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Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
Deloitte Global Powers of Retailing 2014
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Deloitte Global Powers of Retailing 2014

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  • 1. Global Powers of Retailing 2014: Retail Beyond 1 Ira Kalish Deloitte Touche Tohmatsu Limited Scott Bearse Deloitte Consulting LLP 13 January 2014 Follow us @DeloitteCB #nrf14
  • 2. © 2014. For information, contact Deloitte Touche Tohmatsu Limited. RETAIL BEYOND 2
  • 3. Retail is moving from a Supply Driven industry to a Demand Driven industry. There is a seismic power shift to consumers
  • 4. Technologies will converge in unexpected ways that will change human capabilities and behaviors We may often miss when predicting the future, but the building blocks of the future are here today…
  • 5. Technology Convergence Wireless RFID/NFC Voice and Image Recognition 3D Printing Connected-Cameras GPS Biometrics MagneticResonanceImaging Big Data Mobile Nano-technology DNASequencing 3D Holographics
  • 6. Retail Everywhere Anything, anywhere, to anyone The new customer experience…
  • 7. GLOBAL ECONOMIC OUTLOOK 7
  • 8. China Growth stabilizes at new normal • Weaker export demand • Manufacturing steady • Tighter credit market conditions • Most growth from investment
  • 9. China Banking troubles • Bank regulation limits credit growth • Banks seek new channels • Securitize loans into WMPs • Fund off-balance sheet lending • Huge expansion of unregulated credit • Banks have low NPL ratio • True state of banks much worse • A crisis waiting to happen
  • 10. China Long term challenges • Excess investment - Nearly half of GDP - Driven by SOEs, state banking - Will lead to losses - Unsustainable
  • 11. China Long term challenges • Labor shortage emerges - Lagged impact of one-child policy - Leading to much higher wages - Low wage production is leaving 600 650 700 750 800 850 900 950 1000 1050 Population aged 15 to 64 millions Source: Oxford Economics
  • 12. China Reform agenda • Reduce role of SOEs • Allow market pricing • Allow competition in banking • Create deposit insurance • Free deposit interest rates • Protect private property rights • Protect intellectual property • Boost rural-urban migration • Address income inequality
  • 13. China What next? • Higher wages and higher currency • Less low end assembly • More focus on consumer spending • Less focus on investment, exports • Efforts to compete globally • Efforts to boost innovation • Efforts to boost non-price competition
  • 14. Europe What is wrong with Europe? • Weak banks
  • 15. Europe What is wrong with Europe? • High risk spreads • Poor credit growth 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 2007 2008 2009 2010 2011 2012 2013 Spain Germany Italy France Interest rate on 5 year private sector loans
  • 16. Europe What is right with Europe? • Less support for austerity • Looser monetary policy • Weak euro • Improved competitiveness • Expanding exports Unit labor costs
  • 17. Europe Germany • Merkel celebrates victory • Continued focus on austerity • Heavy reliance on exports • Inadequate focus on domestic demand
  • 18. Europe France • Hollande under pressure • Extreme economic weakness • Need for improved competitiveness • Outlook poor
  • 19. Europe UK • Surprisingly strong revival of growth • Continued reliance on housing • Consumer spending rebounds • Low unemployment • Wages begin to stabilize • Manufacturing revival • Weak investment • Uncertainty over EU
  • 20. United States ‒What to make of Fed policy • Fed will reduce monthly purchases of assets • Interest rates will remain low for a long time • Further “tapering” will depend on job market • Bond yields will rise further • Stronger dollar
  • 21. United States ‒Fiscal policy • Budget deal will reduce impact of sequestration • Negative impact of 2013 to be abated
  • 22. United States ‒Positive signs in the economy • Real incomes rising modestly as inflation remains low • Consumer spending keeps steady pace
  • 23. United States ‒Positive signs in the economy • House prices continue to rise, pulling homeowners out of water • Housing activity is up, but higher mortgage rates could hurt Sales of existing homesCase Shiller Home Price Index
  • 24. United States ‒Consumers have reason to spend … • Increased wealth • Reduced debt • Improved cash flow • Accelerated job growth • Pent up demand
  • 25. United States ‒Why is 2014 likely to be better? • No headwinds from fiscal policy • Fed “tapering” will be modest • Europe and China will stabilize • Investment in energy and low energy prices • Revival of manufacturing sector • Pent up demand for new homes • Improved credit markets
  • 26. Transport revolution People are driving less. Why?
