deloitte global powers of retailing 2015

Global Powers of

Retailing 2015

January 2015

Embracing innovation

© 2015 Deloitte & Touche Oy, Group of Companies 1

2© 2015 Deloitte & Touche Oy, Group of Companies

Global Economic Outlook 4

Retail trends 2015 9

Global Powers of Retailing 16

• Top 10 retailers 17

• Geographic analysis 18

• Product sector analysis 24

• Top 10 fastest-growing retailers 29

• Top 10 e-retailers 30

• Newcomers 33

• Q ratio 34

• Local contact 37

Contents

Global Economic

Outlook


Changing demographics

Big global issues

• Slower labor force growth

• More retirees

• Slower economic growth

• More pressure on governments

• Especially onerous in China, Russia


Rise of global middle class

Big global issues


0 5 10 15 20 25

USA

Japan

China

India

Germany

0 5 10 15 20 25

USA

Japan

China

India

Germany

0 5 10 15 20 25

USA

Japan

China

India

Germany

Share of global middle class spending by country

2009 2020 2030

Information technology

Big global issues

• Revolutions by industry: Revolutionary impact:

• Books - Lower prices of everything

• Music - Eliminate mid-level jobs

• Travel - Increase demand for highly skilled

• Banking - Exacerbate income inequality

• Entertainment - Reduce need for stores/offices

• Retailing - Less driving, less energy


Chinese slowdown

Big global issues

• Chinese investment slows

• Weak commodity prices

• Negative impact on:

− Africa

− Australia

− Brazil

− Indonesia


6%

13%

16%

18%

27%

30%

31%

37%

44%

45%

45%

48%

0% 10% 20% 30% 40% 50%

Natural Gas

Crude Oil

Wheat

Meat

Corn

Soybeans

Rice

Sea Food

Coal

Aluminium

Copper

Cotton

In %

China’s share in global commodity markets

Source: ABN AMRO

7.6%1999

10.1%2004

14.2%2007

10.4%2010

7.5%2014f

7.3%2015f

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4f

201

5f

In %

China - GDP GrowthYoY % change

Source: IMF

China share of commodity markets

China – GDP growth

European Economy

• Low growth, near deflation

− Very weak investment

− High unemployment

− Spillover impact from Russia and

China

− Declining oil prices threaten

deflation

− Declining oil prices will help

consumer demand

© 2015 Deloitte & Touche Oy, Group of Companies 8Source: Federal Reserve

Retail trends

2015


Driving growth by catering to high-spending travelers

Travel retailing


International

tourism Increase in travelers who are willing to shop while on the move

Travel promotes

spending

Lengthy waits, and an atmosphere of indulgence, lead to leisurely

shopping at airports

Better abroadConsumers often wait to shop where the selection is better and there are

no high import taxes

Building brand

awareness

Companies promote their brand to travelers even in countries where their

goods are not available

Airports as

labs

Airports have become data sources, and also display and engagement

laboratories

Quickly becoming a major retail platform

Mobile retailing


Aggressive

growthMobile retailing continues to grow and is becoming the norm

Wearables Will open new opportunities for sales and engagement

Mobile

paymentsMobile payments will play an increasingly important role

Mobile

experience

Retailers need to provide convenient, mobile-friendly customer

experiences

Privacy and

securityRetailers must ensure privacy and security

Retailers who move first and fastest gain the edge

Faster retailing


Adding speed

everywhere

• Faster to market

• Faster to respond

• Faster to deliver

Millennials in

charge

• Millennials prefer immediate gratification

• And they have the spending power to drive the need for speed

Shrinking

delivery window

• Delivery window is becoming more narrow and specific

• Retailers are racing to offer same-day delivery

• Efficient end-to-end supply chain more important than ever

Instant

information

• Consumers expect immediate and relevant information

• Retailers must optimize information by balancing content and load time

Making the process of shopping part of the total value

Experience retailing


Retail as

environment • Adding entertainment, education, emotion, and engagement to the act of

shopping

Anytime,

anywhere

• Consumers want to order, pick up, ship, receive, and return at their convenience

Integrated

platforms

• Consistent experience across all channels, from mobile to bricks & mortar

• Retailers will update operations, remove silos, and improve cross-function

collaboration

Personalization• Requires gathering and analysis of big data

• Transparency around the collection and use of data is needed to retain trust of

customers

The near future is about adaptation and embracing change

Innovative retailing


The rise of

disruption• Innovation and consumer demands will both escalate, swiftly

No magic

answer• No single formula for success

• We’ll see all shapes, sizes, formats, and channels

Joining the

bandwagon

• Expect more retailers to become innovators

• Many will start connecting strategy, capabilities, initiatives, and data

Innovation

everywhere

• Not only products & services but also business models and customer

engagement

Talent matters• Retailers need the right innovation talent

• Not only on staff, but in partnerships and access to specialists

How retailers are keeping up with the dazzling speed of change

“Embracing innovation”


