Deloitte Global report finds more balanced retailer growth and profitability
- US$4.4 trillion in revenues generated by Top 250 global retailers
- It is a transformative time in retail, the shopper is in the driver’s seat
SAIPAN, 24 January 2018 —The Top 250 global retailers generated aggregated revenues of US$4.4 trillion in fiscal year 2016, representing composite growth of 4.1 percent, according to the Global Powers of Retailing 2018: Transformative change, reinvigorated commerce report from Deloitte Touche Tohmatsu Limited (Deloitte Global).
“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, stabilized in China and the US, and revived in many other emerging markets,” explained Dr. Ira Kalish, Deloitte Global Chief Economist. “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.”
Global Powers of Retailing Top 250
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—which now accounts for 30.7 percent of the overall Top 250’s retail revenue (compared to 30.4 percent last year).
For the first time in four years, the apparel and accessories retailers were not the clear growth leaders, but they remained the most profitable sector.
Retailers of fast-moving consumer goods1 (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 percent of all Top 250 companies and two-thirds of Top 250 revenue).
Europe’s share of the Top 250 dropped again, with 82 retailers based in Europe (85 in FY2015, 93 in FY2014) and the gap widened versus North America. However, despite dropping share, European retailers remain the most globally active as they search for growth outside their mature home markets. Nearly 41 percent of their combined revenue was generated from foreign operations—almost twice as much as the Top 250 group as a whole.
Transformative change, reinvigorated commerce
Global Powers of Retailing 2018 also discusses how the rules of retailing are being rewritten in this time of transformative change. Innovation, collaboration, consolidation, integration, and automation will likely be required to reinvigorate commerce, profoundly impacting the way retailers do business now, and in the future.
The four trends identified in the report are:
- Building top-notch 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.
- Creating unique and compelling in-store experiences. Physical retail stores are not going away; 90% of worldwide retail sales are still done in physical stores. But 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.
“It is a transformative time in retail. The shopper is clearly in the driver’s seat, enabled by technology to remain constantly connected and more empowered than ever before to drive changes in shopping behavior”, said Vicky Eng, Deloitte Global Retail Sector leader. “Across the retail industry, disruption of traditional business models has given way to unprecedented and transformative change—change required online and offline to better serve more demanding shoppers and redefining customer experience.”
“In Southeast Asia, the evolving customer expectation and the rise of digital technology adoption, mainly driven by the young and growing population, have not only transformed the retail landscape but also created creating new business opportunities for retailers. Increasingly, store operators are combining bricks and clicks to meet the growing demands of consumers in the fragmented geographies,” commented Eugene Ho, Deloitte Southeast Asia’s Consumer & Industrial Products Industry Leader.
“Taking the fast-moving consumer goods industry as an example, businesses are reaching out to untapped market segments with the use of digital-enabled business models that bypass the traditional constraints of physical storefronts by leveraging third-party infrastructure. Given the size of the middle-class and affluent consumers in the region, the business potential from this innovative can be phenomenal.”
¹Fast-moving consumer goods: Products that are sold quickly and at relatively low cost.
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