This report is the second installment of the Modern Retail Index, a research framework that analyzes and ranks a set of major retailers across e-commerce experience, ease of fulfillment and financial momentum dimensions. Click here to read the first installment on e-commerce.
Many retailers had a difficult year in 2024. According to Coresight Research, 51 major retailers filed for bankruptcy in 2024, up from 25 in 2023. Positioned across industries, the retailers ranged from fabric and craft chain Joanne to storage and organization chain The Container Store. “Total retail sales growth was robust in 2024, but performance was uneven and some sectors faced considerably weaker demand than others,” John Mercer, head of global research for Coresight Research, said in an email. Mercer cited big-ticket industries like appliances and electronics as ones that faced weaker demand “on top of generally heightened consumer caution.”
While some industries and retailers saw significant declines, others thrived. Retailers on the upswing and looking to expand their physical reach have started eyeing competitors’ bankruptcies as opportunities to snatch up prime real estate for their new locations.
“As we have seen these spaces become available, there has been a run on these spaces with retailers that have wanted to expand but couldn’t find the space,” Jason Baker, principal at Houston-based real estate firm Baker Katz, told Modern Retail. “These are typically spaces that are in shopping centers with good co-tenancy that are, in many cases, well-designed with ample parking and visibility. They check the boxes of the needs for so many of the retailers that we either represent or know have an interest right now in expanding.”
Retailers that have honed in on acquiring brick-and-mortar locations are able to use stores as fulfillment locations and also enable omnichannel services like buy-online, pick-up in-store. There has also been a hyperfocus on improving the speed of delivery. In its fiscal fourth-quarter earnings report released in February, Walmart said it can now fulfill same-day deliveries to 93% of U.S. households. In the same report, Walmart said its same-day and next-day delivery orders increased by approximately 30% year over year.
The second installment of the Modern Retail Index examines attributes like delivery speed that are important motivators for online shoppers. Retailer rankings are based on their e-commerce fulfillment strategies, including features like product accessibility through expedited shipping and delivery, post-purchase modifications and tracking, ease of online returns, and online payment options. The Index examines retailers within five cohorts — big box, drugstores, dollar and off-price stores, home goods, and specialty retail — to understand which cohorts, and which retailers within those cohorts, are excelling at fulfilling e-commerce orders and why.
Here’s how.
The Modern Retail Index (MRI) collects data from 30 retailers and scores the data into dimensions to create 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.
In essence, we analyze and rank retailers based on point-in-time data and their performance relative to the other retailers in the Index. 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 Index does this by assessing a series of sub-dimensions to provide a better sense of the retailer’s strengths and weaknesses. We contextualize that within the cohorts we analyze — which include big box, drugstore, dollar store/off-price, home goods and specialty retail — to create a fuller picture of how the largest retailers in the country approach fulfillment. The Index includes Amazon outside of any other cohort due to its unique positioning in the market.
Within the ease of fulfillment dimension of our rubric, retailers are assessed across four different areas: Product Accessibility, Post Purchase, Returns and Payments.
- Product Accessibility measures how easy it is for a consumer to obtain a product from the retailer. This includes the presence of different fulfillment methods, such as order-online and pick-up in-store, and expedited shipping.
- Post Purchase measures the presence of options available to the consumer after they complete a purchase, such as purchase tracking and post-purchase order modifications.
- Returns measures the level of difficulty to return or exchange a product.
- Payments measures the presence of different payment options, such as quick pay, subscribe and save, and buy now, pay later.
Providing expedited shipping through delivery partnerships was a dominant theme among retailers this year, as many leaned into third-party services like Instacart and DoorDash to provide delivery, instead of building out costly new infrastructure. Kohl’s, for example, made waves in May 2024 with its collaboration with Instacart, which enabled the retailer to offer same-day delivery. While Kohl’s already provided one-day shipping, the Instacart partnership gave it the ability to offer same-day delivery options. However, shoppers must make purchases through the Instacart platform, rather than buying directly from Kohl’s.
In January 2025, Home Depot similarly announced collaborations with DoorDash and Uber Eats. This was after the retailer partnered with Instacart in May 2024. Jordan Broggi, evp of customer experience and president of online at Home Depot, said the DoorDash partnership adds another layer of suppleness to the retailer’s delivery options.
“Combining DoorDash’s fast and convenient platform with The Home Depot’s existing same-day and next-day delivery options, homedepot.com offers our customers even more flexibility and convenience to shop in the way that best suits their needs,” Broggi said.
