A retailer, is a business that sells directly to consumers or the general public.
Virtually every American interacts with a retailer at one point in his or her life. Shopping at a supermarket, or buying clothes or home goods at a store or mall are two a common ways that consumers and retailers interact.
Retailers in the U.S support directly and indirectly more than 40 million jobs. They also contribute to around 8% of the U.S GDP.
So which retailers are the most important players by revenue?
The following table shows the 10 largest retailers based in the U.S., by revenue as of 2017. This ranking does not include private retailers, or retailers with headquarters outside of the United States. Revenue data was retrieved from their 2016 respective income statement. Retailers in this ranking come from the classification of the Retail Federation.
*Considered a retailer, but total revenue diversified in other lines of business.
Measuring the Size of a Retailer
Financial experts typically use several different metrics to measure the size of a retailer. For the chart above, we’ve used total revenue. Some financial analysts may use other metrics, including book value, market capitalization, or total assets.
Other metrics can also be helpful to measure the size of a retailer, such as total number of stores. Detailed specifics aren’t always presented in the company’s annual report.
How Retailers Generate Revenue
Retailers generate revenue in a variety of ways. This may include buying inventory or products from wholesalers and re-selling them to the public for a profit, as it is the case of Walmart. Other retailers like Apple create their own products and sell them in their own stores or through third party retailers. Wireless carriers are also retailers however a big part of their total income comes from monthly fees of the services they provide.
Investors and analysts should keep in mind that revenue and profit or net income are not the same thing. Revenue is essentially the total income of a business, and does not take into account operating expenses or other costs associated with the day-to-day operations of the company. Profit, sometimes called net income, is what’s left over after accounting for these expenses. Some metrics used by analysts to measure profitability for retailers include net profit, profit margin, pe ratio, inventory turnover among, other useful ratios related to the retailer industry.
How can you invest in retail companies?
Investors can purchase individual stocks in retail companies or in funds that focus on the retail sector. Retail Therapy, an exchange-traded fund (ETF) available on Stash, is an investment fund that offers the opportunity to invest in some of the companies included on this list.
Ready to start investing?
Stash is giving you $5 to try investing in one of the diversified funds on its platform, including Retail Therapy by just subscribing here. You also get access to Stash Learn so you can master the basics of investing along the way.
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