Global Powers of Retailing 2018 - Transformative change, reinvigorated commerce - Retail Capabilities
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Global Powers of Retailing 2018 Transformative change, reinvigorated commerce
Contents Australian Edition Introduction 4 Global retailers in the Australian market 6 Australian economic outlook 10 Global Report 2018 Top 250 quick statistics 12 Retail trends: Transformative change, reinvigorated commerce 13 Retailing through the lens of young consumers 16 A retrospective: Then and now 18 Global economic outlook 20 Top 10 highlights 24 Global Powers of Retailing Top 250 26 Geographic analysis 34 Product sector analysis 38 New entrants 41 Fastest 50 42 Study methodology and data sources 47 Endnotes 51 Contacts 55
Global Powers of Retailing identifies the 250 largest
retailers around the world based on publicly available
data for FY2016 (fiscal years ended through June 2017),
and analyses their performance across geographies
and product sectors. It also provides a global economic
outlook and looks at the 50 fastest-growing retailers and
new entrants to the Top 250.
This year’s report will focus on the theme of
“Transformative change, reinvigorated commerce”, which
looks at the latest retail trends and the future of retailing
through the lens of young consumers. To mark this 21st
edition, there will be a retrospective which looks at how
the Top 250 has changed over the last 15 years.
3Global Powers of Retailing 2018 | Retail trends
Introduction
Highlights
The Global Powers of Retailing Top 250 companies achieved Just as Amazon has been the talk of the town in Australia
profitable growth in FY2016. Retail revenue increased for this year with its initial on-shore foray into the market, so it
nearly three-quarters of the world’s 250 largest retailers (181 continues to be the one to watch from a global perspective.
companies), resulting in a currency-adjusted composite growth Amazon first joined the Top 250 in the year 2000, and with
rate of 4.1 percent, albeit lower than the previous year’s 5.2 remarkable year on year growth it entered the top 10 for
percent growth. Ninety percent of the retailers that disclosed the first time last year. Amazon has continued its rise to
their bottom-line results (176 of 195 companies) operated the top, taking out 6th spot in the list this year. Amazon’s
profitably - the same as last year. On a composite basis, the aggressive push into grocery, including its acquisition in 2017
reporting companies posted a net profit margin of 3.2 percent of the bricks-and-mortar grocer Whole Foods Market, should
in FY2016 and generated return on assets of 3.3 percent. continue to propel the company forward. If Amazon continues
to grow at its current rate, it will become the second largest
In aggregate, retail revenue for the Global Powers of Retailing retailer in just two years’ time.
Top 250 companies topped US$4.4 trillion in FY2016 (up from
$4.3 trillion in FY2015), resulting in an average of US$17.6 billion Wesfarmers and Woolworths continue to be ranked highly
per company. However, less than a quarter of retailers (55 of in the Top 250 at 21st and 23rd respectively (2015: 21st and
250 companies) achieved sales above this average in FY2016. 24th respectively). However, Australia has a third company
represented in the Top 250 in FY2016. With annual revenues of
To join the ranks of the Top 250 in FY2016 required retail US$4.2 billion, Australia’s JB-Hi Fi has joined the list at number
revenue of at least US$3.6 billion, up slightly from the prior 218. This has been driven both by consistent year-on-year
year’s Top 250 results due in part to a strengthening global comparative sales growth together with the recent acquisition
economy, increased consumer spending, and some favourable of The Good Guys in November 2016 which accounted for
foreign currency exchanges against the US dollar. Twenty Top AU$1.25 billion of additional sales in FY17.
250 companies exceeded US$50 billion in retail revenue in
FY2016, while 62 retailers fell below the US$5 billion threshold,
which was five fewer than the previous year’s ranking. The level
of retail globalisation has stabilised somewhat in recent years
as retailers have focused on improving existing operations and
turned their attention to e-commerce initiatives. Two-thirds of
the Top 250 retailers (167 of 250) operated outside their home
country. On average, they had retail operations in 10 countries
and derived 22.5 percent of their composite retail revenue
from foreign operations.
4Global Powers of Retailing 2018 | Retail trends
Australian perspective Global perspective
In 2017 we saw a retail market that was growing overall, Overall, the outlook for the global retail market appears
but at the same time the level of competition amongst to be relatively positive. The US in particular is experiencing
retailers also continued to increase. Ongoing population strong growth, and we are also seeing a resurgence in
growth, a strong tourism market and improving wages Japan. Australia’s main trading partner, China, is also
are all set to ensure the overall retail market continues forecast to see steady growth in the year ahead which
to grow at circa 3% in 2018. However, with the increase should create further opportunities for Australian retailers
in competition from both international and domestic selling into Australia. There are three potential threats to
retailers, we can expect to see further consolidation in the this global stability: private sector debt levels in China,
sector. Just what the impact of Amazon’s onshore business over-reaction by the central banks to tax cuts and the
in Australia will be, we’ll have to wait and see – but it’s threat of greater protectionist policies.
important to remember that this also creates opportunities
for Australian retailers.
David White
Whilst the global retail environment appears to be relatively National Leader – Australia
stable, in Australia we are seeing a number of potential Retail, Wholesale & Distribution Group
disruptors which could have a significant impact on the
retail landscape. Amazon’s operations will start to ramp-up
in 2018 and there are a number of other major international
retailers who continue to expand and take market share.
There are also huge untapped opportunities for Australian
retailers to sell through to the Chinese market. Building
partnerships with the likes of Alibaba, JD.com and VIP.com
will be an important strategy for many Australian retailers to
grow and expand in 2018.
5Global Powers of Retailing 2018 | Retail trends
Global retailers in the Australian market
During the past 12 months we have continued to see new global retailers enter the Australian market and existing
retailers expand their operations. The table summarises the Top 250 Global Retailers currently operating in Australia.
