IE 11 is not supported. For an optimal experience visit our site on another browser.

Recession? These stores haven’t heard of it

Few industries have been hurt as badly by the recession as retail, the front lines of the battlefield where businesses try to separate consumers from their money.
Image: Amazon warehouse
Amazon continues to grab market share from traditional booksellers while expanding the online sales model to an ever-increasing range of products.Getty images
/ Source: Forbes

Few industries have been hurt as badly by the recession as retail, the front lines of the battlefield where businesses try to separate consumers from their money.

In an industry that got overbuilt during flush times, the recession sent sales plunging, forcing chains to close stores. But there are exceptions — retailers that have found a strong competitive advantage.

The most obvious one: Apple, which has taken the retail world by storm with its own outlets. Customers regularly crowd into the small, cozy Apple Stores to scoop up Macs and iPods, vaulting Apple to the top of the industry for revenue per square foot. Apple Store sales have nearly doubled over the past three years to $9.6 billion. continues to roll up higher sales — almost 80 percent growth over the past three years — even though some industry analysts see the company maturing in the U.S. Once little more than an online bookseller, Amazon has become the go-to spot for shoppers looking for convenience and reasonable prices on a wide range of merchandise, including consumer electronics.

"They have expanded their model into almost everything you can think of buying," says Jack Plunkett, who runs a stock research firm in Houston.

Forbes measured the sales growth of major retail chains over the past three years using data compiled by the National Retail Federation, Stores Magazine and company annual reports. Companies that derived sales growth primarily from acquisitions, such as grocer A&P with its pickup of Pathmark, were omitted.

The casual dining sector is crowded and struggling, but some chains have carved out distinctive niches and rung up strong sales growth. Chipotle Mexican Grill, Texas Roadhouse and Buffalo Wild Wings have steadily opened outlets while growing revenue 47 percent to 61 percent since 2006. The keys: nice decor, friendly service, consistent food and, of course, low prices. Sounds simple enough, but too many chains trying this model fail to distract customers from the fact that they're out for a discount meal.

"I feel like I'm in a better restaurant than I am," says Plunkett of Chipotle. Texas Roadhouse has taken a gradual approach, expanding to over 300 restaurants over 17 years, mostly on cheap land outside of major urban areas. That's kept overhead down as the company slowly widens the audience for Tex-Mex cuisine. The idea: draw car-driving, working-class families with a fun atmosphere and steaks at decent prices.

Recent government stats on retail sales indicate that the sector is starting to thaw. Analysts generally agree the worst is probably over, but they aren't looking for robust growth anytime soon. The overbuilding by so many chains fighting for market share during flush times left too many square feet of space dedicated to selling stuff to free-spending consumers. Even as the recession ebbs, consumers are continuing to pay down debt and save in a way they haven't in years, analysts note. What was once a cash spigot may remain little more than a slow drip for years to come.

"I don't think we'll ever live that way again," says retail investment banker Howard Davidowitz of New York-based Davidowitz & Associates.

Nonetheless, Forbes' Fastest-Growing Retailers have shown that big sales growth is still there for the taking — it just takes more creativity to grab it these days.