For more detailed analysis of our other dimensions, check out the other reports in this series.

Read our full report on the E-commerce Experience Dimension here.

Read our full report on the Ease of Fulfillment Dimension here. 

Methodology

The Modern Retail Index (MRI) collects data from a list of retailers, buckets and scores the data into dimensions, and creates a total index average score as a benchmarking tool. Retailers are given a deviation percentage from the index average to denote above- or below-average performance. The average changes depending on the list of retailers and the time period of data collection to show a snapshot of the retailer space at specific points. 

The Index uses three main dimensions that are further broken down into subdimensions to measure a retailer’s performance. They are presented here in the order in which they impact our model, from most to least heavily weighted:

• The E-commerce Dimension deep dives into subdimensions of the online shopping experience to create a better sense for which retailers have made forward-looking investments and how they ladder back to their unique retail sectors and business models. The subdimensions include: virtual product, checkout, reviews, customer service, customer benefits, app and social commerce presence.
• The Ease of Fulfillment Dimension focuses on the retailer’s ability to get the end product into the consumer’s hands when purchases are made through its e-commerce platform. The dimension’s subdimensions include: fulfillment options, post-purchase, returns and payments.
• The Financial Momentum Dimension gives a picture of the retailer’s performance and the rate at which revenue has increased or decreased within a six-month time period. Absolute revenue is also measured to take into account older retailers that make up a large portion of market share but do not grow as quickly as new retailers. The dimension measures profit and operating margins to better understand the efficiency at which the retailer runs. Please note that the Index does not separate financial momentum into digital versus brick-and-mortar revenue. The dimension’s subdimensions include: total revenue, revenue change, profit, profit margin and operating income.

Within the collection of indexed retailers, five immediate cohorts were identified: Big Box, Drugstore, Dollar Store/Off-Price, Home Goods and Specialty Retail. The index includes Amazon in its own cohort due to its unique position in the market.

Financial Momentum

As a whole, retailers within the Index had relatively flat financial performances year over year, with an average retailer revenue growth rate of 1%. However, at the individual cohort level, certain groups clearly had a better year than others. 

At the top of the list, Amazon, in its own cohort, saw 11% year-over-year revenue growth, followed by off-price retailers at 8%, not including dollar stores in this figure. While Amazon had a strong year financially, it faced new challenges that will likely impact it going forward. Other third-party marketplaces, such as Temu and Walmart’s marketplace, have gained traction over Amazon by offering lower rates for sellers — attracting brands that previously sold on Amazon with their lower barriers of entry.

Costly seller rates are often a primary barrier of entry for brands that hope to sell their products on third-party marketplaces. The fees can eat up about half of the cost per sale, hurting merchant profits, according to Marketplace Pulse.  

In March 2024, Amazon announced a number of new fees for sellers that utilize the tech company’s Fulfillment by Amazon service. Amazon also said it would start charging sellers for keeping a low amount of inventory in its warehouses. And, it announced a surcharge on shipments sent to the company’s fulfillment centers if sellers didn’t split up inventory so that it could be shipped by Amazon for free. 

Because of Amazon’s new fees, many sellers either had to restructure their pricing strategy or pull away from Amazon entirely. As a result, Amazon retracted some of the fees in November 2024. However, the damage had been done. Many sellers had already repriced their products or pulled products from Amazon’s site completely and moved to competing marketplaces.

In contrast to Amazon’s seller fee strategy missteps, off-price retailers relied on traditional business strategies, like opening more brick-and-mortar stores, to generate a healthy 8% year-over-year revenue increase for the group. (To note, off-price retailers are grouped with dollar stores within a larger cohort for the purposes of our Index analysis. That larger dollar store and off-price retailer group saw a 4% year-over-year revenue increase.)

Throughout this Index’s history, off-price retailers have consistently placed in the lowest ranks for e-commerce performance due to their lack of an e-commerce presence. For example, Burlington and Ross continued to not have shoppable sites in 2024. However, this does not seem to be impacting the retailers’ financial performances and willingness to make future business investments. 

As other cohorts focused on making digital investments over the past year, off-price and dollar stores continued to spend on building new brick-and-mortar stores. At the beginning of 2024, Ross announced that it would open approximately 90 stores over the coming year. By the end of 2024, the retailer said it had completed the goal with 89 new stores opened. The company’s press release said Ross plans to expand even further in the future. Similarly, T.J. Maxx parent company TJX Companies announced plans to open more than 1,000 new stores.