Experimenting • Retailers are testing, adopting, then moving on to the next technology

Leveraging • Using innovation and big data analysis to gain a market advantage

Rethinking • Considering the business model, and adjusting every aspect of their

operations

Executing• Integrating marketing, products, and services across every possible

channel

Responding • Engaging 24/7 with consumers who are 24/7 and have high

expectations

Global Powers of

Retailing

Highlights from

the 2015 edition

of the report


2013 a challenging year as global economy decelerates

Top 10 retailers worldwide

© 2015 Deloitte & Touche Oy, Group of Companies

1 Wal-mart Stores Inc., U.S. 476,294mn 3.3%$

2 Costco Wholesale Corporation, U.S. 105,156mn 7.7%$

3 Carrefour S.A., France 98,688mn (3.0)%$

4 Schwarz Unternehmens Treuhand KG, Germany 98,662mne 6.5%$

5 Tesco PLC, UK 98,631mn 2.9%$

6 The Kroger Co., U.S. 98,375mn 5.3%$

7 Metro AG*, Germany 86,393mne (0.9)%$

8 Aldi Einkauf GmbH & Co. oHG, Germany 81,090mne 5.5%$

9 The Home Depot, Inc., U.S. 78,812mn 2.0%$

10 Target Corporation, U.S 72,596mn 2.9%$$: 2013 revenue in USD millions 2008-13 Retail Revenue CAGR e: Estimate *Metro changed its fiscal year from end of Dec. to end of Sep. Fiscal 2013

results reported here include the 9 months ended 20 Sep 2013, plus the quarter

ended 31 Dec 2013 to create a 12-month period.

42

Percentage share of Top 250 revenue by region and by top countries

Top 250 geographical revenue


18

44.2%North

America1.8%

Latin

America

38.9%

Europe 14.0% Asia Pacific

1.0% Africa/

Middle East

United States

41.9%

Canada

2.3%

France

9.4%

Germany

10.6%

United Kingdom

6.2%

Japan

7.0%

European retailers are the most globally active of the Top 250

Top 10 European retailers


19

1 Carrefour SA, France 98,688mn (2.4%) 3$

2 Schwarz Unternehmens Treuhand KG, Germany 98,662mne 9.5% 4$

3 Tesco PLC, UK 98,631mn (2.0%) 5 $

4 Metro AG*, Germany 86,393mne (2.5%) 7$

6 Casino Gulchard-Perrachon S.A., France 63,468mn** 15.1% 13$

7 Groupe Auchan SA, France 62,444mn 2.4% 14$

8 Edeka Zentrale AG $ Co. KG, Germany 59,704mn** 3.3% 16$

9 Rewe Combine, Germany 51,109mn** 1.0% 21$

5 $Aldi Einkauf GmbH $ Co. oHG, Germany 81,090mne 4.7% 8

10 Centres Distributeurs E. Leclerc, France 47,671mne** 4.1% 23$$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

*Metro changed its fiscal year from end of Dec. to end of Sep. Fiscal 2013 results reported here include the 9 months

ended 20 Sep 2013, plus the quarter ended 31 Dec 2013 to create a 12-month period.

N. American retailers lead in revenue but saw growth fall to 4-year low

Top 10 North American retailers


20

1 Wal-mart Stores Inc., U.S. 476,294mn 1.5% 1$

2 Costco Wholesale Corporation, U.S. 105,156mn 6.1% 2$

3 The Kroger Co., U.S. 98,375mn 1.7% 6 $

4 The Home Depot, U.S. 78,812mn 5.4% 9$

6 Walgreen, U.S. 72,217mn 0.8% 11$

7 CVS Caremark Corporation, U.S. 65,618mn 3.1% 12$

8 Amazon.com, Inc., U.S. 60,903mn 17.7% 15$

9 Lowe’s Companies, U.S. 53,417mn 5.7% 20$

5 $Target Corporation, U.S. 72,596mn 0.9% 10

10 Best Buy Co. Inc., U.S. 42,210mn (14.5)% 25$$: 2013 Retail Revenue in USD millions Top 250 ranking 2013 Retail Revenue growth