“2016 retail “2016 group “2016 group
revenue revenue net income
Name 2016 2015 Country of origin (US$m)” (US$m)” (US$m)”
Costco Wholesale Corporation 2 2 US 1,18,719 1,18,719 2,376
Amazon.com, Inc. 6 10 US 94,665 1,35,987 2,371
Aldi Einkauf GmbH & Co. oHG 8 8 Germany 84,923 84,923 n/a
Seven & i Holdings Co., Ltd. 20 20 Japan 51,385 53,859 1,023
Wesfarmers Limited 21 21 Australia 47,690 51,569 2,165
Woolworths Limited 23 24 Australia 40,773 41,943 1,201
The IKEA Group (INGKA Holding B.V.) 27 27 Netherlands 37,982 38,953 4,676
The TJX Companies, Inc. 32 31 US 33,184 33,184 2,298
Apple Inc. / Apple Retail Stores 34 33 US 28,600 2,15,639 45,687
LVMH Moët Hennessy – Louis Vuitton S.A. 35 38 France 26,904 41,593 4,826
Inditex, S.A. 38 43 Spain 25,734 25,734 3,490
H & M Hennes & Mauritz AB 42 47 Sweden 22,602 22,602 2,191
Fast Retailing Co., Ltd. 58 67 Japan 15,739 15,763 477
The Gap, Inc. 61 60 US 15,516 15,516 676
Marks and Spencer Group plc 67 58 UK 13,837 13,837 151
Steinhoff International Holdings N.V. 68 72 S. Africa 13,596 14,909 1,364
John Lewis Partnership plc 70 65 UK 13,361 13,361 471
L Brands, Inc. 76 78 US 12,574 12,574 1,158
Toys "R" Us, Inc. 82 82 US 11,540 11,540 – 29
Décathlon S.A. 86 94 France 11,062 11,062 n/a
Otto (GmbH & Co KG) 89 92 Germany 10,805 14,604 45
NIKE, Inc. / Direct to Consumer 109 123 US 9,082 34,350 4,240
GameStop Corp. 112 104 US 8,608 8,608 353
Foot Locker, Inc. 125 126 US 7,766 7,766 664
Dufry AG 127 152 Switzerland 7,736 7,946 46
Kering S.A. 128 137 France 7,727 13,700 961
Compagnie Financière Richemont SA 138 141 Switzerland 7,007 11,677 1,327
Staples, Inc. 148 89 US 6,662 18,247 – 1,497
Office Depot, Inc. 170 130 US 5,603 11,021 529
Next plc 175 149 UK 5,443 5,460 847
Williams-Sonoma, Inc. 188 185 US 5,084 5,084 305
Woolworths Holdings Limited 191 197 S. Africa 4,944 4,944 400
Hermès International SCA 204 203 France 4,613 5,754 1,221
JB Hi-Fi Limited 218 NA Australia 4,240 4,240 130
Forever 21, Inc. 229 201 US 4,000 4,000 n/a
Tiffany & Co. 232 226 US 3,903 4,002 446
Coach, Inc. 238 232 US 3,810 4,488 591
Ralph Lauren Corporation 243 224 US 3,682 6,653 – 99
6Global Powers of Retailing 2018 | Retail trends
There are 38 of the Top 250 global retailers operating in Australia – one lower than last year. We’ve seen one new international
player enter the Australian market as well as another Australian company, JB Hi-Fi, making the Top 250 list in 2017. This increase
has been offset by two companies who continue to operate in Australia but who have fallen out of the top 250 and a third, Lowes
Inc., who have exited their operations in Australia with the closure of Masters home improvements business.
Notwithstanding this decrease, international retailers continue to expand their operations in Australia – and 2018 could see some
of the most dramatic changes we’ve seen for many years in the Australian retail landscape.
Country of origin for top 250 retailers Categories of top 250 retailers
operating in Australia operating in Australia
8% 8%
5%
8% 34%
45%
5% 32%
5%
5%
8% 5% 13%
11% 8%
US Japan Apparel/Footwear Speciality
France UK Department store Electronics Specialty
Australia Switzerland Supermarket Other
Germany Other
South Africa The largest category of the Top 250 retailers operating in
Australia continues to be apparel/footwear at 34% (36%
last year). The high demand for international branded
US retailers continue to be over-represented in the
apparel has been the key driver historically for the influx
Australian market, with 45% of the Top 250 retailers
of international retailers into Australia. Demand for the
operating in Australia being head-quartered in the US,
products, brands and experiences that these international
down from 50% last year. In contrast US retailers make
retailers brings remains strong, and so domestic retailers
up 32% of the Top 250 globally. With the growth in the
can expect competition to only increase further.
Asia Pacific region, in particular China, we can expect this
percentage to rebalance over the coming years.
7Global Powers of Retailing 2018 | Retail trends
The changing retail landscape in Australia
The table below summarises the movements in the
Top 250 list of retailers operating in Australia in 2017.
Name 2016 2015 Country of origin Retail Segment In/Out Change
JB Hi-Fi Limited 218 n/a Australia Electronics Specialty In New to Top 250
Marks and Spencer Group plc 67 58 UK Department store In New to Australia
Debenhams plc n/a 241 UK Department store Out Out of Top 250
Abercrombie & Fitch Co. n/a 248 US Apparel/Footwear Specialty Out Out of Top 250
Lowe's Companies, Inc. 15 15 US Home improvements Out Exited Australia
New entrants We also continue to see strong interest from international
retailers for acquisition opportunities in Australia. Following the
Whilst Marks & Spencer doesn’t have a physical bricks and mortar
acquisitions of the likes of David Jones by Woolworths Limited and
presence in Australia, they have now established a dedicated online
Trade Secrets by TJX Companies Inc., 2017 saw the acquisition
Australian business. With products tailored to the Australian market
of the Retail Apparel Group (whose brands include Tarocash,
(particularly seasons) as well as competitive delivery services and
Connor, yd., Johnny Bigg and Rockwear) by South African retailer
fees, it’s certainly one to watch out for in the next 12 months or so
The Foschini Group for AU$302M. With the continued competitive
as the Marks & Spencer seeks to establish its customer base. Whilst
pressures in the Australian retail market we can expect to see
there are no public plans for Marks & Spencer stores in Australia,
further consolidation in 2018, particularly in the apparel sector.
we’ve seen other international retailers test the Australian market
via online prior to launching a physical presence.
Over the past 12 months we’ve also seen new players outside of
the Top 250 enter Australia – and this trend looks set to continue.
JD Sports, the UK sports-fashion retailer, now has five stores in
operation in Australia. We also saw the French owned retailer
Decathlon open its first bricks and mortar store in Australia in
2017 having initially started trading via online. The luxury retail
market in Australia also continues to expand, with well-established
international players such as Swarovski and Tiffany & Co. opening
new stores, expanding existing footprints and introducing new
brands to the Australian market.