Delivery services like Instacart and DoorDash have been slowly filling the gap in retailers’ last-mile delivery needs and, as a result, some have seen significant revenue growth. DoorDash said in its fourth-quarter 2024 financial results that its own revenue grew 24% year over year.
But providing expedited shipping wasn’t the only fulfillment area in which retailers made changes this year. Many retailers also tightened their return policies. One common policy change was to require in-store returns for online purchases to eliminate the costs associated with shipping returns back to the retailer. Other retailers began charging consumers return fees to offset high return shipping costs. Although instituting stricter return policies has caused some retailers to fall in this Index’s fulfillment rankings, their policy changes are not unfounded. The National Retail Federation (NRF) projected that total returns would hit $890 billion in 2024, and noted that retailers estimated that 16.9% of their annual sales in 2024 will be returned. In response, retailers are shifting strategies to cut down on expenses.
A report from Appriss Retail and Deloitte underscored the high cost of online returns. The report found that US online purchases have a return rate of 24.52%, totaling $363.16 billion annually, compared to in-store purchases at just 8.72%, or $323.73 billion. With online returns not only being made more frequently but also costing retailers more, many retailers are pushing for in-store returns for online purchases, according to Modern Retail’s analysis.
Mirroring Modern Retail’s findings, a separate 2024 survey from Appriss and Retail Dive found that 83% of companies have tightened their return policies to combat the rising cost of returns.
Along with instituting stricter return guidelines, a growing number of retailers have started offering “returnless refunds.” This policy allows customers to receive refunds without having to ship back lower-priced items or products retailers can’t resell. The idea is that when the cost of returning a product exceeds the item’s value, such as single-use items or low-cost goods, retailers prefer to refund the customer and let the customer keep the item as a cost-saving measure. Major players like Amazon, Walmart and Target have already adopted returnless refunds.
Overall, retailers within the big-box cohort did not see large changes to their fulfillment ranking order, largely because they did not make major changes to their shopper-focused fulfillment strategies. This Index primarily measures changes to the fulfillment experience that affect consumers directly. Kohl’s was the only retailer within the group that made a significant consumer-facing change by adding a return fee to purchases made on its website — a 15% restocking fee, plus shipping costs. While the group did not see many changes to ranking order, that doesn’t mean the group did not make actual logistical changes. In particular, there were big shifts in big-box retailers’ store openings and closings.
Walmart and Target were in the top 10 retailers of the Index and saw store locations increase in 2024. The two retailers plan to open new stores in 2025. John Furner, president and CEO of Walmart U.S., said in January 2024 that 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.
In last year’s Index, Modern Retail noted that Walmart is planning to open a number of “next generation” fulfillment centers by 2026. The fulfillment centers are intended to combine the manual labor of Walmart’s staffers with AI and automation to provide faster shipping for Walmart.com orders. More interestingly, third-party vendors who sell through Walmart Marketplace also have access to the shipping options. Walmart Fulfillment Services charges sellers a percentage of sales, 15% less than other marketplaces according to Walmart, in exchange for Walmart’s two-day shipping, packing and storage services. As third-party marketplaces increase in consumer and vendor popularity, especially after the explosive growth of China-based Temu, fast fulfillment options will become more important for vendors, according to Modern Retail’s analysis. This will also pose competition for Amazon — more on that in our later section on Amazon.
Similar to Walmart, 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. Its Atlanta sortation center batches and routes orders for Shipt, Target’s same-day delivery service, to deliver to local neighborhoods. The center was built at a fraction of the cost of a regular fulfillment center, according to Target, and it increased Target’s next-day delivery capability by over 30% in the area.
While Walmart and Target opened new locations and fulfillment centers, not all big-box retailers had the same trajectory. Macy’s, Kohl’s and Nordstrom announced plans to close stores. In January, Macy’s named 66 stores it plans to close in 2025 as part of its “Bold New Chapter” strategy. The strategy, which Macy’s announced in February 2024, maps out how the company plans to turn profits around, including closing 150 underperforming locations and focusing on other revenue channels. As Macy’s continues to close stores, the retailer may need to revisit its online fulfillment strategy if consumers increase their digital purchases in the absence of having physical stores at which to shop.
Also in January, Kohl’s announced its plans to close 27 underperforming stores. In particular, the retailer plans to close its San Bernardino e-commerce fulfillment center in May. According to a statement from Kohl’s, the retailer has chosen to close the fulfillment center in favor of newer centers with better technology. However, given that the geographic location of a fulfillment center can play a key role in delivery strategies, the closure may affect Kohl’s ability to provide fast shipping options.
