Headline Verdana BoldGlobal Powers of Retailing 2018 · study finds that global grocery sales ... and endless aisle assortment offered online, ... Aldi Group 9. Carrefour 10

Headline Verdana BoldGlobal Powers of Retailing 2018

Highlights

2© 2018. For information, contact Deloitte Touche Tohmatsu Limited.

Global Powers of Retailing

3© 2018. For information, contact Deloitte Touche Tohmatsu Limited

FY2016

Top 250 quick statistics

US$17.6 billionAverage size of Top 250

(retail revenue)

Source: Deloitte Touche Tohmatsu Limited. Global Powers of Retailing 2018. Analysis of financial performance and operations for fiscal years ended through June 2017 using company annual reports, Planet Retail database and other public sources.

FY2011-2016 Retail revenue CAGR

4.8% US$4.4 trillionAggregate retail revenue of Top 250

3.2%Composite net profit margin

US$3.6 billionMinimum retail revenue

required to be among Top 250

22.5%Share of Top 250 aggregate retail revenue from foreign operations

4.1%Composite YOY retail revenue

growth

3.3%Composite return on

assets

10Average number of countries with

retail operations per company

66.8%Top 250 retailers

with foreign operations


Wal-Mart continues its stint as the world’s largest retailer

Top 10 retailers

e: estimate

#1

#2

#3

#4

#5

#6

#7

Costco Wholesale Corporation

The Kroger Co.

Schwarz Group

Walgreens Boots Alliance, Inc.

Amazon.com, Inc.

The Home Depot, Inc.

Wal-Mart Stores Inc.

Aldi Group

Carrefour S.A.

CVS Health Corporation

#8

#9

#10

US

US

US

Germany

US

US

US

Germany

France

US

$ 485.8

$ 118.7

$ 115.3

$ 99.2

$ 97.0

$ 94.6

$ 94.5

$ 84.9 e

$ 84.1

$ 81.1

+4

-1

-2

+2

Key highlights

The top five largest retailers maintained

their positions on the leader board

A combination of organic growth,

acquisitions, and exchange rate volatility

shuffled the rest of the Top 10

Amazon moves up the leader board and

CVS joins the Top 10

The Top 10 continued to compose a

bigger share of industry sales, accounting

for 30.7% of the overall Top 250’s retail

revenue (compared to 30.4% last year)

FY2016 Retail revenue (US$ billions)Location Change in rank#: FY2016 Top 250 rank


Percentage share of Top 250 revenue by region and by top countries

Geographic breakdown

North America

47.8%

Europe

33.8%

Latin America

1.4%

Asia Pacific

15.4%

Africa/Middle East

1.5%

US

45.7%

China

ML/HK

3.7%

Japan

7.2%

Other Asia

Pacific

4.6%

France

7.9%

Germany

9.6%

UK

4.9%

Other

Europe

11.4%


Product sector breakdown

9.8%

Apparel and accessories

Fast-moving consumer goods

(FMCG)

66.4%

Hardlines and leisure goods

17.0%

Diversified

6.8%%Share of revenue

Key highlights

For the first time in four years, the apparel and accessories

sector was not the clear growth leader but they remained the most

profitable sector

Retailers of FMCG are by far, the largest companies (average

retail revenue of nearly US$21.7 billion) as well as the most

numerous (135 retailers accounting for 54% of all Top 250)

TOP 250Companies by sector

43

135

51

21

The strong growth of e-commerce giants Amazon.com and JD.com gave the

hardlines and leisure goods group’s composite revenue growth a big boost—

offsetting negative growth among 13 of the sector’s 51 companies

The diversified group has experienced persistently slow to no growth—its

composite revenue declined as three of the four largest diversified companies

posted negative top-line results

Percentage share of Top 250 revenue by primary product sector


FY2011-FY2016 CAGR

Top 10 fastest-growing retailers

e: estimate

#1

#2

#3

#4

#5

#6

#7

Albertsons Companies, Inc

JD.com, Inc.

Zalando SE

Reliance Industries Limited/ Reliance Retail

Southeastern Grocers, LLC

Axel Johnson AB / Axfood, Axstores

Vipshop Holdings Limited

Hudson’s Bay Company

Sprouts Farmers Market, Inc.