8Global Powers of Retailing 2018 | Retail trends
The calm before the storm
Notwithstanding the number of Top 250 global retailers has China: The third major factor to look out for in 2018 is China, more
fallen to 38, we are potentially facing one of the most disruptive specifically Chinese retailers and e-platform operators expanding
periods in the history of the Australian retail market. The three key their operations in Australia. Whilst US and European retailers
disruptors to look out for are: dominate the Top 250, the number and size of Chinese retailers
continues to grow rapidly. To date, many of these retailers have
Amazon: The launch of Amazon’s Australian platform has been predominately domestic-focused, but this is beginning to
dominated the headlines over the past 12 months. Amazon has change. A number of Chinese retailers and e-platform providers
long been servicing Australian consumers through its offshore are either entering the Australian market or expanding their
business, and so is not considered to be a “new” entrant into operations here. They currently aren’t selling products to
Australia. Whilst Amazon’s initial launch of its onshore business Australian consumers, but rather sourcing and selling highly
didn’t have the “big bang” effect that some commentators were sought after Australian products to Chinese consumers.
expecting, you underestimate Amazon at your peril. As Amazon
builds out its infrastructure and services in Australia in 2018 we At the start of 2017, the e-platform provider Alibaba opened its
can expect their presence and influence on the market to grow Australian headquarter in Melbourne, and JD.com is expected
significantly, particularly in the second half of the year and in the to follow suit shortly. Chinese online retailer Vipshop Holdings
lead up to Christmas. (VIP.com) opened its new distribution centre in Sydney in
November 2017 as the Chinese online retailer seeks to partner
Lidl: With so much focus on Amazon’s market entry into Australia, with more Australian retailers. With Vipshop Holdings and JD.com,
we shouldn’t forget another potential major disruptor on the Inc. making up 2 of the 3 fastest growing companies in the Top 250,
horizon. There continues to be significant speculation that the they are starting to make a significant impact on the global retail
discount supermarket operator Lidl, owned by the 4th largest market. This provides Australian retailers with a huge opportunity
retailer in the world The Schwarz Group, are preparing to enter the to take advantage of the high demand for Australian products.
Australia market following recent land purchases, securing of trade
marks and talent acquisition in Australia. Should Lidl choose to set With only 15% of the Top 250 retailers globally operating in the
up shop in Australia it will take time for the full effect to be felt, in Australian market, we can expect further competition to come
much the same that Aldi took a number of years to grow its market from international retailers. And with so much change and
share here. The impact of Lidl in markets such as the UK has been uncertainty in the Australian retail landscape, 2018 could be
transformational to the sector, and so we wait to see what their a pivotal year for many Australian retailers.
plans may be for Australia.
9Global Powers of Retailing 2018 | Retail trends
Australian economic outlook
The Australian economy made some The retail environment has been difficult,
but it is still a growth environment.
gains last year, as employment, business
confidence and investment outcomes Deloitte’s Retailers’ Christmas Survey 2017 gauged retailers’ attitudes
leading into the Christmas season last year, a crucial period for
improved. But the retail sector is lagging retailers. Nearly 70% of retailers expected Christmas sales in 2017
behind the broader growth in the to exceed those in 2016. Retailers are also optimistic about margins,
Australian economy, as retail turnover, with 42% expecting consistent margins to last year and 43%
retail employment and wages in the sector expecting margin growth.
suffer due to intense competition and Despite some areas of weakness in the sector, retail profitability
pinched consumers. Luckily, international in Australia is also still in reasonable shape. Profits have held up
retailers are not deterred by the weak relatively well in light of increased competition, consumer budget
points of the sector, and many of the strains pressure and rising input costs. Still, the promises of increased
competition in the future (from more international retailers, further
on retail spending are likely to ease in 2018. shifts to online retail and Amazon) will keep retailers on their toes.
Shaky retail sales growth during most of 2017 reflected fragile
And Australia is considered an appealing destination for
consumer confidence, continuing underemployment and wealth
international retailers. Australia’s economy has a track record of
risks for homeowners. Over the year to November 2017, retail
26 years without a recession and poses less risks than many other
sales grew by approximately 2.9% (helped significantly by a jump
destinations, our population is growing quickly, and retail profit
in sales during November) and prices were flat. Recent very strong
margins provide opportunities for new entrants. Our growing
jobs growth should provide retail with a kick start to 2018, with
tourism visitation is also an incentive for retailers with international
both stronger pricing and sales volume growth than seen in 2017
brands to locate here.
expected through the year.
Our popularity with international retailers is having an effect not just
It’s not just retail turnover which has seen weakness over the past
on competition for consumers, but also for retail space. The number
year - retail employment and wages have been struggling to keep up
of new large-scale international entrants setting up operations in
with other industries. Low turnover growth and intense competition
Australia is keeping demand for retail space, particularly in prime
is forcing operators across the sector (but particularly in non-food,
CBD locations, strong despite weak overall retail turnover growth.
discretionary categories such as fashion) to cut costs. Just as retail
As a result, retail vacancy rates were reported to be as low as 1.5%,
price growth is well below the wider economy, retail wage growth
and Sydney’s Pitt Street Mall has climbed up to the seventh most
and employment growth has been trailing behind as well.
expensive retail location in the world.
10Global Powers of Retailing 2018 | Retail trends
Looking to 2018, there is some cause for encouragement. Australia’s
population growth is exceeding most developed countries, at 1.6%.
And tourism numbers are growing by almost 7% per year, and
contributing around 40% of the increase in retail spending growth.
Both these sources of additional consumers are expected to
improve retail volume growth through 2018. The shaky performance across
In terms of average buying power, consumers were hit by three key
the retail sector across most
issues last year. First, homeowners perceived risks in the housing of 2017 is not a deterrent for
market, as what had been rampant house price growth showed
some signs of slowing down late in 2017 (limiting the ability and
international retailers. While
willingness to spend from wealth). Secondly, minimal wage growth there are still risks to be wary
limited consumers’ abilities to grow their spending out of income.
And thirdly, rising cost of living pressures, particularly in energy
of (housing market risks,
costs and health care, diverted a significant part of the consumer rising living cost pressures
budget towards non-retail spending.
and intense price competition),
But this year, some improvement is likely. The last 12 months saw strong population growth, a
Australia deliver a stunning gain of 380,000 jobs, which will provide
good impetus for income growth in the early part of 2018. This is
buoyant tourism market and
also likely to lead to see some improvement in wage growth from improving wages are all set to
the record lows seen in 2016 and 2017. These forces are expected
to ease the pressure on consumers of rising living costs. While
keep retail running in 2018.
housing market risks are continuing (and may be exacerbated)
this year, strong population growth and a cooling in the residential
construction market, as well as continued low interest rates, may
reduce the magnitude of a housing downturn going forward.
David Rumbens
Deloitte Access Economics
11Top 250 quick statistics, FY2016
5 year retail
revenue growth US$4.4 Composite
net profit margin
(Compound annual
growth rate CAGR trillion 3.2%
from FY2011-2016) Aggregate
4.8% retail revenue
of Top 250
US$17.6 Minimum retail
revenue required to be
Top 250
retailers with foreign
billion among Top 250 operations
Average size US$3.6 66.8%
of Top 250
(retail revenue) billion
Composite
year-over-year retail 3.3% 22.5% 10
revenue growth Composite Share of Top 250 Average number
4.1% return on assets aggregate retail revenue
from foreign
of countries with
retail operations
operations per company
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.
