NRF Hot 25 List Spotlights Fastest-Growing Retailers

Smart & Final store

Mexican grocer Chedraui, Raley’s Supermarkets and Primark Stores have topped the National Retail Federation’s 2023 Hot 25 Retailers list, which ranks the fastest-growing retail companies in the U.S.

The annual ranking is compiled by global marketing consultancy Kantar and is determined by comparing year-over-year increases in domestic sales (in the case of the 2023 list, this means 2021 versus 2022).

While some of the retailers on the list demonstrated remarkable growth, overall growth was markedly lower than in 2022. All 25 of the retailers on last year’s list saw sales growth above 25%, while on this year’s list only the top six saw growth above 25%.

Still, “that doesn’t diminish Chedraui’s staggering 137% growth, thanks largely to its acquisition of Smart & Final stores,” said NRF Contributor Sandy Smith in a blog post analyzing the findings. “Nor does it diminish Harbor Freight Tools [No. 1 in 2022], which again made a Hot 25 appearance after nearly doubling in 2022 and adding another 13% growth for 2023’s list.”

This ranking is particularly helpful as a trendspotting tool, because the focus on growth rate as opposed to total sales helps highlight growing companies that might otherwise be overshadowed by larger retailers. A few of the notable trends that emerged from this year’s list:

  • Food and wine reigns, driven in large part by M&A activity;
  • Retail media is driving growth, especially for grocers; and
  • Cost-conscious consumers are leaning into discount and beauty.

Food and Wine Retail is Particularly Hot

As Kantar SVP David Marcotte pointed out, food and/or wine make up half of this year’s Hot 25 retailers, highlighting the significant growth activity in that sector. In fact, grocers accounted for six of the top 10 retailers on the list (if you include 7-Eleven, which while technically a convenience store is a large purveyor of food products as well).

If you look at the growth in grocery, it’s almost all [mergers and acquisitions],” said Marcotte in a blog post. “That both shows the strength of the sector and some of the stress.”

The stress, in this case, is largely related to the aftereffects of the pandemic, as retailers look to maintain their growth trajectories despite a normalization of consumer spending habits.

Chedraui took the top spot on the list, with 137% growth from 2021 to 2022, largely due to its acquisition of the more than 150-year-old Smart & Final grocery chain that was completed in 2022. Raley’s Supermarkets, No. 2 on the Hot 25 list, also got to that leaderboard position via its merger with Basha’s Family of Stores in late 2021, leading to 75% growth in 2022. 7-Eleven’s acquisition of Speedway in 2021 grew the chain’s footprint to 14,000 stores and 30% growth in 2022 as well as landing it at No. 5; and Southern California retailer Superior Grocers added 22 Numero Uno stores in 2022, pushing it to No. 6, also with 30% growth.

By contrast, Grocery Outlet (No. 13), Publix (No. 18), Schnucks (No. 21) and H.E. Butt Grocery (No. 25) have grown largely by slowly expanding their regional footprints and adding services like delivery, as have warehouse stores BJ’s Wholesale Club (No. 7) and Costco (No. 12).

Retail Media Networks Provide Incremental Growth

With retail media now increasingly prevalent, it should come as no surprise that this new revenue stream is aiding retailers’ growth. “Retail media, with its ability to connect with shoppers on all levels, is very profitable and can add up to 2% of your operating margin,” said Marcotte.

Among the Hot 25 with established retail media networks are BJ’s Wholesale Club, Ulta Beauty, Schwarz Group (which owns grocer Lidl) and Schnucks. Expect more chains to join the fold as retail media matures, although as the field gets more crowded it may prove not to be a significant revenue driver for all.

“Across most categories, once you get past the category leader, the scale isn’t there,” warned Andrew Lipsman, Principal Analyst for Retail and Ecommerce at Insider Intelligence in an interview with Retail TouchPoints. “If [a retailer] has enough online traffic, they can monetize search traffic through some ads and get some nice high-margin revenue, but it’s probably not going to be that much incremental revenue at the end of the day, so it’s not going to be a game-changer for their business.”

Consumers Still Watching Their Wallets

Ongoing inflation and other macroeconomic factors put pressure on consumers in 2022, and the resulting cost-cutting is evidenced by the growth of bargain-based retailers like Primark (which hit No. 3 in large part due to its aggressive ongoing U.S expansion), BJ’s Wholesale and Costco. Just one luxury brand made the list this year, LVMH’s Tiffany & Co., at No. 16 with 14% growth.  

The “lipstick effect” (when cash-strapped consumers spend money on smaller splurges like makeup in lieu of fashion and accessories) was also in play last year. As beauty sales rose across the board, Ulta and Sephora, both of which are relatively mature beauty retailers, made it into the Hot 25 at Nos. 10 and 13, respectively.

It’s worth noting that while the Hot 25 list reflects results from 2022, consumers are still feeling a fair amount of economic pressure in 2023. However, there is one place where U.S. consumers can be relied upon to continue spending despite an economic downturn — their pets. landed at No. 19 with nearly 14% growth in 2022. As to why Chewy saw more significant growth than its fellow pet retailers, Marcotte chalked it up to the DTC brand’s ability to connect emotionally with its customers: “Pets are very emotional, and they are able to tap into that, while at the same time being able to build a subscription base for predictability,” he said. “The main competitors have not been able to gain that emotional engagement. If you look at their marketing, direct mail, communication that comes with the deliveries — it’s all emotional.”

The Top 10 Fastest-Growing Retailers:

1. Chedraui (U.S. sales up 137.3% from 2021 to 2022, reflects the acquisition of Smart & Final)

2. Raley’s Supermarkets (up 73.5%, reflects the acquisition of Basha’s)

3. Primark Stores (up 65.7%)

4. Schwarz Group (up 52.3%)

5. 7-Eleven (up 30.2%)

6. Superior Grocers (up 30.1%)

7. BJ’s Wholesale Club (up 22.9%)

8. Inditex (up 19.4%)

9. Chico’s (up 18.5%)

10. Ulta Beauty (up 18.3%)

To view the full list of the NRF’s 2023 Hot 25 Retailers, click here.