Aside from Amazon and off-price retailers, the specialty retail cohort also had a positive financial year, with an average revenue increase of 3%. The specialty retailers used a variety of strategies, reflective of their main product categories which contributed to their financial successes — ranging from a 1% increase for Barnes & Noble to a 5% increase for Dick’s Sporting Goods. (To note, Sephora was not measured because it is owned by LVMH and not reported separately.) 

Overall, Dick’s Sporting Goods had the best financial performance within the specialty retail group. Interestingly, the sporting goods industry as a whole experienced a financial slowdown in 2024. However, despite industry sluggishness, Dick’s remained a strong player in comparison to competitors in the field, according to Telsey Advisory Group analyst Joe Feldman. About Dick’s Sporting Goods, he wrote, “It improved positioning in the marketplace — including a stronger and more diverse assortment of national brands [and] high performing private brands.” In 2024, the sporting retailer is on track to open new House of Sport locations — large-scale stores with immersive elements like rock climbing walls, indoor tracks and simulated driving ranges.

Other specialty retailers, like Sephora and Chewy, focused on revamping their membership benefits over the past year. In August 2024, Sephora launched its Rouge Celebration Event, a four-day event of in-store and online activations for members only. The event was meant to celebrate the retailer’s loyal customers and to highlight the benefits of climbing membership tiers – which, of course, is tied to the amount a customer spends at Sephora. Chewy, on the other hand, launched its first-ever vet clinic called Chewy Vet Care. The main benefit for pet owners is its members-only 24/7 customer service line. 

While most members of the specialty retail group revamped their strategies with the goal of seeing immediate business results, Ulta and Barnes & Noble focused on making future investments that are expected to pay off in 2025. Ulta, for example, revamped its enterprise resource planning system to simplify its supply chain, merchandising and inventory management. This change coincided with upgrades Ulta made to its data platform, which sets the retailer up for AI and machine learning capabilities. 

Bookseller Barnes & Noble didn’t make strong moves to change its supply chain over the past year, but it did make at least one hiring move that could affect its policies going forward. In the fourth quarter of 2024, Barnes & Noble announced that it had hired Annette Danek-Akey as its new chief supply chain officer, possibly signaling changes to come in 2025.

After specialty retailers, and squarely in the middle of the Index pack with both positive and negative performances, are drug store retailers. Within the drug store cohort, CVS and Walgreens saw an average year-over-year growth rate of 5%. However, fellow drug store Rite Aid didn’t fare as well. In October 2023, Rite Aid announced its bankruptcy and plans to sell off 180 retail stores. Since filing for bankruptcy, Rite Aid has reduced its debt by $2 billion, reduced its store count by hundreds and emerged as a privately held company.  As a result of its newly private status, Rite Aid’s financial performance was not ranked in this year’s Index.

In light of Rite Aid’s bankruptcy, Walgreens and CVS emerged as the dominant players in the drug store cohort this year. However, retailers from other cohorts have begun making plays for a larger portion of the drug store market. Walmart, for example, which belongs to the big-box cohort, launched same-day pharmacy delivery services in January 2025. These types of retailer expansions may cause more disruptions to the drug store group than drug store retailers themselves, according to Modern Retail’s analysis. 

The big-box and home goods cohorts saw the least financial growth year over year, compared to other groups. However, among big-box retailers, Walmart saw positive revenue growth of 5% and Nordstrom grew by 4%.

Walmart improved both its digital and fulfillment strategies in 2024 by implementing various AI tools. The retailer added generative AI applications to its website to improve search functions and to enhance data analysis capabilities. Walmart has also been opening a number of  “next generation” fulfillment centers that combine manual labor with AI and automation to provide faster order shipping. 

On the other hand, Nordstrom’s efforts to increase revenue followed a different storyline than Walmart’s. Much of Nordstrom’s 2023 revenue growth was driven by its off-price branch, Nordstrom Rack. As a result, Nordstrom focused on expanding its off-price business in 2024. The majority of the new stores the retailer opened during the last year were Nordstrom Rack stores. 

Other retailers in the big-box group did not fare as well. Macy’s, for instance, named 66 stores it plans to close in 2025 and said it will close up to 150 underperforming locations to focus on other revenue channels. Similarly, Kohl’s announced plans to close 27 underperforming stores. Kohl’s also plans to close its San Bernardino e-commerce fulfillment center in May — a hit that may affect Kohl’s ability to provide fast shipping options. 

