Over the past decade, rapid growth at the behemoths of retailing--Home Depot, Wal-Mart Stores, Toys `R' Us, and other chains--has given rise to doomsday prophecies for small and midsize retailers. One version has the big guys swallowing up the little guys in more and more product areas, leaving the landscape dominated by a few major players operating large stores.

The trouble with such predictions, however, is that they exaggerate the reach of giant chains. "In many sectors, small retailers are growing as rapidly as big retailers," says economist David T. Kresge of Dun & Bradstreet Corp., "and there are no sectors controlled by just a handful of companies."

An analysis of D&B's nationwide database tells the story: After rising rapidly in the late 1980s and contracting during the 1990-91 recession, the number of retail stores has been showing healthy growth--and so has the number of retail companies. While the ranks of $100 million-plus companies jumped by 20%, to 3,600, from 1989 to 1993, companies with less than $1 million in sales also rose by 15%, to 775,000. If anyone has taken a hit in the 1990s, it has been midsize outfits with sales of $1 million to $100 million. Such companies have actually shed workers since 1989.

Although the giants have accounted for much of the job growth in recent years, they dominate just a few product fields: clothing, drugstores, general merchandise, lumber, and home supplies. On the other hand, notes Gary A. Wright, a Denver retail consultant who helped analyze the D&B data, "in the sectors dominated by individualized products or services, small firms continue to flourish."

Small companies still dominate employment in hardware, sporting goods, jewelry, and gift stores. And they remain major retailers of such products as auto supplies, books, paint, cameras, appliances, women's accessories, carpeting, and children's clothing.

Although bigger businesses are starting to offer more personalized service, says Kresge, smaller retailers could actually gain ground "as an older, more affluent, and diverse population seeks greater convenience, quality, service, and lifestyle compatibility."

Before it's here, it's on the Bloomberg Terminal. LEARN MORE