Acquisitions playing a significant role in Asia Pacific growth

Top 10 Asia Pacific retailers


21

1 Aeon Co. Ltd., Japan 57,986mn** 11.9% 17$

2 Woolworth’s, Australia 54,457mn 3.9% 18$

3 Seven & I Holdings Co. Ltd., Japan 54,258mn** 13.3% 19 $

4 Wesfarmers, Australia 50,711mn 4.6% 22$

6 A.S. Watson Group, Hong Kong SAR 19,230mn** 0.4% 51$

7 Yamada Denki, Japan 18,921mn** 11.3% 53$

8 Suning Commerce Group, China 16,616mn 4.6% 59$

9 Gome Home Appliance Group, China 13,441mne 9.6% 69$

5 $Lotte Shopping, S. Korea 24,601mn 13.4% 40

10 Isetan Mitsukoshi Holdings, Japan 12,856mn 6.7% 74$$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

Seven of the Top 10 saw a double-digit increase in top-line sales

Top 10 Latin American retailers


22

1 Cencosud, Chile 19,855mn 13.1% 47$

2 S.A.C.I. Falabella, Chile 11,377mn 13.0% 88$

3 Organización Soriana, S.A.B. de C.V., Mexico 8,240mn** 0.4% 127 $

4 FEMSA Comercio, S.A. de C.V., Mexico 7,655mn 12.9% 134$

6 Lojas Americanas S.A., Brazil 6,247mn 18.2% 150$

7 Grupo Comercial Chedraui, S.A.B. de C.V., Mexico 5,157mn 3.8% 176$

8 El Puerto de Liverpool, Mexico 5,156mn 11.8% 177$

9 SMU S.A., Chile 3,823mn** (9.6%) 241 $

5 $Coppel S.A. de C.V., Mexico 6,304mn 17.0% 149

10 Magazine Luiza S.A., Brazil 3,758mn 14.5% 247$$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

Currently boasts the highest composite retail growth of any region

Top Africa/Middle East retailers


23

1 Shoprite Holdings Ltd., South Africa 9,869mn** 10.2% 107$

2 Steinhoff International Holdings Ltd., South Africa 8,217mn 21.6% 128$

3 Pick n Pay Stores Limited, South Africa 6,351mn 6.5% 148$

4 BİM Birleşik Mağazalar A.Ş., Turkey 6,242mn 19.6% 151$

6 Emke Group/Lulu Group International, UAE 5,000mn 9.6% 183$

7 Woolworths Holdings Limited, South Africa 3,834mn 12.7% 239$

$

5 $The SPAR Group Limited, South Africa 5,175mn 9.7% 174

$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

Percentage share of Top 250 revenue by sector

Top 250 sector revenue breakdown

© 2015 Deloitte & Touche Oy, Group of Companies24

9.2%

Apparel &

accessories

67.5%

Fast-moving

consumer goods

15.1%

Hardlines &

leisure goods

8.2%

Diversified

This sector accounts for over half of the Top 250

Top 10 fast-moving consumer goods retailers


25

1 Wal-mart Stores Inc., U.S. 476,294mn 1.5% 1$

2 Costco, U.S. 105,156mn 6.1% 2$

3 Carrefour SA, France 98,688mn (2.4%) 3$

4 Schwarz, Germany 98,662mne 9.5% 4$

6 The Kroger Co., U.S. 98,375mn 1.7% 6 $

7 Aldi, Germany 81,090mne 4.7% 8$

8 Walgreen, U.S. 72,217mn 0.8% 11$

9 CVS Caremark, U.S. 65,618mn 3.1% 12$

5 $Tesco PLC, UK 98,631mn (2.0%) 5

10 Casino, France 63,468mn** 15.1% 13$

$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

This high-margin sector was the fastest growing product group

Top 10 apparel & accessories retailers


1 Macy’s Inc., U.S . 27,931mn** 0.9% 34$

2 The TJX Companies, Inc., U.S. 27,423mn 6.0% 36$

3 LVMH Moet Hennessy-Louis Vuitton S.A., France 24,392mne 3.7% 41$

4 Inditex, S.A., Spain 22,265mn** 4.9% 44$

6 Kohl’s Corporation, U.S. 19,031mn (1.3%) 52 $

7 The Gap, Inc., U.S. 16,148mn 3.2% 61$

8 Isetan Mitsukoshi Holdings, Japan 12,856mn 6.7% 74$

9 Fast Retailing Co., Ltd., Japan 12,639mn** 23.2% 76$

5 $H&M Hennes & Mauritz AB, Sweden 19,729mn 6.4% 49

10 Nordstrom Inc., U.S. 12,166mn 3.4% 80$

26$: 2013 Retail Revenue in USD millions Top 250 ranking e: Estimate **: Revenue includes wholesale and retail2013 Retail Revenue growth