Nordstrom has had its ups and downs with both store closures and openings. However, the bigger news is that Nordstrom’s founding family is reportedly seeking to take the department store private. Similarly, Macy’s is also considering going private. In order to improve sales more immediately, Nordstrom has been focusing on expanding its off-price Nordstrom Rack business The majority of new stores the retailer has opened during the last year have been Nordstrom Rack stores. These store openings, in combination with the closure of Nordstrom stores, may affect Nordstrom’s ability to fulfill online orders from Nordstrom.com, according to Modern Retail’s analysis.
The drugstore cohort’s ranking order shifted somewhat due to changes in the retailers’ shipping and return policies. Walgreens’ rank number dropped significantly, while Rite Aid saw a small bump in its ranking. Both ranking shifts were counter to the retailers’ respective financial performances.
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. While Walgreens’ policy change caused its fulfillment ranking to drop, the shift matches the previously mentioned trend of retailers putting stricter return policies in place to reduce costs. However, this change may cause friction for consumers who do not have a store nearby, according to Modern Retail’s analysis.
On the other hand, 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.
Rite Aid also partnered with Uber Eats to provide alcohol delivery in certain states as an additional effort to expand its fulfillment capabilities. “Our collaboration and trusted partnership with Uber Eats underscores our commitment to meeting the evolving needs of our customers and providing a seamless digital shopping experience that complements their busy lives,” said Jeanniey Walden, svp and CMO at Rite Aid. “Rite Aid’s selection of alcohol brands combined with convenient delivery ensures customers have what they need when they need it, be it for a special occasion or casual night at home.”
Uniquely within the drugstore cohort, retailers compete with each other on prescription delivery services. As reported in the e-commerce dimension of this year’s Index, CVS is considering spinning off its pharmaceutical business from its OTC business. This decision could also affect its delivery capabilities if the company decides to build stand-alone stores for the two new branches of its business.
While the future of CVS’s prescription business is unknown, it’s clear that other retailers are vying to increase their prescription delivery services. In June 2024, Amazon announced it had expanded its prescription savings program, RxPass, to include consumers with Medicare health insurance coverage, thereby expanding its Amazon Pharmacy business in the process. Because Amazon’s Pharmacy business has access to Amazon’s fulfillment network, the expansion may create more competition for drugstore chains that provide same-day prescription delivery services.
Similarly, Walmart recently expanded its Walmart Pharmacy services to include same-day prescription delivery. With about 4,700 Walmart Pharmacy locations throughout the U.S., the change could pull consumers away from drugstore chains and lead them to use Walmart’s pharmacy instead.
Likewise, with drugstore chains facing increasing competition from the two largest retailers in the U.S., drugstores may have to revisit how they deliver prescriptions to consumers, according to Modern Retail’s analysis.
Dollar and off-price stores have consistently placed low in the fulfillment dimension since the first Modern Retail Index in 2021. This year is no exception. However, their low placement is mainly due to the group’s lack of an e-commerce presence when the Index mainly measures online fulfillment options. All dollar and off-price stores ranked in the bottom 10 of Modern Retail’s Index.
Overall, the cohort did not make many changes within the past year. This is partly because the cohort heavily focuses on in-store rather than online shopping strategies. As a result, the cohort’s online fulfillment features are much fewer than other retailers in the Index and tend to be focused on areas surrounding local stores. 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.
While the cohort’s online delivery options remained limited, many of the retailers opened new stores since last year’s Index — a striking difference from other cohorts in which retailers closed stores.
Dollar Tree acquired 170 stores from 99 Cents Only after it announced bankruptcy, further expanding Dollar Tree’s reach.
“As we continue to execute on our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong profitable growth potential,” said Michael Creedon, Jr., chief operating officer at Dollar Tree. “The portfolio complements our existing footprint and will provide us access to high-quality real estate assets in premium retail centers, enabling us to rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities.”
At the end of 2024, Dollar General announced that it plans to open over 500 new stores in the U.S. and to remodel more than 2,000 stores through a plan called “Project Elevate.” “We are excited about our significant increase in planned real estate projects for 2025,” said Kelly Dilts, CFO at Dollar General. “In particular, we are enthusiastic about Project Elevate, which introduces an incremental remodel initiative within our mature store base. This initiative is aimed at our mature stores that are not yet old enough to be part of the full remodel pipeline.”
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.
“This fall, we continued to expand our presence in both existing and newer markets,” said Richard Lietz, evp of property development at Ross. “Looking ahead, we remain confident in our expansion plans and see plenty of opportunity to grow to at least 2,900 Ross Dress for Less and 700 DD’s Discounts locations over time.”
