovating beyond just products, rule-makers redefine the customer experience by discovering unmet customer needs and fulfilling them before others even see them.
To dig into how retailers achieve revenue growth through rule-making, we re-ranked the RIS Top 100 Retailers by their ability to meet customer expectations. To measure expectations, we use online interviews with customers to score how well each company performs against their functional and emotional needs. These needs are grouped together to form moats, which is what companies build to protect rivals from taking their customers away. Warren Buffett says he won’t invest in a company that doesn’t have an economic moat. And the precursor to an economic moat is a customer moat.
Here are the top ten retailers ranked by their Moat Score (ability to meet customer expectations).
Four of the top ten retailers also rank high by revenue share (retailers in green). That shouldn’t surprise any of us, since any company that meets customer expectations better than its rivals logically generates more revenue. In fact, the top 20 companies best meeting customer expectations (high moat score) on average increased their revenue share ranking by ~2.5 slots. In comparison, that’s five times greater than any other quintile in the top 100. Top-line growth comes from figuring out how to create a new set of rules that force your rivals to follow.
In addition to returning to revenue growth throughout 2021, Starbucks improved their ranking four spots in the Top 100 Retailers Revenue Share from #23 in 2021 to #19 in 2022. No small feat during a pandemic.
To see the full Top 100 Retailers by customer expectations (Moat Scores), click here [free registration required].
To receive notification when we post a new W Report on a company, sign up for free access here.
Gary A. Williams is the founder and CEO of wRatings and a co-managing partner at G2 Equity Partners.