12Global Powers of Retailing 2018 | Retail trends
Retail trends: Transformative
change, reinvigorated commerce
It is a transformative time in retail. The shopper is clearly in Building world-class digital capabilities
the driver’s seat, enabled by technology to remain constantly
Retailers across the globe are rapidly adapting to the
connected and more empowered than ever before to drive
fact that, from the consumer perspective, shopping
changes in shopping behavior. “Everywhere commerce” has
is not about bricks versus clicks or one channel
taken root, allowing consumers to shop however, wherever, and
versus another. Instead, consumers are channel-agnostic. The
whenever they want—whether in stores, online, by mobile, voice
shopping journey and pre-shopping research is a fluid process
activation or click-and-collect.
with consumers bouncing between online and offline along the
path to purchase.
Across the retail industry, disruption of traditional business
models has given way to unprecedented and transformative
Just how much digital influences consumer spending is a real
change—change required online and offline to better serve
eye-opener. In the 2016 report The New Digital Divide, Deloitte
more demanding shoppers and redefining customer experience.
found that digital interactions influence 56 cents of every
Innovations and transformations are happening faster and at a
dollar spent in bricks-and-mortar stores,2 up from 36 cents
greater magnitude than ever, presenting challenges for retailers
just three years prior.3 Furthermore, people who shop using
accustomed to balancing conventional performance metrics like
different methods—including online, mobile and visits to a
growth, profitability, and space productivity.
physical store—spend more than double those who only shop at
bricks-and-mortar stores, according to Deloitte’s The Omnichannel
The standards are shifting, however, as some of the world’s
Opportunity study.4
nimblest and fastest-growing retailers—recognised industry
disruptors like Amazon and JD.com—actively forego short-term
This means retailers must adequately and holistically plan,
profitability in their quest instead for customer acquisition, top-
strategise, and execute across all channels, regardless of whether
line expansion, and retail dominance. Established and entrenched
the ultimate sale happens in-store or online. A seamless shopping
retailers could be at risk of losing customers and market share to
experience is no longer a nice to have, but an imperative. And it
these retail disruptors who are able to exploit organisational and
is a key reason why retailers worldwide are heavily investing in
operational agility.
online and digital.
Stores are closing as retail spending moves online at a meteoric
More than ever, the retail industry is rife with examples of
pace, gets overturned by spending on services, and some
companies building, buying, or partnering to attain much-needed
retailers generally lose favour with consumers. In fact, the US
e-commerce and last-mile capabilities. Most notably is Amazon’s
saw a record number of store closings in 2017, with 6,885 stores
rapid ascent up the Top 250 ranking from its debut at No. 186
already having shut their doors by 1 December.1 Among those
in FY2000 to No. 6 in this year’s report. The retail giant is bigger
rationalising their store bases are Macy’s, J.C.Penney, Sears/Kmart
and more powerful than ever. It continues to enter new markets,
and a host of mall-based apparel specialists. Stores across the
expand product categories, and test new technologies and
globe face a similar fate as retailers close unprofitable stores to
concepts, leaving a path of disruption in its wake.
instead focus on their most productive and promising locations.
The rules of retailing indeed are being rewritten in this time of
transformative change. Innovation, collaboration, consolidation,
integration, and automation will be required to reinvigorate
commerce, profoundly impacting the way retailers do business
now, and in the future.
13Global Powers of Retailing 2018 | Retail trends
In what could be one of its biggest moves to date, Amazon gained which Auchan is a leading shareholder.15 French supermarket chain
an instant bricks-and-mortar presence when it bought natural Casino has inked a deal with online retailer Ocado to leverage the
supermarket Whole Foods Market in August 2017. The deal gives latter’s technology platform to launch an e-commerce business in
Amazon access to more than 450 physical pickup points and fresh France.16 In Spain, DIA is partnering with online discount retailer
food “distribution centres” located throughout the US. The retailer MeQuedoUno to expand its e-commerce offer in electronics and
also is preparing its internally developed checkout-free Amazon Go other household goods.17
convenience concept for prime time. A single store has been in test
mode by company associates since early 2017. Meanwhile, since the Amazon/Whole Foods combination was
announced, it seems not a day goes by in the US without another
Combining bricks and clicks makes up for supermarket player aligning with third-party provider Instacart
lost time on grocery home delivery. Instacart’s increasingly lengthy and
impressive list of retail partners includes Kroger, Price Chopper,
The rest of the retailing world is not about to sit idly
Publix, Stop & Shop, Wegmans, and even hard discounter
by and watch Amazon shoot up the retail ranks and
Aldi. Instacart recently crossed north of the border, forging an
steal market share. Many players that may have initially been on the
e-commerce alliance with Canadian’s top grocer Loblaw.18
sidelines, failing to keep up with digital trends, are now making up
for lost time in a big way.
Interestingly, Amazon has been busy designing some partnerships
of its own to try and solve the last-mile delivery conundrum. The
A recent study finds that global grocery sales through e-commerce
retail giant broadened its collaboration with UK grocer Morrison’s
channels jumped 30 percent in the past year.5 Countries leading
to bring one-hour grocery delivery to London-area shoppers.19
the growth charge were China (+52%), South Korea (+41%), the
In the US, Amazon is pairing with several shoppable recipe sites,
UK (+8%), France (+7%), and Japan and the US (both +5%). China is
including Allrecipes,20 EatLove,21 and Serious Eats,22 to add buying
the world’s dominant e-commerce—and mobile—market.6 Two
and delivery services, typically through its Prime Now offer. The
of the top three fastest-growing retailers in 2016 are China-based
e-tailer also recently opened the “Amazon Smart Home Experience”
e-commerce retailers Vipshop and JD.com.
inside select Kohl’s department stores in Los Angeles and Chicago,23
including an area inside the store that accepts Amazon returns.
The world’s largest retailer Wal-Mart has made it clear that
e-commerce is one of the company’s strategic pillars. Wal-Mart is
Creating unique and compelling in-store
pumping billions in capital investment to introduce Grocery Online,
experiences
ramp up click-and-collect capabilities, and leverage its vast network
of stores to marry online and offline assets and gain an edge over Physical retail stores are not going away; 90 percent
Amazon.7 The retail behemoth also has been on an acquisition of worldwide retail sales are still done in physical
spree of late, buying the likes of Jet.com,8 ShoeBuy,9 Moosejaw,10 stores.24 But to compete with the convenience and endless aisle
ModCloth,11 and Bonobos12 to quickly attain e-commerce assortment offered online, meaningful customer experiences and
capabilities in lieu of building from the ground up. brand engagement is crucial. Apple Stores and Nike Retail are held
as the gold standard in this regard.
