The Continued Success of Big-Box Stores

While some large retailers have closed or filed for bankruptcy, club and warehouse stores are still thriving.

May 13, 2016

BENTONVILLE, Ark. – It’s been more than 60 years since big stores opened their doors, and while the U.S. retail landscape has changed since then, the format still survives in some forms, The Atlantic reports. Most historians point to 1962 as the genesis of big-box stores with the launching of Kmart, Target and Walmart, which wowed customers with the sheer size of the stores and the variety of the merchandise.

The success of that trio of retailers paved the way for many other stores to open. Now, some of those companies are struggling or closing, such as Sports Authority and Best Buy. However, some large formats are actually trending upward: supercenters and warehouse stores.

As the historian Marc Levinson told NPR, “We're talking about stores that were gigantic for their time, and that meant they might have about 50,000 square feet of space.”

Nevertheless, amid all these store closings and bankruptcies, some big-box stores are still enjoying a surprising, decades-long upward trend: warehouse stores and supercenters. “What we found is that a certain kind of big-box store, that is supercenters and warehouse stores—they've been doing great and they're still doing great,” said Chad Syverson, an economics professor with the University of Chicago’s Booth School of Business. “That's your Walmart supercenters, that's your Meijer, Costco, Sam's Club.” Syverson and fellow economics professor Ali Hortaçsu have studied the U.S. retail channel over the past two decades.

Their research found that warehouse store and supercenter sales advanced tenfold from $40 billion in 1992 to $420 billion in 2013. Over that same time period, department store sales faltered. “Until e-commerce really makes inroads into drugs, cosmetics, food and beverage, there’s a huge amount of retail volume out there that basically e-commerce hasn't touched yet at all. So it's still going to be a physical store, but what size it is, it's harder to say,” Syverson said.