International expansion is an important growth strategy

Top 10 hardlines & leisure goods retailers


27

1 The Home Depot, U.S. 78,812mn 5.4% 9$

2 Amazon.com, U.S. 60,903mn 17.7% 15$

3 Lowe’s Companies, U.S. 53,417mn 5.7% 20$

4 Best Buy, U.S. 42,210mn (14.5)% 25$

6 Apple Inc./Apple Retail Stores, U.S. 20,228mn 7.4% 46 $

7 Yamada Denki, Japan 18,921mn** 11.3% 53$

8 Groupe Adeo SA, France 18,197mne** 5.3% 54$

9 Kingfisher plc, United Kingdom 17,454mn 5.2% 57$

5 $The IKEA Group, The Netherlands 36,495mn 3.3% 28

10 Suning Commerce Group Co., Ltd., China 16,616mn 4.6% 59$


Entrance of top Finnish retailer Kesko

Top 10 diversified retailers


28

1 Metro AG, Germany* 86,393mne (2.5%) 7$

2 Target Corporation, U.S. 72,596mn 0.9% 10$

3 Sears Holding Corp., U.S. 36,188mn (9.2%) 20$

4 Lotte Shopping, S. Korea 24,601mn 13.4% 40$

6 El Corte Ingles, S.A., Spain 14,789mn (2.4%) 66 $

7 Otto (GmBH & Co. KG), Germany 13,355mn (0.4%) 70$

8 S.A.C.I. Falabella, Chile 11,377mn 13.0% 88$

9 Liberty Interactive Corporation, U.S. 10,307mn 2.9% 99$

5 $Marks and Spencer Group plc, UK 16,391mn 2.8% 60

10 Kesko Corporation, Finland 8,776mne** (7.2%) 121$

*Metro changed its fiscal year from end of Dec. to end of Sep. Fiscal 2013 results reported here include the 9 months

ended 20 Sep 2013, plus the quarter ended 31 Dec 2013 to create a 12-month period.


China retailers surge

Top 10 fastest-growing retailers 2008-13


29

1 JD.com, Inc., China 10,827mn 66.2.% 92$

2 Yonghui Superstores Co., Ltd., China 4,733mn 23.4% 189$

3 Albertson’s LLC, U.S. 23,000mn 489.7% 43$

4 Jumbo Groep Holding B.V., The Netherlands 9,420mne 1.9% 111$

6 Chow Tai Fook Jewellery Group Ltd., Hong Kong 9,979mn** 34.8% 104$

7 Southeastern Grocers, LLC, U.S. 10,126mne 19.2% 102$

8 Steinhoff International Holdings Ltd., S. Africa 8,217mn 21.6% 128$

9 OJSC Dixy Group, Russia 5,628mn 22.8% 166$

5 $Chongqing Department Store Co., Ltd., China 4,733mn 7.1% 188

10 SMU, S.A., Chile 3.823mn** (9.2%) 241$


Pure-play e-retailers command top two slots

Top 10 e-retailers


30

1 Amazon.com, U.S. 60,903mn 17.7% 15$

2 JD.com, Inc., China 10,826mn 66.2% 92$

3 Wal-mart Stores Inc., U.S. 10,000mne 29.9% 1$

4 Apple Inc., U.S. 9,000mne n/a 46$

6 Tesco PLC, UK 5,250mne 11.0% 5 $

7 Liberty Interactive Corporation, U.S. 4,884mn 10.9% 99$

8 Casino, France 3,952mn 19.4% 13$

9 Suning Commerce Group Co., Ltd., China 3,536mn 43.9% 59$

5 $Otto (GmBH & Co. KG), Germany 8,188mne 7.0% 70

10 Macy’s Inc., U.S . 3,100mne 37.8% 34$


Top 250 with e-commerce site grows to 80% from 75%

E-commerce activity among the Top 250


# companies with

e-commerce sales

E-commerce as share

of retail revenue*

E-commerce year over

year sales growth*

Top 250 145 6.2% 21.1%

Excluding Amazon.com and JD.com** 143 4.2% 20.1%

Asia/Pacific 28 4.7% 42.5%

Excluding JD.com** 27 2.4% 23.8%

Europe 57 3.6% 16.0%

Latin America 8 7.1% 27.3%

North America 51 8.9% 20.0%

Excluding Amazon.com** 50 5.1% 21.8%

Apparel & Accessories 35 7.0% 21.0%

Fast-moving Consumer Goods 61 1.9% 21.6%

Hardlines/Leisure Goods 37 20.8% 22.4%

Excluding Amazon.com and JD.com** 35 9.5% 21.4%

Diversified 12 7.8% 14.2%

Africa/Middle East region excluded as e-commerce sales available for only one retailer * Sales-weighted composites

** Amazon.com and JD.com are the only two online-only retailers in the Top 250

About the Top 50 e-retailers


25United States

19Europe

5Emerging

Markets

China 4; Brazil 1

Where are the biggest e-retailers located?

