Global Powers of Retailing 2015
SINGAPORE, 13 January 2015 — The top 2501 global retailers generated revenue of US$4.4 trillion in fiscal year 2013, each with an average size of more than US$17.4 billion, according to the 2015 Global Powers of Retailing, Embracing Innovation report from Deloitte Touche Tohmatsu Limited (DTTL), in conjunction with STORES Media. This year’s report explores innovative trends in retail, forecasts for 2015 as well as the strategies retailers are utilising to address the disruptive changes impacting the sector.
The 250 largest retailers around the world are analysed based on their financial performance, geographic region, product sector and e-commerce activity. Revenue growth for the top 250 retailers, which began declining in 2011, continued to slow in fiscal year 2013. According to the report, sales-weighted, currency-adjusted retail revenue was 4.1 percent for the top 250, following a 4.9 percent gain in fiscal year 2012. While growth continued to decline, nearly 80 percent of the top 250 (199 companies) posted an increase in retail revenue in fiscal year 2013.
“The sluggish global economy in 2014 left many consumers financially constrained and retail sales under pressure. Thus, the prosperity of the global retail sector in 2015 will very much depend on the economic stability of several of the largest economies. China, the Eurozone as well as a few key emerging economies had a particularly tough 2014. Comparatively, the US and British economies continue to do well, with indicators pointing to the likelihood of strong growth in 2015 and possibly beyond,” said Dr. Ira Kalish, DTTL Chief Global Economist.
Top retail trends in 2015
- Travel retailing – International tourism is set to continue to rise above expectations despite continuing global geopolitical and economic challenges. The expanding middle classes of emerging markets are travelling to the world’s capitals and boosting retail sales. For example, over half of France’s 16 billion Euros luxury industry depends on tourists2. In 2015, retailers are expected to increasingly cater to high-spending travellers, especially emerging market tourists to drive growth.
- Mobile retailing – Mobile retailing is expected to continue to grow aggressively. Sixty-five percent of the global population will be using a mobile phone by 2015 and an estimated 83 percent of internet usage will be through handheld devices3. Retailers will need to respond by offering free in-store Wi-Fi and mobile-friendly retail websites optimised for different kinds of personal devices. Privacy and security will become increasingly important as trust, transparency and protecting customer information will be critical in retaining loyalty as mobile retailing becomes the norm.
- Faster retailing – Speed continues to remain an important trend in retail. This includes: “fast fashion” (getting runway styles to the stores as soon as possible); limited-time-only products and flash sales to drive urgency and immediate purchase; pop-up establishments to quickly get products and services to market and build buzz; and self-service check-out and kiosks to reduce or eliminate waiting. In 2015, retailing is forecast to get even faster to meet consumers’ desires. Millennials will be driving much of this as they are the largest generation, with a lot of spending power, and carry a lot of influence. They prefer fast response and immediate gratification, and retailers will cater to that.
- Experience retailing – Retailing is no longer just about the product, but the experience. Retailers will continue to explore innovative ways to enhance the buying experience for their customers through social media campaigns, festivals, fashion shows and interactive displays.
- Innovative retailing – The retail industry will continue to be disrupted by new technologies and innovative competition. More retailers are likely to adopt innovative practices, embrace technology and use it in creative ways.
Vicky Eng, DTTL Global Sector Leader, Retail: “The retail sector is going through a significant period of change. The speed of innovation and the disruption being felt across the industry will continue, as the demands of customers continue to increase. To succeed in this environment, retailers will need to respond quickly to threats and opportunities ensuring they are quick to implement innovations of their own. This will require a connecting strategy, capabilities, and specific initiatives, guided by the insights provided by market data.”
In particular, retailers in Southeast Asia will need to watch the online retail space closely. The region’s rapid rise in Internet penetration rates and embrace of mobile Internet-enabled devices such as smartphones and tablets is likely to have dramatic impacts on media usage, marketing, and e-commerce, as well as enable new consumer shopping behaviours.
“Retailers pursuing greater online sales face an increasingly crowded, complex, and fragmented market. In order to grab consumers’ attention and extend their online presences, many sellers are utilising multiple online models, including but not limited to online storefronts, click and collect services, as well as affiliate marketing programmes,” said Eugene Ho, Deloitte Southeast Asia’s Consumer Business Industry Leader. “As online sales surge, retailers are likely to increasingly view e-commerce as a key element of their global expansion strategies. This is especially so in markets with more advanced telecommunications networks such as Singapore.”
In a recent Deloitte mobile consumer survey4, it was found that consumers in Southeast Asia are particularly welcoming towards mobile based in-store payment solutions, while consumers in developed countries such as UK are not likely to abandon traditional payment methods. This indicates a high level of acceptance of innovative retailing in the region.
“For emerging economies in Southeast Asia, where bricks and mortar retailing still prevails, retailers should continue to focus on and invest in understanding consumer behaviours and leverage innovation to drive loyalty and customer engagement," added Eugene. “Innovative technologies – such as smart shelves, Wi-Fi hot spots, point-of-sales systems, and virtual storefronts – are effective tools to engage customers both in-store and elsewhere.”
1 The analysis is based on publicly available data for fiscal year 2013 (encompassing companies’ fiscal years ended through June 2014).
2 Inside France’s €16.8 Billion Luxury Goods Market, Luxury Society, 13 February 2014. http://luxurysociety.com/articles/2014/02/ inside-frances-168-billion-luxury-goods-market
3 Two Billion Smartphone Users By 2015: 83% of Internet Usage From Mobiles, DazeInfo, 23 January 2014. http://www.dazeinfo.com/2014/01/23/smartphone-users-growth-mobile-internet-2014-2017/
4 Deloitte Global Mobile Consumer Survey, SEA edition, July 2014 http://www2.deloitte.com/sg/en/pages/technology-media-and-telecommunications/articles/2014-mobile-consumer-sea.html