Staples Retail & Distribution covers supermarkets, warehouse clubs, discount and dollar stores, and food distributors. MoatScope covers 35 companies here. Two have a wide moat, 15 a narrow moat and 18 none.
How the industry makes money
Margins are thin, so profit comes from volume and efficiency: buying well, moving goods cheaply and turning inventory fast. Walmart, the largest retailer in the world, offers groceries, general merchandise and services across its store base. Costco runs membership-only warehouse clubs with a deliberately limited assortment at very low markups, and relies heavily on membership fees. Distributors such as Sysco and US Foods supply restaurants and institutions.
Where the moats are
Every moat-rated company in the industry has a cost advantage: purchasing scale and efficient logistics let the leaders charge less and still earn more. Intangible assets appear in ten and switching costs in seven.
- Walmart: unmatched purchasing and logistics scale, now extended into online orders and services.
- Costco: low prices funded by membership fees that members renew year after year.
The narrow-moat group includes Target, Kroger, Sysco, Dollar General, Dollar Tree, US Foods and Miniso. Companies without a moat include BBB Foods, United Natural Foods and Weis Markets.
What wears moats down
Price competition never lets up, online shopping and delivery shift where people shop, and wage costs and theft squeeze thin margins. Grocers also face discounters and warehouse clubs taking share with lower prices.
What the quality scores say
Costco scores 65 and Walmart 55 on MoatScope's quality scale, and the industry averages 38.
What to watch
- Same-store sales and customer traffic.
- Growth in online orders and advertising income.
- Membership renewal rates at the warehouse clubs.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.