39Of the Top 50 e-

retailers also have

bricks & mortar

stores

26.6%Average growth rate

for E-50 retailers

2Of the web-only

Top 50 e-retailers

are also in the Top

250

74%Of the Top 50 e-

retailers are also in

the Top 250

17 retailers appear in the Top 250 for the first time

Newcomers to the Top 250


e: Estimate

Top 250 rank Name of the company Dominant format 2013 revenue growth

104 Chow Tai Fook Jewellery Group Limited, Hong Kong SAR Other specialty 9,979.3**

182 Foodstuffs North Island Ltd., New Zealand Hypermarket/Supercenter/Superstore 5,021.2e**

189 Yonghui Superstores Co., Ltd., China Hypermarket/Supercenter/Superstore 4,733.1

190 Ascena Retail Group, Inc., U.S. Apparel/Footwear Specialty 4,714.9

196 Lenta Group, Russia Hypermarket/Supercenter/Superstore 4,538.6

206 O’Key Group S.A., Russia Hypermarket/Supercenter/Superstore 4,330.1

214 SM Investments Corporation, Philippines Department Store 4,275.8

224 Forever 21, Inc., U.S. Apparel/Footwear Specialty 4,000.0e

225 PRADA Group, Italy Apparel/Footwear Specialty 3,989.3

227 Gruppo Eurospin, Italy Discount Store 3,984.8e**

232 Academy Sports + Outdoors, U.S. Other specialty 3,900.0

243 Reinalt-Thomas Corp. (dba Discount Tire/America's Tire), U.S. Other specialty 3,800.0

244 Tiffany & Co., U.S. Other specialty 3,800.0

245 Ralph Lauren Corporation, U.S. Apparel/Footwear Specialty 3,798.0

247 Magazine Luiza SA, Brazil Electronics Specialty 3,757.6

248 HTM-Group, France Electronics Specialty 3,705.8

249 Welcia Holdings Co., Ltd., Japan Drug Store/Pharmacy 3,705.1

**: Revenue includes wholesale and retail

H&M at the top of the list again (The Q ratio is the ratio of a publicly traded company’s market capitalization to the value of its

tangible assets. If the ratio is greater than one, it means that financial market participants believe that part of a company’s value comes from its non-

tangible assets.)

Top retailers by Q ratio


Name of Company Country Q ratio

H & M Hennes & Mauritz AB Sweden 6.46

Tractor Supply Company U.S. 5.18

BİM Birleşik Mağazalar A.Ş. Turkey 4.76

Next plc UK 4.68

Inditex, S.A. Spain 4.57

Dollar Tree, Inc. U.S. 4.51

Nike, Inc. U.S. 4.35

The TJX Companies, Inc. U.S. 4.34

Ross Stores, Inc. U.S. 4.33

Fast Retailing Co., Ltd. Japan 3.95

Sweden leads by wide margin

Q ratio by geography


Q ratio by region

Africa/Middle East 1.32

Asia Pacific 0.47

Asia Pacific less Japan 0.51

Europe 0.85

Latin America 0.84

North America 1.76

Q ratio by country

Canada 0.52

China 0.25

France 0.50

Germany 0.28

Hong Kong 0.84

Japan 0.43

Mexico 1.02

Russia 1.09

South Africa 0.57

South Korea 0.29

Sweden 3.47

UK 0.63

US 1.82

Apple drives dominance of electronics segment

Q ratio by category


Q ratio by product sector

Apparel and accessories 1.24

Diversified 0.47

FMCG 0.82

Hardlines/Leisure 2.08

Q ratio by retail segment

Apparel/Footwear specialty 1.73

Convenience 0.53

Department stores 0.60

Discount department stores 0.60

Discount stores 1.00

Drug stores 1.25

Electronics 2.39

Electronics less Apple 0.51

Home improvement 1.70

Hypermarkets 0.66

Other specialty 1.21

Supermarkets 0.80

Deloitte Finland

Your local contact


For further information, please contact:

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Consumer Business

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mailto:[email protected]

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deloitte global powers of retailing 2015

Retail

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global middle class

retail trends