More recently, Target felt the financial impact of consumer boycotts after the retailer rolled back its DEI efforts. According to Similarweb, a Feb. 28, 2025 “Economic Blackout” of Target caused the retailer’s web traffic to decline by 14%. A recent Forbes article noted that Target also saw an 11% decline in in-store traffic on the same day.

When it comes to the home goods cohort, home improvement stores Home Depot and Ace Hardware saw revenue gains in 2024 of 2% and 3%, respectively. Both retailers focused on opening more brick-and-mortar locations.  Even Lowe’s, which saw a revenue decrease of 4% year over year, said it plans to open 10-15 stores per year over the next several years, according to a December 2024 press release.

Unlike Home Depot and Ace Hardware, home furniture stores Wayfair and Ethan Allen did not see revenue gains in 2024. In fact, Wayfair’s revenue has decreased for several years running, with a 2% decrease this past year. In response, Wayfair has significantly revamped its digital platform in hopes of bolstering its site sales. 

On the other hand, Ethan Allen plans to relocate physical retail locations to more convenient locations to allow customers to experience products firsthand. An in-person experience is often a crucial part of a customer’s purchase path for home furniture stores,according to Modern Retail’s analysis. 

Across all cohorts, the Container Store faced the greatest financial struggles in 2024. The Container Store filed for bankruptcy on Dec. 23, 2024. The retailer completed its financial restructuring and emerged from bankruptcy a month later as a private company. The Container Store wasn’t alone in facing economic turmoil over the past year. Several non-indexed retailers also filed for bankruptcy recently, including Joann, Party City and Forever 21. 

Key Highlights: E-Commerce Experience 

Read our full report on the E-commerce Experience Dimension here.

Big Box

• Indexed retailer Best Buy made improvements to its on-site chatbot and also its real-time delivery tracking, both of which are backed by AI technology. The applications are directly consumer-facing, and the improvements aimed to better the e-commerce experience for shoppers. Target similarly used AI over the past year to add summaries to product pages and, like Walmart, to boost its on-site search capabilities.
• Macy’s invested in a new membership program called Red Carpet by Macy’s which, unlike Macy’s previous membership program, is a paid program. Establishing paid membership programs remains a central Index trend, building on last year’s momentum when many top performers launched or revamped their membership offerings.

Drug Store

• CVS Health’s board of directors is currently considering splitting up the company between its retail and insurance businesses. If the pharmacy portion of the company is separated and lives on a different platform, the retailer will have to refocus its e-commerce strategies and compete more in line with big-box retailers like Target and Walmart. 
• Overall, the cohort has seen stagnant growth year over year and has made few changes to the e-commerce retail experience. For both the retailers and the brands selling through those retailers, the cohort is long overdue for change. 

Dollar and Off-Price

• Only Dollar General saw some improvement this year, climbing four ranks but still remaining in the lower rankings. Off-price retailers Burlington and Ross continued to not have shoppable sites in 2024, which placed them low in the e-commerce rankings. 
• Dollar General announced a partnership with Shelf Engine, an AI company that focuses on perishable food forecasting and ordering. Similarly, Dollar Tree’s subsidiary company, Family Dollar, announced a partnership with Dunnhumby, an AI company that focuses on data science and analysis to improve merchandising forecasting.

Home Goods

• Wayfair had the biggest ranking change among retailers within the home goods cohort, moving from a rank of 17 to 6 year over year. One of the biggest changes Wayfair made in 2024 was to create a paid membership program. 
• Ace Hardware also moved up the ranking by 4 spots to number 11 in the Index. Ace Hardware made subtle changes to its site to improve the customer experience. The hardware retailer focused heavily on its checkout experience, adding cross-sell product recommendations to the shopping cart feature and reducing the number of steps to checkout. 

Specialty Retail

• Ulta fell 5 positions in the ranking this year because it made minimal consumer-facing improvements to its e-commerce site. The retailer mainly improved its behind-the-scenes functionality for the site and, as a result, lost out on improving customer experience for 2024. 
• Barnes & Noble doubled down on its positioning as a local, community-first bookseller to fend off competition from e-commerce giant Amazon. While Barnes & Noble’s e-commerce site is still a work in progress, the retailer’s advantage comes from its book expertise.