Increasingly though, forging e-commerce partnerships, in which
each party brings something unique to the table, is gaining traction. Other bricks-and-mortar retailers are realising the importance of
Wal-Mart and JD.com formed a strategic alliance in June 2016, creating unique and curated merchandise offers, an exciting and
positioning the world’s No. 1 retailer for growth in China. As part entertaining atmosphere, and concierge-like service levels beyond
of the deal, Wal-Mart sold its Yihaodian e-commerce business to what consumers can find online. What is starting to happen inside
JD.com and took a 5 percent stake in JD that has since grown to 10 grocery stores across the globe is a good example.
percent.13 More recently, JD.com partnered with leading Thai retailer
Central Group too, with plans to launch an online shopping site in Grocers are transitioning from providers of goods to purveyors of
Thailand in 2018.14 services and solutions, with food, health, and wellness converging
in a retail setting. A host of retailers already have added in-
French grocer Auchan and Chinese e-commerce technology store health clinics and on-site nutritionists and dieticians. US
platform Alibaba are bringing together their respective offline and supermarket chain Hy-Vee is now teaming with OrangeTheory
online expertise to explore new retail opportunities in China’s food fitness centers to open locations in some stores and integrate
sector, leveraging the physical presence of Sun Art Retail Group, in training and nutrition services.25 In the UK, Debenhams is trialing
fitness centers in collaboration with gym specialist Sweat!26
14Global Powers of Retailing 2018 | Retail trends
Lowe’s home improvement chain is rolling out its “Smart Home To challenge Amazon’s Alexa, Wal-Mart began partnering with
powered by b8ta” connected-home store-within-a-store Google in October 2017 to bring voice-assisted shopping to its
experience to more stores.27 The fast-growing b8ta electronics customers using Google Home.32 Google also has recruited The
startup has a reputation for exceptional service and product Home Depot 33 and Target 34 as retail partners adopting Google
knowledge provided by staff known as “b8ta testers.” Now Assistant for voice shopping.
Lowe’s offers a curated selection of smart home products that
encourage hands-on play with shops staffed by none other than Leading edge technology also is being deployed inside stores
b8ta testers to support the shopping process. Macy’s is adding to enhance and personalise the shopping experience—and
b8ta outposts inside its flagship stores as well.28 generally drive in-store traffic. IKEA has integrated an AR/VR
experience in its new pop-up concepts throughout the Middle
It would be remiss not to mention how fast fashion retailers East.35 German consumer electronics retailer Ceconomy, spun
across the globe continue to disrupt the apparel sector. Spain’s off from Metro in July 2017, has launched a VR application for its
Inditex (Zara), Sweden’s H&M, and Japan’s Fast Retailing (Uniqlo) Saturn banner,36 enabling shoppers to browse for 100 selected
have each grown sales at a double-digit annual pace, on average, products in two virtual environments. Spain’s El Corte Ingles
during the last five years. These retailers have reduced the immerses shoppers on a wine journey with its VR app promoting
fashion cycle to about five weeks compared with traditional its range of Rioja wines.37
retailers’ six to nine months.29 Providing consumers immediate
gratification of affordable fashion-forward merchandise In-store robots are being trialed by several retailers to handle
differentiates these retailers in the marketplace. routine and often mundane tasks, and improve efficiency and
service levels.38 Wal-Mart 39 and Ahold Delhaize40 have deployed
Reinventing retail with the latest robots in US stores to support tasks such as scanning shelves
technologies and counting stock. LoweBot assists Lowe’s home improvement
chain customers navigate aisles where they can find and scan
Few times in history have rapid advancements in
products and check store availability.41 Russian supermarket
technology and breakthrough innovations had the
chain Lenta recently rolled out customer service “Promobots” in
ability to disrupt retail business models in such fast and all-
its stores.42
encompassing ways. If not already, the Internet of Things, artificial
intelligence, augmented and virtual reality (AR/VR), and robots Perhaps one of the most progressive uses of technology and
should be on every retailer’s radar. automation is in the emergence of unmanned stores. “Grab and
go” shopping, in every sense of the word, is now reality thanks
These kinds of enabling technologies and automation, among
to mobile pay technology. Although execution is still in the early
others, are staking a claim in retail as tools that both bricks-and-
stages, consumers can now visit a store, self-scan items with a
mortar and online retailers alike can use to further elevate their
smartphone app, then merely tap the phone to pay and walk out
businesses and advance customer relationships.
the door, as in the case of Amazon Go.43
Voice-controlled electronic devices powered by artificial
While the industry is buzzing about Amazon’s physical store
intelligence technology, like Amazon Echo, Echo Dot, and Google
trial, retailers around the globe—like China’s electronics retailer
Home, are disrupting the path to purchase.30 Amazon’s Echo and
Suning in Shanghai44 and supermarket Coop Danmark in
Dot, for example, have built-in capabilities that sync with
Denmark45—are grabbing attention with their own unmanned
Amazon.com for shopping purposes. With a simple voice
store pilots as well. In what could be the biggest trial of
command, shoppers order items for direct delivery through
automated stores to date, Auchan is readying the rollout of
Alexa, the “voice” behind Amazon’s AI technology, without going
“hundreds” of unmanned Minute micro-convenience stores
online or stepping foot in a store. Not too surprisingly, Amazon
in China.46
holds 68 percent of smart speaker market share.31 Alexa moved
into Canada in November 2017. The device is expected to release
in Australia in early 2018.
15Retailing through the lens of
young consumers
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
What are the most important things that you look for in your
retail experience?
CUSTOMER SERVICE OMNICHANNEL
knowledgeable staff who are ability to shop anytime, anywhere,
willing and able to assist you quickly and seamlessly, including an
integrated returns service
QUALITY SUSTAINABILITY
good quality products which sustainably sourced products,
offer value for money new alternative materials and
transparent supply chains
What share of your shopping is done online?
20-80%
There was a divide between Depends on the type of product Why do young Some barriers to
male/female consumers consumers shopping online
shop online
Females have Males prefer higher for groceries lower for clothing • huge variety of • issues with website
more choice higher quality and and small ticket items and footwear where products online trust and reputation
for online to see the product (e.g. electronics, customers wish to
shopping before purchasing books, music) try them on in a store • ease of purchase • unable to see/feel
before purchasing the product
• competitive prices
Source: Business students of Pearson College London, aged 19-22
16How do you feel payment systems will be impacted by current
and future technologies?
CURRENT PAYMENT SYSTEMS FUTURE PAYMENT SYSTEMS
Cash
Credit card
Apple Pay Cryptocurrencies
PayPal
Android Pay
Payment systems will become more seamless, based on contactless payments revolving
around Android Pay and Apple Pay. Cash will reduce in both use and level of acceptance by
retailers. 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.