Finally, within the cohort, T.J. Maxx parent company TJX Companies similarly announced plans to open more than 1,000 new stores. “Over the long term, we see the potential to further expand our store footprint by at least another 1,300-plus stores with our current retail banners in our existing countries alone,” said TJX CEO Ernie Herrman.
As many other types of retailers struggled to keep their brick-and-mortar store locations open during the past year, retailers within the dollar store and off-price cohort continued to make headway by opening new stores. The group is also a strong example of how retailers can focus on servicing a local audience from regional stores.
Similar to previous groups, not much changed in the ranking for the home goods cohort. The only retailer with a big drop in ranking was Ace Hardware, while other retailers saw modest increases in their rank order. During the past year, Ace Hardware quietly changed some of its return policies, including making online purchases returnable only in-store. As mentioned in the general trends section of this Index, Ace Hardware’s strategy follows this year’s overall theme of retailers attempting to reduce the cost of returns.
Within the home goods cohort, RH (Restoration Hardware) and Wayfair’s rankings improved. RH began offering an online return option, in addition to offering in-store returns. However, before making an online return, the consumer has to first reach out directly to RH to learn whether their product is eligible for an online return due to the wide range of physical size of RH’s products.
Wayfair, on the other hand, saw an increase in its Index ranking because it 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.
Within the home goods group, financial performances varied. 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. Notably, The Container Store only closed two of its retail locations, rather than the entire lineup of stores. With its restructuring complete and with the majority of its brick-and-mortar locations intact, it is yet to be seen whether the retailer will change its fulfillment processes going forward.
However, not all retailers within the home goods cohort had poor financial performances this year. Home improvement retailers Ace Hardware, Lowe’s and Home Depot all opened new stores. Ace opened its 100th store in July 2024, and by the end of the year, the company said that it had opened a total of 150 stores in 2024. Similarly, Lowe’s plans to open 10-15 stores per year over the next several years, according to a December 2024 press release. It also plans to add its rural product assortment, including pet products, workwear, automotive supplies and utility vehicles, to 150 stores.
Meanwhile, Home Depot made plans to increase the number of its distribution centers by four in 2024. According to a March 2024 press release, the new distribution centers would house large, bulky merchandise like lumber, insulation, and roofing shingles, intended for the company’s “pro” customer base.
Overall, because the home improvement retailers examined in this Index carry building supplies and other large-scale items, their store formats tend to be larger, as well. This may give them more nimbleness in their fulfillment capabilities as many of their stores also act as warehouses, according to Modern Retail’s analysis.
The luxury furniture stores within the home goods cohort — Ethan Allen and RH — focused more on selecting strategic store locations rather than heavily increasing their store counts. In June 2024, Ethan Allen said it would relocate three of its U.S. store locations by the fall in order to “enhance Ethan Allen’s visibility” and to offer “convenient access for current clients.” Retailers like Ethan Allen rely heavily on their stores, or “design centers” as it calls them, to allow customers to experience the company’s products and branding. Fulfillment strategies function differently for higher-end brands that typically rely on in-store experiences to engage customers and provide them with a luxury shopping experience.
RH uses a similar in-store approach to Ethan Allen’s. Both RH’s and Ethan Allen’s stores function as showrooms that display the retailers’ newest seasonal products. For these luxury retailers, their online fulfillment capabilities are mainly limited to allowing a customer to order products online once the customer has experienced them in-store.
Unlike most cohorts in the Index, the specialty retail group saw retailers’ rankings increase due to other cohorts reducing the number of return options they offer, particularly their buy-online and return-online policies. Overall, the specialty retail cohort did not make many changes on its own, but the cohort is gearing up for a significant number of changes in 2025.
Sephora and Ulta, the top-ranked retailers in the specialty retail cohort, have lofty 2025 plans laid out. 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.
Likewise, Ulta announced during its Investors Day in October 2024 that it plans to build 200 stores over the next three years. Ulta also updated its resource planning system to simplify supply chain, merchandising and inventory management. The retailer uses a market fulfillment center model, which relies on using smaller regional warehouses as distribution centers. The smaller warehouses allow for more product distribution mobility and quicker warehouse setup, but at the cost of storage space. The retailer can’t store large quantities of inventory in the smaller warehouses. Ulta plans to retrofit these centers with new AI technology to better increase supply chain and fulfillment efficiency.