Amazon

• In 2024, Amazon continued to offer its well-established Prime Day sale in July, and it more recently added an October Prime Day sale. Amazon’s July Prime Day drove record sales this year, driving over $14 billion in sales, up 11% year over year, according to Adobe Analytics.
• Amazon has also added more AI solutions for its shoppers. In September 2024, the retail juggernaut released Rufus, an AI-powered shopping assistant – essentially a powerful chatbot that is able to answer more complex questions. Unlike the virtual assistants offered by other retailers, Rufus wasn’t solely built to generate shopping inspiration ideas. Instead, it can answer product questions, compare products and provide order tracking. A month later, in October, Amazon released its AI Shopping Guides on its search pages. The tool aggregates key features that are personalized to the user and recommends products based on what matters most to the consumer. 

Key Highlights: Ease of Fulfillment

Read our full report on the Ease of Fulfillment Dimension here. 

Big Box

• Walmart and Target ranked among the top 10 retailers of the Index, and they both increased their number of store locations in 2024. The two retailers plan to open new stores in 2025. Walmart plans to build or convert more than 150 stores over the next five years. Similarly, Target plans to open more than 300 new stores during the next decade, with many of the new locations intended to be both stores and fulfillment hubs in order to provide improved fulfillment options. 
• Target has been building “sortation centers” near Target stores to sort, batch and route orders that store staffers pack, in order to provide faster delivery. According to an August 2024 Target fact sheet, the retailer’s fulfillment strategy has helped it acquire 500,000 new consumers in Atlanta.

Drug Store

• Walgreens’ dip in the ranking was the result of changes the retailer made to its online return policy. Previously, Walgreens allowed consumers to buy products online and return them online. During the past year, it quietly changed that policy to only allow online purchases to be returned in-store. 
• Rite Aid’s increase in ranking number was because it added faster delivery options. In particular, Rite Aid added overnight and same-day delivery options for consumers who live in close proximity to a Rite Aid store. The change comes after Rite Aid filed for Chapter 11 bankruptcy in 2023 and focused its 2024 efforts on restructuring its fulfillment capabilities. 

Dollar and Off-Price

• The cohort heavily focuses on in-store rather than online shopping strategies. However, in terms of digital changes that were made this year, Dollar Tree and Dollar General both stopped offering free shipping. They also partnered with delivery services to enable same-day delivery within local shopping areas. 
• Dollar Tree acquired 170 stores from 99 Cents Only after it announced bankruptcy, further expanding Dollar Tree’s reach. And at the end of 2024, Dollar General announced that it plans to open over 500 new stores in the U.S. and remodel more than 2,000 stores through a plan called “Project Elevate.”

Home Goods

• The only retailer with a big drop in ranking was Ace Hardware. During the past year, Ace Hardware quietly changed some of its return policies, including making online purchases returnable only in-store. Ace Hardware’s strategy follows this year’s overall theme of retailers attempting to reduce the cost of returns. 
• Wayfair opened its first retail store in May 2024. By having a physical location, Wayfair can now offer a buy-online and return-in-store option for consumers. While some retailers are reverting entirely to in-store returns, Wayfair is still primarily a digitally based retailer and, as a result, primarily handles returns online.

Specialty Retail

• Rather than putting a large focus on supply chain logistics like other retailers in the Index have, Sephora is focusing on its brick-and-mortar experience. In January, Sephora announced plans to redesign all of its North American stores. 
• Ulta announced during its Investors Day in October 2024 that it plans to build 200 stores over the next three years. The retailer also plans to update its market fulfillment center model, which uses smaller regional warehouses as distribution centers. Ulta plans to retrofit these centers with new AI technology to better increase supply chain and fulfillment efficiency. 

Amazon

• Amazon ranks as the No. 1 retailer in the Modern Retail Index, a position it has held since the Index debuted in 2021. Amazon has maintained its spot at the top of the Index because it continues to innovate its fulfillment offerings.
• However, Amazon does face competition from big-box retailer Walmart. Walmart’s equivalent to Amazon’s Fulfilled by Amazon is its Walmart Fulfillment Services, which costs sellers 15% less than other marketplaces, according to Walmart. In January 2025, Walmart and IBM announced a collaboration that integrates GoLocal into IBM’s Sterling Order Management system, which is a software that manages inventory, orders and shipping across channels in real time.