Big-box retailers ride strong sales to National 25 dominance

Rising energy costs didn't slow down shoppers last year as electronics merchants, home improvement shops, and discounters welcomed consumers with open arms and hot deals.

A top-performing industry sector nationally, retail also cleaned up in The Globe 100's first ''Globe National 25" ranking of the performance of publicly traded companies with headquarters elsewhere who have large operations here. With Home Depot Inc. and Lowe's Cos. grabbing the top two slots on the National 25, four other big merchants also landed in the top 10: Best Buy Co. Inc., Federated Department Stores Inc., Target Corp., and Wal-Mart Stores Inc.

Across the country, retail sales increased about 6.1 percent last year, according to the National Retail Federation, slightly higher than the 5.6 percent gain the group forecasted. Building materials stores, warehouse clubs, and electronics merchants saw the biggest growth, and sales at discount stores lifted during the holiday season.

Retail analysts say successful merchants began pushing the holiday season earlier and lured consumers into stores with deep discounts. But a slowdown in the housing market, coupled with soaring gas prices, have some analysts predicting a restraint in consumer spending this year. The National Retail Federation estimates sales will increase 4.7 percent this year, a smaller gain than in 2005.

Some of the state's biggest merchants describe Massachusetts as an attractive place to do business, offering a plentiful, well-trained workforce and dense population centers. Federated Department Stores, the parent company of Macy's, said it believes it has succeeded in winning the same loyalty Bay Staters once paid to Macy's predecessors Jordan Marsh and Filene's.

''People in Massachusetts are fiercely loyal," said Ed Goldberg, Macy's senior vice president of government and community affairs. ''There was a lot of concern when we took over the space once operated by Jordan Marsh. But we worked hard to dispel our image as just a New York department store. It took us a while, but once we were able to bridge that gap, people not only accepted us, but they developed the same fierce loyalty as with brands in the past."

Still, the Commonwealth isn't the easiest place to run a business. Finding developable space is one of the biggest challenges, said Mia Masten, a spokeswoman for Wal-Mart, which operates 48 stores in Massachusetts, including Sam's Clubs outlets. Moreover, Goldberg said it's costly to operate here between high taxes, requirements to pay employees time-and-a-half on Sundays, and curtailed retail hours on state holidays.

''There's a tremendous amount of taxation -- real estate, sales taxes, employment taxes," said Goldberg. ''It impedes our ability to grow."

Federated operated 32 stores last year in Massachusetts, although it is in the process of shrinking to 24 as it weeds out duplicate Macy's and Filene's locations.

Meanwhile, the rest of the top 10 in The Globe National 25 includes companies in a broad mix of industries that have large operations in Massachusetts: technology giant IBM Corp.; Procter & Gamble Co.; United Parcel Service Inc.; and Wyeth.

P&G became one of the largest employers in Massachusetts through its acquisition last fall of Boston's Gillette Co., which employed about 4,000 people in Massachusetts at its South Boston razor factory, Prudential building headquarters, and other facilities.

Since taking over Gillette, P&G has had to make decisions about what kinds of jobs to keep here, and which to move to its home base in Cincinnati. P&G has committed more than $200 million to upgrade Gillette's razor plant in South Boston, but it is making cuts in back-end operations at Gillette's corporate headquarters and moving the company's oral care business to Cincinnati.

Jenn Abelson can be reached at abelson@globe.com.