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South Africa dominates Africa/Middle East Region in 2015 Deloitte Global Retailing Survey

South Africa dominates Africa/Middle East Region in 2015 Deloitte Global Retailing Survey

 

· Shoprite Holdings was named the number one retailer in Africa/Middle East followed by Steinhoff International and Pick n Pay

· The fastest growing retail sector is apparel and accessories, with 5.8% composite revenue growth

· Looking beyond Africa and the Middle East, Wal-Mart claimed top spot with 2013 retail revenue of US$476 294 million followed by Costco Wholesale Corp., Carrefour S.A.

Johannesburg, 26 January 2015 - South African retailers have led the Africa/Middle East region in the Deloitte Global Powers of Retailing survey for 2015, accounting for five of the region’s top seven retailers that qualified for inclusion in the professional services firm’s list of the world’s 250 largest retailers.

Shoprite Holdings was named the number one retailer in Africa/Middle East followed by Steinhoff International and Pick n Pay with Spar Group claiming fifth place and Woolworths coming in at number seven. Turkey’s BİM Birleşik Mağazalar A.Ş. was named in fourth spot while Emke Group/Lulu Group International from the United Arab Emirates was ranked the sixth biggest retailer in the Africa/Middle East region.

“South Africa has certainly performed strongly from a regional perspective, which is testament to the ability of the country’s retailers to compete in what remains a very tough operating environment. Most notable too, is that  while Massmart Holdings Limited is not singled out in the report, this is due to the results being incorporated in Wal-Mart Stores, Inc. If we considered Massmart in isolation they would rank 3rd in the Africa/Middle East Region,” said Stephan Botha, Manager in Deloitte’s Consumer Practice in Johannesburg. “Although the Africa/Middle East region is still fairly small in terms of its revenue contribution to the global retail universe, it is significant from a growth point of view.”

Deloitte’s 18th annual Global Powers of Retailing survey identified the 250 largest retailers around the world based on publicly available data for fiscal 2013 (encompassing companies’ fiscal years ended through June 2014) and analysed their performance based on geographic region, product sector, e-commerce activity, and other factors. This year’s report focused on the theme of “embracing innovation” with particular emphasis on 2015’s major retail trends as well as retailers’ ability to creatively utilize innovations to address the disruptive changes impacting their markets.

The Africa/Middle East region boasted the highest composite retail growth of all regions at 12.9% and its composite net profit margin of 4.7% led the industry. Following the global trend, innovation has been key to the region’s growth as the increasing demands of Africa’s rising middle class and particularly youth, has led to the continent ‘leapfrogging’ landline infrastructures in favour of mobile. According to a recently released report, Deloitte Consumer Review Africa: a 21st century view, it is projected that there will be 334 million smartphone connections by 2017 (the fastest telecoms growth globally) leading to a rapid adoption of e-commerce and digital technologies. All the South African companies that featured in the survey experienced growth of more than 6%, ranging from 6.5% for Pick n Pay to 21.6% for Steinhoff.

Shoprite was the top performing South African company with 2013 retail revenue of US$9 869 million, putting it in 107th position on the global list of retailers. Steinhoff was the second best performer in Africa/Middle East with retail revenue of $8 217 million and was also ranked the 8th fastest growing retailer in the world with a compound annual growth rate of 31.5% between 2008 and 2013.

“Whilst the current economic situation is challenging for consumers, it remains that consumers have to eat and clothe themselves, which offers some insulation to retailers who are competing for consumers’ limited share of wallet,” said Rob Latham, Deloitte Consumer Business Digital Leader. “Steinhoff’s acquisition of Pepkor and kika-Leiner Group, a furniture retailer with 73 shops in Austria, Central and Eastern Europe, will put it in prime position to challenge Shoprite for the top position in the Africa/Middle East region in future.”

Looking beyond Africa and the Middle East, Wal-Mart claimed top spot in the Deloitte survey with 2013 retail revenue of US$476 294 million followed by Costco Wholesale Corp., Carrefour S.A., Schwarz Unternehmens Treuhand KG and Tesco. The combined revenue of the top 250 global retailers reached US$4.4 trillion in fiscal year 2013, an average of more than US$17.4 billion per company.

“One thing that is becoming increasingly apparent to Deloitte is that South African retailers are increasingly adopting the global trends that are affecting the industry,” said Latham. “That creates a lot of potential opportunities for more agile operators that apply the industry’s global lessons to their local operations.”

General industry trends

·         The fastest growing retail sector is apparel and accessories, with 5.8% composite revenue growth

·         Growth in “travel retailing” (retailing targeted at tourists) is driven by catering to high-spending travellers, who value the better prices and wider selection of luxury products abroad

·         “Mobile retailing is quickly become a major retail platform, with mobile payments playing an increasingly important role, and technology such as wearables providing new opportunities for sales and engagement. Wal-Mart, eBay and Amazon are playing well in this field

·         “Faster retailing” is all about retailers who respond first and the fastest to changing market dynamics and increasingly urgent consumer demands. Retailers need to consider the immediate gratification preferred by millennials, increased customer expectations with regards to access to information narrowing delivery windows for products. With Amazon and Google offering same-day delivery, other companies are expected to follow suit

·         “Experience retailing focuses on making the process of shopping part of the total value offered to consumers. Convenience and personalisation of the customer shopping experience are the driving forces of this trend

·         “Innovative retailing” is all about adaptation and embracing change and is led by retailers such as Amazon’s Creative Expressions(being a blurred mix of retailer and producer), Warby Parker (with single product retailing of prescription glasses) and Made.com (with made-to-order direct from manufacturer products)

Top 7 retailers in Africa/Middle East region

Retail revenue rank

Name of company

Country of origin

2013 retail revenue 
(US$m)

1

Shoprite Holdings Ltd.

South Africa

9,869

2

Steinhoff International Holdings Ltd.

South Africa

8,217

3

Pick n Pay Stores Ltd.

South Africa

6,351

4

BİM Birleşik Mağazalar A.Ş.

Turkey

6,242

5

The SPAR Group Ltd.

South Africa

5,175

6

Emke Group/Lulu Group International

UAE

5,000

7

Woolworths Holdings Ltd.

South Africa

3,834

*(Comment) Massmart Holdings Limted, if included separately to Wal-Mart Stores, Inc. would rank 3rd in the Africa/Middle East Region, marginally higher than Pick n Pay, per their 2013 Annual report with ZAR revenues of R72.5129bn

Top 10 retailers worldwide

Retail revenue rank

Name of company

Country of origin

2013 retail revenue (US$m)

1

Wal-Mart Stores, Inc.

U.S.

476,294

2

Costco Wholesale Corporation

U.S.

105,156

3

Carrefour S.A., France  

France

98,688

4

Schwarz Unternehmens Treuhand KG

Germany

98,662

5

Tesco PLC

U.K.

98,631

6

The Kroger Co.

U.S.

98,375

7

Metro AG

Germany

86,393

8

Aldi Einkauf GmbH & Co. oHG

Germany

81,090

9

The Home Depot, Inc.

U.S.

78,812

10

Target Corporation

U.S.

72,596

 

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Media contacts:
 

Annelle Botha
Deloitte & Touche
Tel: +27(0)11 517 4552
Email: anbotha@deloitte.co.za

Inga Sebata
Magna Carta (PR)
Tel: +27(0) 11 784-2598
Email: inga@magna-carta.co.za

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