Retailing of the future
Innovative user-friendly
New technologies experiential stores will act as
such as smart tagging and retail galleries which allow
smart check-out will no customers to create their
longer be supplemental to personalised shopping
the shopping experience, experience through
but fundamental AR/VR technologies
More e-retailers and
small traders as social
Customer experience media is enabling people
continues to be important to create and promote
as shoppers want more their own brands.
engagement and
interaction in stores
Source: Business students of Pearson College London, aged 19-22
17A retrospective: Then and now
This retrospective infographic looks at how the Top 250 has changed over
the last 15 years
Finding growth has been a challenge
28.7%
9.1% 22.1% 20.9%
5.4% 4.8%
FY2006 FY2011 FY2016 FY2006 FY2011 FY2016
Top 250, 5-year retail revenue CAGR Fastest 50, 5-year retail revenue CAGR
The average annual rate of growth, on a Even the Fastest 50 retailers are not
currency-adjusted basis, for the Top 250 in growing as quickly as the group once did.
FY2016 is about half what it was 10 years ago.
A markedly different looking Top 10
FY2001 FY2016
1. Wal-Mart 1. Wal-Mart Wal-Mart has retained its pole
position at the top of the retailer
2. Carrefour 2. Costco leader board for over 20 years.
3. Ahold 3. Kroger
4. Home Depot 4. Schwarz Group Only 4 of the Top 10 retailers in
FY2016 were on the Top 10 list
5. Kroger 5. Walgreens Boots Alliance in FY2001.
6. Metro 6. Amazon
Amazon has skyrocketed from
7. Target 7. Home Depot
No. 157 in FY2001 to No. 6 in
8. Albertson’s 8. Aldi FY2016 as its retail revenue
approaches US$100B.
9. Kmart 9. Carrrefour
10. Sears 10. CVS Health
Source: Deloitte Touche Tohmatsu Limited. Global Powers of Retailing 2003 (for FY2001 data), 2008 (FY2006 data), 2013 (FY2011 data) and 2018 (FY2016 data).
18The minimum retail revenue required to be among the Top 200*
has increased steadily over the years
US$4.50B
US$4.73B
US$2.40B US$3.36B
FY2001 FY2006 FY2011 FY2016
* Top 200 used for comparison as the FY2001 list was for the Top 200
Europe loses ground to Asia Pacific and some emerging markets
Struggling European economies, Brexit and weak Retailers from China, Japan and the rest
performances by some big European-based of Asia Pacific are gaining ground, along
retailers in recent years, including the grocery with some players from emerging
sector—caused Europe’s share of Top 250 revenues markets in Africa and the Middle East.
to drop from 39.4% to 33.8% in just 10 years.
Changing share of Top 250 retail revenue, FY2006 to FY2016
Africa/Middle East Africa/Middle East
0.6% 1.5%
Asia
Pacific Asia
10.4% Pacific
15.4%
N. America N. America
48.3% 47.8%
Europe Europe
39.4% 33.8%
Latin America Latin America
1.2% 1.4%
FY2006 FY2016
Source: Deloitte Touche Tohmatsu Limited. Global Powers of Retailing 2003 (for FY2001 data), 2008 (FY2006 data), 2013 (FY2011 data) and 2018 (FY2016 data).
19Global Powers of Retailing 2018 | Global economic outlook
Global economic outlook
The global economy is currently in the midst of a period of relatively strong growth and benign
circumstances. Growth has accelerated in Europe and Japan, stabilised in China and the US, and
revived in many other emerging markets. Inflation remains low in most places, asset prices have
risen, and central banks have retained relatively easy monetary policies. Conditions are so good that
one could be forgiven for worrying about hidden risks. Actually, there are a number of clearly visible
risks. These include protectionist sentiment, potential asset price bubbles, an impending tightening
of monetary policy in several locations, political dysfunction and fragmentation, and geopolitical
tensions. For retailers, the stronger economic growth is most welcome. Yet they must also contend
with the negative consequences of rising income inequality, protectionist actions, and the potential
impact of monetary tightening. Moreover, consumer spending in some key markets (notably Japan
and the UK) is currently weak. In what follows, we will look at the economic landscape that retailers
are likely to face in the coming year.
Major economic trends is not happening. Rather, the greater availability of jobs has
caused labour force participation to rise in several markets,
thus suppressing wage gains. Plus, an evident deflationary
Slow growth in developed economies
psychology has prevented workers from seeking large wage
Economic growth in the major advanced economies
gains. This cannot go on forever and, eventually, wages will
has been disappointing in the past decade, at least
accelerate leading to higher inflation. It is the expectation of
compared with the past. This largely reflects the
this that is leading central banks to either tighten monetary
impact of demographics. Working-age populations
policy or signal an intention to tighten. The speed at which
are rising more slowly, or not at all, in many countries. Moreover,
such tightening takes place will be important, and will depend
productivity growth (increases in output per worker) has been
on future information concerning inflation, employment, and
disappointing. Yet economic growth has been sufficient to generate
government policies on taxes and spending.
full employment in several countries including the US, Japan, and
Germany. Plus, unemployment is coming down in many other
Asset price bubbles and risk from monetary
countries. The good thing about modest growth is that it has not
tightening
generated much inflation, thus it can probably be sustained for a
One side effect of the last several years of
good deal longer.
unusually loose monetary policy, which has
entailed historically low interest rates, is that
Low inflation despite tighter labor markets
investors have been on the hunt for yield. That, in turn, has
As labour markets have tightened in many markets,
contributed to the sharp rise in asset prices including equities,
wages have remained relatively dormant. This has
bonds, and property. From a retail perspective, the rise in
been especially true in the US, Japan, and Germany,
wealth has been good in that it stimulates consumer spending,
and is a source of concern for central bankers.
especially at the upper end of the income spectrum. However,
Normally, a tight labour market would generate wage pressures
the risk is that, should interest rates rise quickly, asset prices
due to a shortage of labor, leading businesses to invest in labour-
could collapse, leading not only to a loss of wealth but to
saving technology that would generate productivity gains. This
troubles in credit markets.