Lenta Group

#8

#9

#10

Key highlights

From FY2011-2016, the composite retail

revenue for the 50 fastest-growing

retailers increased at a CAGR of

20.9%—4X times faster than the growth

rate for the Top 250

38 of the fastest 50 companies were

also among the 50 fastest-growing

retailers in FY2015

Three of the top four retailers on this list

are exclusively focused on e-commerce:

Chinese retailers, Vipshop and JD.com¹,

and German apparel specialist, Zalando

FY2016 Retail revenue (US$ billions)Location FY2011-2016 Retail revenue CAGR#: Growth rank ** Revenue includes wholesale

and retail sales

China

US

China

Germany

India

US

Sweden

Canada

US

Russia

$ 7.9

$ 59.6

$ 35.7

$ 4.0

$ 4.9

$ 10.5 e

$ 6.0 **

$ 10.9

$ 4.0

$ 4.5

103.8%

74.0%

62.6%

48.1%

34.5%

31.7%

31.6%

30.3%

29.6%

27.8%

121

17

28

227

189

92

164

87

226

207

Top 250 rank

CAGR

¹Both Vipshop and JD.com have investment from

Tencent. These e-commerce players have been aggressively considering investments in integrated online and offline business operations. This will be one of the most important trends for the future of retail.


10 retailers joined or re-entered the ranks of the Top 250

New entrants to the Top 250

FY2016 retail revenue growth (%)Location

Top 250 rank

Reliance Industries Limited / Reliance Retail India 189 Supermarket 59.2%India

Save-A-Lot 198 Discount Store neUS

42.3%

Zalando SE 227 Non-store 23.0%Germany

Sugi Holdings Co., Ltd. 231 Drug Store/Pharmacy 4.2%Japan

Heiwado Co., Ltd. 236 Hypermarket/Supercenter/Superstore 0.1%Japan

Bass Pro Group, LLC 240 Other Specialty 22.4%US

East Japan Railway Company (JR East) 241 Convenience/Forecourt Store -0.1%Japan

Migros Ticaret A.Ş. 247 Supermarket 17.8%Turkey

Intersport Deutschland eG 250 Other Specialty 4.5%Germany

Dominant operational format

ne: not in existence (created by divesture or merger)

JB Hi-Fi Limited Electronics SpecialtyAustralia218


Retail trends


Transformative change, reinvigorated commerce

Retail trends

Building world-class digital capabilities

Retailers across the globe are rapidly adapting to the fact that, from the consumer perspective, shopping is not about bricks versus clicks or one channel versus another. Instead, consumers are channel-agnostic.

Combining bricks and clicks makes up for lost time

Many players that may have initially been on the sidelines, failing to keep up with digital trends, are now making up for lost time in a big way. A recent study finds that global grocery sales through e-commerce channels jumped 30% in the past year.

Voice-controlled electronic devices powered by artificial intelligence technology, like Amazon Echo, Echo Dot, and Google Home, are disrupting the path to purchase.

Creating unique and compelling in-store experiences

Physical retail stores are not going away; 90% of worldwide retail sales are still done in physical storesBut to compete with the convenience and endless aisle assortment offered online, meaningful customer experiences and brand engagement is crucial.

Reinventing retail with the latest technologies

The Internet of Things, artificial intelligence, augmented and virtual reality, and robots should be on every retailer’s radar.

In the 2016 report The New Digital Divide, Deloitte found that digital interactions influence 56 cents of every dollar spent in bricks-and-mortar stores, up from 36 cents just three years prior.

6 countries leading the e-commerce growth charge were China (+52%), South Korea (+41%), the UK (+8%), France (+7%), and Japan and the US (both +5%).

US supermarket chain Hy-Vee is now teaming with OrangeTheory fitness centers to open locations in some stores and integrate training and nutrition services.


We asked young consumers from Pearson College London to share with us how they and their peers shop and how they see the future of retailing

Retailing through the lens of young consumers

Key highlights

Omnichannel presence of the retailer, sustainably sourced products,

customer service, and value for money are the key factors young consumers

look for while shopping

There was a divide between male/female consumers for online shopping,

there is more choice for females, males prefer to see the product before

purchasing

Groceries and small ticket items like electronics, books, and music are

more likely to be purchased online

Huge product assortment, ease of purchase, and competitive pricing drive

online shopping

Inability to experience the product and trust issues with the website are

barriersFuture of Retailing

Cryptocurrencies will become increasingly important as future payment systems (e.g., Bitcoin, Ethereum, IOTA), although the rate of adoption will be dependent on the relative development of countries.

