The so-called retail apocalypse has caused all sort of havoc in 2017. Malls are struggling, stores are closing, and bankruptcies have been prevalent.
But just because the climate has been bad for some retailers, does not mean that every player in the space has struggled. In fact, 2017 was a year when the strong got stronger.
These three retail leaders not only had good years, they further entrenched their dominance going forward. That doesn't mean they can't be disrupted, but it does make it less likely. Each of these companies showed in 2017 that consumers still want to shop, they just want to do so on their own terms.
If you define the year with a theme of the strong getting stronger, then Amazon (NASDAQ:AMZN) is the key example. In 2017 the company not only purchased Whole Foods, giving it a high-end brick-and-mortar presence to bolster same-day delivery, it also established the Echo as the clear leader in the growing digital-assistant-powered home speaker space.
These two things, as well as the company's ever-growing base of Prime subscribers, continue to make the company the default shopping choice for more and more people. Why go the store or even another website when you can just say "Alexa, order paper towels and Oreo cookies."
Amazon has taken the work out of shopping while integrating itself into people's lives. That led to some stunning sales including $43.7 billion in Q3, a 34% increase over the same quarter last year. That includes $1.3 billion from Whole Foods, but even factoring that out, the company increased sales by 29%.
The warehouse club made some major changes in 2017 while keeping its core business exactly the same. Costco (NASDAQ:COST) added two delivery methods including same-day shipping via Instacart toward the end of its calendar year. It also spent much of 2017 evolving its website to make it more useful.
These changes have clearly worked out. In Q1 2018 e-commerce comparable-store sales rose by 42.1%. That number suggests that Costco has made the moves needed to entice some of its customers to shop digitally and its 10.5% comparable-store sales increase during the same period shows that effort has not hurt its warehouses.
Along with strong sales numbers, Costco continues to deliver when it comes to membership where it makes about 75% of its profits.
"Our membership renewal rates came in at 90% in the U.S. and Canada and 87.2% worldwide," CFO Richard Galanti said during the Q1 earnings call. "These are the same renewal percentage figures we had at the end of the previous fiscal quarter at Q4 of '17."
Those numbers are especially solid because the warehouse club raised its prices in June for the first time in about five years. Despite that, total households with memberships rose from 49.4 million at the end of Q4 to 49.9 million at the close of Q1. The company also saw total cardholders rise from 90.3 million to 91.5 million over the same period.
Of the three companies on this list, Wal-Mart (NYSE:WMT) may be the one that had the diciest moments. There was a time when it looked like the digital revolution might pass the company by. That may not have threatened its existence, but it could have ended growth, leaving the chain as a slowly decaying retail relic.
Instead, Wal-Mart bought Jet.com in October 2016 and set off its own reinvention. With Jet CEO Marc Lore running its digital operation the retailer quickly pivoted to an omnichannel model. This means that it has worked toward fully integrating its digital and physical businesses allowing consumers to shop however they want.
These changes have included offering free two-day shipping on orders over $35 as well as adding in-store kiosks to make picking up items ordered online easier. The chain has also tested using store employees to make deliveries and curbside pickup.
And while the transformation isn't complete, early returns have been good. Total revenue came in up 4.2% at $123.2 billion in Q3 while U.S. comparable-store sales rose by 2.7%, and comp traffic increased 1.5%. In addition, digital net sales jumped by 50%.
Be more of what your customers want
All three of these companies made major changes in 2017 that were in-line with their core brands. They all made shopping more convenient for their customers and that's going to be a clear driver going forward.
Many consumers clearly want to shop in a variety of ways. That sometimes means going to stores, sometimes involves a pure-digital experience, and can involve a combination of both. These three 2017 retail leaders showed that by giving people what they want, when and how they want it, growth -- even impressive growth -- can be achieved.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.