20Global Powers of Retailing 2018 | Global economic outlook
Major markets Eurozone
The Eurozone economy is growing
United States strongly. On a per capita basis, it is
The economic situation in the US is so actually growing more rapidly than
benign that one could be forgiven for the US. The high growth countries
worrying that something bad must be include Germany, Spain, and the
right around the corner. Growth is modest but sufficient to bring Netherlands. France is rebounding and Italy is starting to
the US to full employment. Inflation remains low, borrowing show signs of improvement. All of this reflects the positive
costs are low, and asset prices have risen steadily with only impact of an aggressive monetary policy on the part of the
modest volatility. What could possibly go wrong? The answer is European Central Bank (ECB). This has lowered borrowing
that there are several potential risks. First, consumer spending costs, increased asset prices, and suppressed the value of
has been growing significantly faster than household income. the euro. The latter has contributed to a rebound in European
This has been enabled by reduced saving and increased exports. Moreover, with unemployment still relatively high in
borrowing, something that cannot be sustained indefinitely. some countries, it is possible for the regional economy to grow
Unless wages begin to accelerate, it is possible that the massive rapidly simply by reemploying large numbers of unemployed.
consumer sector will soon decelerate. Second, some analysts Meanwhile, inflation has remained low, in part due to limited
argue that asset prices are characteristic of a bubble, and that wage pressures, a modest rebound in the euro, and continued
when the Federal Reserve increases interest rates sufficiently, deflationary psychology. Consequently, it appears likely that
asset prices will fall. The result will be a loss of wealth for the ECB will retain a relatively easy monetary policy in 2018.
consumers and increased stress on credit markets. Finally, the Meanwhile, the biggest risk to the region is political. In recent
US Administration is threatening to take significant protectionist elections in many countries, centrist parties have seen their
actions meant to save jobs. However, the end result would share of the vote decline, while extremist parties on both the
likely be an increase in consumer prices and a resulting drop in left and right have gained share. This makes it more difficult
consumer purchasing power. In addition, protectionism would to form coalitions and to find common ground. Thus the
increase costs for businesses and compel many to redesign their prospects for structural reforms of the Eurozone are not good,
supply chains. Protectionism aimed at China would likely invite boding poorly for the ability to react appropriately to the
retaliation, thus hurting trade and reducing economic growth on next crisis.
both sides of the Pacific.
United Kingdom
Following the Brexit referendum, there was a sharp
and sustained decline in the value of the pound,
leading to higher import prices. The result was
an acceleration in inflation that was not matched
by rising wages. Consequently, real (inflation-
adjusted) consumer spending power declined.
Thus it is no surprise that retail sales in the UK have faltered.
And although the pound has recovered slightly, the damage
remains. Moreover, uncertainty about the ultimate shape of
Brexit is likely to have a chilling effect on inbound investment
and is already leading many companies to shift jobs to the
continent. Thus the growth outlook for the UK is modest at best.
21Global Powers of Retailing 2018 | Global economic outlook
China Others
China’s economy has been growing In the major emerging markets other than China, economic
at what is, for China, a modest pace. growth has rebounded in the past year. A confluence of events
This is because excess capacity has has significantly improved the outlook for these countries. After
stymied private sector investment, and a perfect storm of declining commodity prices, declining local
an overvalued currency and rising wages have hurt export currencies, rising inflation, and tightening monetary policy which
competitiveness. In addition, deteriorating demographic led to economic slowdown, things have reversed in a positive
conditions have hurt growth. China’s working-age population is way. Commodity prices have stabilised as have currencies,
no longer expanding, leading to a shortage of labour and rising inflation has receded, monetary policy has been loosened, and
labour costs. The government has intermittently stimulated economic growth has rebounded. Russia and Brazil, both of
growth through the easing of credit market conditions. This has which experienced deep and prolonged recessions, are both now
periodically led to a surge in investment in property and heavy growing modestly. A similar story of renewal is taking place in such
industry. However, the government has also intermittently disparate places as Turkey, Indonesia, Argentina, and Nigeria.
tightened such conditions when the pace of debt expansion
has appeared worrisome. While China continues to benefit India, however, is a somewhat different story. There, growth was
from an expanding consumer market, consumer spending strong all along, in part due to the fact that the country is not
remains a relatively small share of GDP compared with most dependent on commodity exports. Strong growth was also due
other major economies. This reflects a weak social safety net to a combination of reform-oriented government that stimulated
that encourages a high level of saving. It also reflects policies investment and favorable demographics. Lately, growth has
that encourage growth of investment rather than consumer decelerated owing to the temporary effect of structural reforms
spending. Whether this will change through economic reforms such as demonetisation and implementation of a new goods
remains uncertain. and services tax. Yet the longer-term outlook remains strong,
especially as those structural reforms are likely to have a positive
Japan long-term benefit.
The Japanese economy is rebounding after
a period of stagnation. The economic policy Another exception is Mexico. There, growth could be impaired
known as “Abenomics,” named for Prime if the trading relationship with the US deteriorates. Already
Minister Shinzō Abe, has largely entailed growth has decelerated. Longer term, the emerging markets
an aggressive monetary policy that has with the most promise are those that have one or more of the
suppressed the value of the euro, boosted inflation, boosted following attributes: favorable demographics; strong institutional
asset prices, and kept borrowing costs low. The biggest impact protection of property rights and a system for adjudicating
has been an improvement in the competitiveness of exports. disputes; good and improving infrastructure; a financial system
On the other hand, despite an extremely tight labour market, that provides capital to entrepreneurs and innovators; and
wages have not yet accelerated. Consequently, consumer relatively open markets, especially openness to foreign capital.
spending has grown only modestly. Going forward, growth
should be moderately strong in the coming year as the
Japanese economy benefits from a strong global economy.
Longer term, the biggest problem for Japan is the aging
population and rapidly declining working-age population.
2223
Global Powers of Retailing 2018 | Top 10 highlights
Top 10 highlights
Top 10 retailers, FY2016
FY2011-
FY2016 FY2016 FY2016 FY2016 2016 % Retail
Top Retail Retail Net Return Retail revenue
250 Change Country revenue revenue profit on revenue # Countries from foreign
rank in rank Name of company of origin (US$M) growth margin assets CAGR* of operation operations
1 Wal-Mart Stores, Inc. US 485,873 0.8% 2.9% 7.2% 1.7% 29 24.3%
2 Costco Wholesale Corporation US 118,719 2.2% 2.0% 7.2% 6.0% 10 27.1%
3 The Kroger Co. US 115,337 5.0% 1.7% 5.4% 5.0% 1 0.0%
4 Schwarz Group Germany 99,256 5.3% n/a n/a 7.3% 27 61.7%
5 Walgreens Boots Alliance, Inc. US 97,058 8.3% 3.6% 5.8% 6.1% 10 13.7%
6 +4 Amazon.com, Inc. US 94,665 19.4% 1.7% 2.8% 17.6% 14 36.8%
7 -1 The Home Depot, Inc. US 94,595 6.9% 8.4% 18.5% 6.1% 4 8.5%
8 Aldi Einkauf GmbH & Co. oHG Germany 84,923 e 4.8% n/a n/a 7.7% 17 67.0%
9 -2 Carrefour S.A. France 84,131 -0.4% 1.1% 1.8% -1.1% 34 53.2%
10 +2 CVS Health Corporation US 81,100 12.6% 3.0% 5.6% 6.4% 3 0.8%
Top 101 1,355,656 4.5% 3.0% 6.4% 4.5% 14.9² 27.3%
Top 2501 4,410,828 4.1% 3.2% 3.3% 4.8% 10.0² 22.5%
Top 10 share of Top 250 retail revenue 30.7%
*Compound annual growth rate e = estimate
¹ Sales-weighted, currency-adjusted composites n/a = not available
² Average
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.