Innovative user-friendly experiential stores will act as retail galleries which allow customers to create their personalized shopping experience through AR/VR technologies.

New technologies such as smart tagging and smart check-outs will no longer be supplemental to the shopping experience, but fundamental.

Shift in payment systems Adoption of AR/VR technologies Smart tagging and smart check-outs


This retrospective infographic looks at how the Top 250 has changed over the last 15 years

A retrospective: Then and now

Finding growth has been a challenge A markedly different looking Top 10

FY2001

1. Wal-Mart

2. Carrefour

3. Ahold

4. Home Depot

5. Kroger

6. Metro

7. Target

8. Albertson’s

9. Kmart

10. Sears

FY2016

1. Wal-Mart

2. Costco

3. Kroger

4. Schwarz Group

5. Walgreens Boots Alliance

6. Amazon

7. Home Depot

8. Aldi Group

9. Carrefour

10. CVS Health

Walmart has retained its pole position at the top of the retailer leader board for over 20 years.

Only 4 of the Top 10 retailers in FY2016 were on the Top 10 listin FY2001.

Amazon has skyrocketed from No. 157 in FY2001 to No. 6 in FY2016 as its retail revenue approaches US$100B.


Global economic outlook


• Slower growth of working age populations

• Declining labor force participation in some markets

• Slow productivity growth, despite rapid leaps in technology

Global issuesModest growth in developed economies

0

1

2

3

4

5

6

Germany Japan Korea United Kingdom United States

Source: OECD/Haver Analytics

Productivity growth in the last three recoveriespercent, annual average

1992-1999 2002-2007 2010-2015


• Tight labor markets have not generated accelerating wages

• Excess capacity dampens prices

• Deflationary psychology lingers

Global issuesLow inflation despite tight labor markets

Core inflation low except in UK


Global issuesAsset price bubbles and monetary policy

Global equity index

FTSE 100 in US dollars

• Equity, bond, and property prices have soared

• One explanation is very low interest rates

• Another is a herd mentality generating a bubble

• Future tightening of monetary policy could prick the bubble, seize up credit markets


• Growth accelerating, fueled by exports and consumer spending

• Inflation remains low, but Fed starts to tighten

• Income growth is slow, but consumers are eager to spend

• Risks include higher interest rates and trade wars

United StatesStrong economy with risks


ChinaStable growth, rising debt

• Growth remains strong, partly fueled by government stimulus

• Consumer spending remains small share of economy

• Debt is fueling growth, leading to concerns about financial stability

• Demographics bode poorly for growth


EurozoneStrong growth, uncertain politics

Eurozone real retail sales index

• Strength in Germany, Spain, Netherlands

• Rebound in growth in France

• Risk: fraying politics

• Very strong growth

• Weak euro boosts exports

• Declining unemployment helps retail

• Inflation remains low, ECB policy loose


United KingdomBrexit hurts retail

UK real retail sales growth

• Drop in pound caused rise in inflation, drop in real wages, decline in retail sales

• Uncertainty about Brexit causes weakening of investment

• Agreement between UK and EU means that Britain won’t fall off cliff


JapanRebound in growth

Japan real growth of consumer spending

• Growth rebounds due to strong exports, fueled by weak yen

• Despite tight job market, wages stagnate, hurting retail sales

• Possible rise in national sales tax bodes poorly for consumer spending

• Demographics are a big worry


Contact us


Contact us

Tian Bing Zhang

Deloitte Consumer Products and Retail Industry

Leader Partner

Email: [email protected]

Sunny Jiang

Deloitte Consumer Products and Retail Industry

Program Manager


Lydia Chen

Deloitte Research

Director


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© 2018. For information, contact Deloitte Touche Tohmatsu Limited.

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Headline Verdana BoldGlobal Powers of Retailing 2018 · study finds that global grocery sales ... and endless aisle assortment offered online, ... Aldi Group 9. Carrefour 10