Globalisation of Australian retail continues apace

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Globalisation of Australian retail continues apace

Woolworths and Wesfarmers remain amongst top 25 global retailers

13 January 2015: 37 of the world’s top 250 retailers are now operating in Australia (up from 30 last year) and the trend of global retailers establishing a presence in Australia is expected to continue apace in 2015, according to the 2015 Global Powers of Retailing report from Deloitte. The 18th edition of this annual report identifies the 250 largest retailers around the world by revenue and examines current global trends and economic prospects in retail.

“In 2014 we saw the likes of H&M, Fast Retailing (Uniqlo), Forever 21 and most recently Sephora entering the Australian market with bricks and mortar stores,” said David White, Deloitte Australia partner and retail industry leader. “There was also the takeover of David Jones by South African-based retailer Woolworths SA.

“With a weakening Australian dollar and ever increasing competitive pressures, we expect to see further interest by overseas retailers in the Australian retail market. As major global players continue to enter the Australian market, and existing global retailers expand their store footprint, Australian retailers across all segments will continue to face significant challenges and increased competition. The ability to innovate, drive improved processes and to connect with the consumer will be critical in order to remain competitive.”

Woolworths and Wesfarmers remain in global top 25

Woolworths and Wesfarmers continue to represent Australia in the Top 25, at 18th and 22nd respectively. Whilst this is lower than last year’s rankings, (15th and 19th respectively), the drop is largely driven by a circa 11% devaluation in the Australian dollar against the U.S. dollar. Excluding this exchange rate movement, Woolworths and Wesfarmers would have remained in the Top 20, with both growing their retail revenue in excess of circa 4% excluding exchange rate fluctuations.

Woolworths is number two in the Asia Pacific top 10, after Japanese retailer Aeon.

The composition of the Top 10 global retailers remains the same as last year (see table below), with Wal-Mart continuing to be the world’s largest retailer by some margin. However, there has been some movement in the rankings within the Top 10. Costco has leapfrogged Tesco into second place, driven both by its impressive ongoing sales growth as well as a strengthening in the Euro compared to the US dollar. Tesco dropped from second place last year to fifth, as a result of both declining sales and a weaker British pound against the U.S. dollar.

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Top 10 global retailers by revenue

Five key retail trends for 2015

The report explores five major retail trends for 2015, which are shaped by the disruptive changes currently impacting the marketplace:

  1. Travel retailing, which is redefining notions of customer base and transforming the role airport retail plays in a company’s strategy.
    - Around 15% of the global population travel each year, spending the equivalent of a trillion US dollars in the process
  2. Mobile retailing, a rapidly growing business segment that is expected to approach US$640 billion in annual global sales within just a few years.
    - Wearables will offer new opportunities to engage consumers
    - Payments via mobile are of growing importance
  3. Faster retailing, which is just what the name implies: speed to market, speed to response, speed to deliver.
    - Millennials prefer fast response times and immediate gratification and successful retailers will cater to that (e.g. same day delivery)
  4. Experience retailing, which takes shopping and adds entertainment, emotion, deeper engagement, and sometimes even an entire environment
  5. Innovative retailing, which responds to market disruption with disruptive creativity of its own.
    - Continued blurring of sectors (e.g. supermarkets as banks)

Commented White: “While these trends are not new, what is interesting for 2015 is that even though the advances in technologies available to consumers and retailers have been exponential, we are seeing both consumers and retailers as more willing and quicker to experiment, adopt and move onto the latest technologies in more creative and innovative ways.”

Growth in e-commerce increases cyber-security threats

The report also highlights an increasing threat to Australian retailers: cyber-security breaches. With retailers transforming to embrace the digital world, the risk of successful attacks is growing. As retailers increasingly expose their internal data through their own and third party apps, they need to build flexible and secure ways to access and govern that data. How a retailer grows and manages application access to its data is critical to enhancing its digital revenue streams, and also to protecting its digital reputation.

Global insights

  • The Top 250 global retailers generated retail revenue approaching US$4.4 trillion in 2013. To earn a spot on the list required fiscal 2013 retail revenue of US$3.7 billion
  • Nearly 80% of the Top 250 (199 companies) posted an increase in retail revenue in 2013, albeit at a lower growth trajectory than previous years: sales-weighted, currency-adjusted retail revenue increased 4.1% in 2013 for the Top 250, following a 4.9% gain in 2012
  • The European region, with 90 companies, accounted for the largest share of the world’s top 250 retailers in 2013. However, North America, with 88 companies averaging nearly US$22b in retail sales, maintained the largest share of Top 250 revenue
  • Amazon.com Inc, ranked 15, is the number one e-tailer globally, followed by JD.com, Walmart and Apple. The report explores how retailers and pure e-tailers are embracing the growing importance of e-commerce.

To download a copy of the report, visit the 2015 Global Powers of Retailing page. 

Top 250 global retailers currently operating in Australia:

Notes to editors 

Companies were ranked by total retail revenue, not just retail sales. For purposes of this analysis, retail revenue includes royalties and franchising/licensing fees as well as wholesales sales to affiliated/member stores or other ‘controlled wholesale space’ operations (e.g., in-store shops or identity corners).

About the 2015 Global Powers of Retailing Report

The 2015 Global Powers of Retailing report identifies the 250 largest retailers around the world (based on publicly available data for fiscal 2013, encompassing companies’ fiscal years ended through to June 2014), and analyses their performance based on geographic region, product sector, e-commerce activity and other factors. It also reviews the world’s 50 largest e-tailers, provides an outlook for the global and Australian economies, trends for retailers to consider in the coming months, and an analysis of market capitalisation in the retail industry.

Copies of the report are available on request.

About Deloitte

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Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

About Deloitte Australia

In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms, and winner of both the Australian Financial Review/CFO Audit Firm of the Year and Accounting Firm of the Year awards 2013, Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. Formore information, please visit Deloitte’s web site at www.deloitte.com.au.

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