Amazon leapfrogs four spots, CVS joins the fray Club units. With improved organic growth and several small
but key strategic e-commerce acquisitions under its belt—
The world’s Top 10 retailers continue to compose a bigger share
including Jet.com,48 ShoeBuy,49 Moosejaw,50 ModCloth,51 and
of industry sales, capturing 30.7 percent of the overall Top 250’s
Bonobos52—Wal-Mart’s growth momentum appears back
retail revenue in FY2016. The five largest retailers maintained
on track.
their positions on the industry’s leader board in FY2016, but a
combination of organic growth, acquisitions, and exchange rate
Although Costco’s same-store sales grew at a 4.0 percent clip
volatility shuffled the rest of the Top 10. Wal-Mart continued its
on a constant currency basis, reported sales grew at a modest
long-held dominance as the world’s largest retailer. Its revenue
rate of 2.2 percent in FY2016, taking into account unfavorable
growth rebounded back into the positive column in FY2016 due
currency exchange rates relative to the US dollar and negative
to same-store sales growth for both Wal-Mart and Sam’s Club
effects of lower gasoline prices. It was enough, however, to
and an acceleration of e-commerce initiatives across the globe,
keep the warehouse club operator in second place. Fuel prices
featuring an alliance with China’s leading online retailer JD.com.
also tempered Kroger’s sales growth, but the full-year inclusion
As part of the June 2016 deal, Wal-Mart sold its Yihaodian
of newly acquired Roundy’s53 helped prop up retail revenues
e-commerce business to JD.com and took a five percent stake
by 5.0 percent. Schwarz Group remained in fourth place with
in JD.47 Offsetting growth somewhat were foreign currency
solid FY2016 growth despite the impact of a weak euro on its
exchange rate fluctuations and lower gasoline prices at Sam’s
24Global Powers of Retailing 2018 | Top 10 highlights
dollar-denominated sales. The company’s push into the US market, Some transformational years for Tesco, which included the sale of
with the opening of its first Lidl locations stateside in 2017, is several non-core operations, has helped the retailer turn around
anticipated to give sales an additional lift.54 performance and restore profitability. The UK grocery giant slipped
out of the Top 10 as it sold its Kipa retail business in Turkey, Giraffe
Following the 2015 merger of drug powerhouses—Walgreens, restaurants,61 Dobbies garden center chain,62 Harris + Hoole coffee
the largest drugstore chain in the US; Boots, the market leader in shops,63 and Euphorium bakery operations.64 Still, watch for Tesco
European retail pharmacy; and Alliance Healthcare, the leading to potentially reclaim a Top 10 spot in the coming years given
international wholesaler and distributor—global company its pending merger with food wholesaler Booker, which earned
Walgreens Boots Alliance posted strong sales growth in FY2016 the approval of the UK Competition and Markets Authority in
to remain the world’s fifth-largest retailer. The company was on November 2017.65
course to acquire fellow US drugstore chain Rite Aid outright, but
talks ceased in June 2017 following scrutiny by the US Federal Trade Stacking up: Top 10 versus Top 250
Commission. Walgreens Boots Alliance instead opted to buy 2,186
The world’s Top 10 retailers are generally much more globally
Rite Aid stores.55
focused with operations, on average, in 15 countries versus 10 for
the overall Top 250. Three of the Top 10 retailers—Aldi, Schwarz
Fueled by a constant stream of product and service innovations,
Group, and Carrefour—derive more than half of their retail revenue
Amazon has posted robust, double-digit growth since its inception
from foreign operations. More than a third of Amazon’s retail
in 1994 and FY2016 was no exception. Near 20 percent year-over-
revenue comes from foreign operations; it is about a quarter for
year retail revenue growth once again propelled the e-tailer up
Wal-Mart and Costco. Kroger remains the only Top 10 retailer not
the leader board, this time leapfrogging four retailers along the
operating globally at this point.
way to take the No. 6 position, up from No. 10 on the previous
list. Amazon’s aggressive push into grocery, including the 2017
On a sales-weighted, currency-adjusted composite basis, growth
acquisition of natural bricks-and-mortar grocer Whole Foods
of the Top 10 outpaced that for the Top 250 retailers, but their net
Market,56 should continue to propel the company forward. Ranking
profit margin composite was slightly weaker than the Top 250. This
186th in 2000 when it first entered the Top 250, Amazon is poised
is in large part because eight of the Top 10 retailers operate in the
to ascend several more spots in the coming years.
notoriously low-margin FMCG sector. The exceptions are Amazon
and The Home Depot. In addition, grocery retailers are plagued
The Home Depot’s retail revenues were only slightly eclipsed by
by ongoing competitive price wars and, in the case of US retailers,
Amazon in FY2016, landing the US-based home improvement chain
food price deflation, which keeps a lid on the top line and places
in the No. 7 spot. A favourable US housing environment drove
increasing pressure on the bottom line.
increased traffic and a higher average sales per customer at The
Home Depot, resulting in the retailer’s strong 6.9 percent year-over-
Return on assets (ROA), however, is an altogether different story.
year sales gain. Aldi’s ongoing aggressive expansion, particularly
The Top 10 ROA composite is almost twice that of the Top 250
in the UK, Australia, and the US, drove solid sales growth of nearly
overall. This clearly indicates the extent of efficient operations and
5 percent, which was enough to overtake Carrefour and keep the
superb inventory control in place at the leading retailers.
hard discounter in the No.8 position.
Carrefour’s three-year string of sales growth was curtailed as retail
revenue fell 0.4 percent in FY2016 to push the company into the No.
9 spot. The acquisitions of Eroski group stores in Spain in February
2016,57 non-food e-tailer Rue du Commerce in January 2016,58
and supermarket chain Billa Romania in December 201559 didn’t
move the needle much at all for Carrefour. CVS, on the other hand,
recorded growth of 12.6 percent, primarily due to the acquisition of
Target pharmacies and clinics,60 new store openings, the acquisition
of Omnicare’s LTC operations and an increase in existing store
sales, propelling the drugstore chain into the Top 10 ranks.
25You can also read