In contrast to Ulta, bookseller Barnes & Noble didn’t make strong moves to change its supply chain over the last 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. Akey came to Barnes & Noble from Penguin Random House where she held the same role. With a new individual helming its supply chain operations, Barnes & Noble may consider different strategies to help it compete against online giants like Amazon that have been nibbling away at its share of the book-selling market, according to Modern Retail’s analysis.
Unlike other retailers in the specialty retail cohort that have expanded their operations over the past year, Dick’s Sporting Goods recently closed three of its Public Lands stores and shuttered its Moosejaw brand and the stores associated with it, according to Retail Dive. Outdoor retailers like Dick’s Sporting Goods currently face a few challenges. The industry experienced an influx of new customers who were introduced to outdoor activities like camping or hiking during the pandemic and bought gear for the first time. For many of these customers, their gear is still holding up, or they don’t feel the need to upgrade, making comp sales growth more challenging for outdoor retailers. Retailers have also had to adjust to an influx in outdoor activities from casual participants who may not buy as much high-end gear generally.
In general, for specialty retail cohort members, the specific industry a retailer focuses on greatly affects its ability and need to expand its fulfillment operations.
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. Other retailers use third-party expedited shipping integrations to deliver online orders on the same day, but Amazon can run its expedited shipping integrations in-house. However, the reality is that Amazon has removed the need for third-party integrations as it continues to set the bar for fast delivery.
Despite all of its success, Amazon had some hiccups over the past year. In early March 2024, Amazon announced a number of new seller fees for third-party sellers that utilize the tech company’s Fulfillment by Amazon (FBA) service. In exchange for paying various FBA fees, such as charges for listings or inventory storage, sellers get access to Prime shipping, a key feature that makes their products more enticing to customers who look for that particular shipping feature. Amazon also said it would start charging sellers for having low inventory in its warehouses. And it announced a surcharge on shipments sent to the company’s fulfillment centers if sellers didn’t split up the inventory to be shipped around the country, a service previously provided by Amazon for free.
Seller fees can eat up about half of the cost per sale, hurting merchant profits, according to research from Marketplace Pulse. Because of Amazon’s new fees, many third-party sellers either had to restructure their pricing strategy or pull entirely away from Amazon. As a result of the backlash, Amazon ended up retracting the fees in November. However, the damage had been done. Many sellers had already repriced their products or stopped selling on Amazon entirely and moved their products to more profitable marketplaces.
In addition to sellers shifting away from selling on Amazon’s marketplace, Amazon competitors like Walmart and Best Buy have continued to build out their marketplace offerings, which have lower fees compared to Amazon. As previously mentioned in our analysis of big-box retailers, Walmart’s equivalent to Amazon’s FBA is its Walmart Fulfillment Services, which costs sellers 15% less than other marketplaces, according to Walmart.
Walmart has continued to compete against Amazon in other fulfillment areas, as well. For example, Amazon offers shipping through an arm of the company called Amazon Logistics, which allows businesses to use Amazon’s delivery services to ship their products rather than use traditional delivery services like UPS and FedEx. In 2021, Walmart launched a similar shipping option called GoLocal, which allows businesses to use Walmart’s delivery services and routes. 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.
“As a last-mile delivery partner built by retail, for retail, Walmart GoLocal is committed to streamlining the last-mile delivery process for our clients,” said Rina Hurst, vp of Walmart GoLocal. “By integrating Walmart GoLocal into IBM Sterling, we’re taking convenience to the next level. IBM customers can now tap into Walmart GoLocal’s extensive last-mile delivery network and robust suite of delivery capabilities, empowering them to enhance efficiency and grow their business.”
Amazon is also facing strong competition from the recent improvements other retailers have made to their paid membership programs. Many retailers have added new benefits, such as Macy’s Red Carpet membership which provides exclusive discounts and Williams Sonoma’s membership program which offers free virtual classes.
However, shipping speed is the main feature many retailers have focused on to entice customers. “These programs are built around free and fast shipping,” said Blake Droesch, a retail analyst at eMarketer. Although the subscription wars are littered with players, Walmart is easily Amazon’s biggest competitor, in part because the world’s largest retailer, by sales, can afford to build out its own fulfillment network that rivals Amazon’s, Droesch added.
Similar to the challenges Modern Retail reported that Amazon faced in the e-commerce dimension of this Index, Amazon has also come up against heavy competition in the Index’s fulfillment dimension. However, a key difference between Amazon’s standings in the two dimensions is that Amazon has set the standard and is the top player when it comes to its fulfillment and supply chain strategies, while it plays on a more even field among competitors in the e-commerce dimension.