  • 27. Mobile telecoms revolution Now, everyone is online everywhere • A billion smart phones • Half of users under 25 • Information anytime • Shop/interact anywhere • Always be entertained • Never talk to anyone 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 20132011 Smart phones as share of mobile phones
  • 28. Where to go next? “After this, there is only North Korea” -- Hotel executive commenting after investing in Myanmar 28
  • 29. TOP 250 RETAILERS 29
  • 30. Top 10 retailers worldwide The most churning in years 30 Retail sales rank (FY12) Name of company Country of origin 2012 retail revenue (US$mil) Retail revenue year-on-year growth (US$mil) 1 Wal-Mart Stores Inc. U.S. 469,162 5.0% 2 Tesco PLC U.K. 101,269 0.5% 3 Costco Wholesale Corporation U.S. 99,137 11.5% 4 Carrefour S.A. France 98,757 -5.5% 5 The Kroger Co. U.S. 96,751 7.1% 6 Schwarz Unternehmens Treuhand KG Germany 87,236 e 6.6% 7 Metro AG Germany 85,832 0.1% 8 The Home Depot Inc. U.S. 74,754 6.2% 9 Aldi Einkauf GmbH & Co. oHG Germany 73,035 e 7.5% 10 Target Corporation U.S. 71,960 5.1% e = estimate
  • 31. Top 10 European retailers Continued dominance of food retailers 31 European rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 2 Tesco U.K. $101,269 2 4 Carrefour France $98,757 3 6 Schwarz Germany $87,236 e 4 7 Metro Germany $85,832 5 9 Aldi Germany $73,035 e 6 14 Auchan France $59,041 7 18 Edeka Germany $55,944** 8 20 Casino France $53,375** 9 22 Rewe Combine Germany $48,984** 10 24 E. Leclerc France $44,807 e e = estimate ** Revenue includes wholesale and retail sales
  • 32. Top 10 North American retailers The relentless rise of Amazon, Target, and Costco 32 N. America rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 1 Wal-Mart U.S. $469,162 2 3 Costco U.S. $99,137 3 5 Kroger U.S. $96,751 4 8 Home Depot U.S. $74,754 5 10 Target U.S. $71,960 6 11 Walgreen U.S. $71,633 7 12 CVS Caremark U.S. $63,654 8 16 Amazon.com U.S. $58,570 9 21 Lowe's U.S. $50,521 10 23 Best Buy U.S. $45,085
  • 33. Top 10 Asia Pacific retailers Suning displaces two other Chinese retailers 33 Asia Pacific rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 13 Aeon Japan $63,100** 2 15 Woolworths Australia $58,602 3 17 Seven & i Japan $58,329** 4 19 Wesfarmers Australia $54,231 5 43 Lotte Shopping S. Korea $20,978 6 44 Yamada Denki Japan $20,588 7 48 AS Watson Hong Kong SAR $19,161 8 60 Suning Commerce Group China $15,608 9 64 Isetan Mitsukoshi Japan $14,600 10 80 Uny Group Japan $12,398** ** Revenue includes wholesale and retail sales
  • 34. Top Latin America retailers Dominance of Chile and Mexico 34 Lat. America rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 51 Cencosud Chile $17,896 2 97 Falabella Chile $10,269 3 124 Soriana Mexico $7,964 4 144 FEMSA Comercio Mexico $6,580 5 162 Lojas Americanas Brazil $5,835 6 180 Coppel Mexico $5,226 7 191 Comercial Chedraui Mexico $4,821 8 201 El Puerto de Liverpool Mexico $4,475 9 212 SMU Chile $4,291** ** Revenue includes wholesale and retail sales
  • 35. Top Africa/Middle East retailers Dominance of South Africa 35 Africa/ME rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 94 Shoprite Holdings S. Africa $10,534** 2 125 Steinhoff International Holdings S. Africa $7,952 3 137 Pick n Pay Stores S. Africa $7,110** 4 167 BİM Birleşik Mağazalar Turkey $5,506 5 172 SPAR Group S. Africa $5,423 6 197 Emke Group/Lulu Group International UAE $4,560 e 7 234 Woolworths Holdings S. Africa $4,001 e = estimate ** Revenue includes wholesale and retail sales
  • 36. Top 10 Fast-Moving Consumer Goods retailers, 2012 The usual suspects 36 Sector rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 1 Wal-Mart U.S. $469,162 2 2 Tesco U.K. $101,269 3 3 Costco U.S. $99,137 4 4 Carrefour France $98,757 5 5 Kroger U.S. $96,751 6 6 Schwarz Germany $87,236 7 9 Aldi Germany $73,035 8 11 Walgreens U.S. $71,633 9 12 CVS Caremark U.S. $63,654 10 13 Aeon Japan $63,100
  • 37. Top 10 Fashion Goods retailers, 2012 Fewer department stores on list 37 Sector rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 36 Macy's U.S. $27,686 2 37 TJX U.S. $25,878 3 41 LVMH France $22,770 4 45 Inditex Spain $20,560 5 47 Kohl's U.S. $19,279 6 52 H & M Sweden $17,800 7 59 The Gap, Inc. U.S. $15,651 8 64 Isetan Mitsukoshi Japan $14,600 9 74 J. C. Penney U.S. $12,985 10 81 J. Front Retailing Japan $12,117
  • 38. Top 10 Hardlines & Leisure Goods retailers, 2012 Rising importance of Amazon and Apple 38 Sector rank Top 250 rank Company Country of origin Retail sales (US$ millions) 1 8 Home Depot U.S. $74,754 2 16 Amazon.com, Inc. U.S. $58,570 3 21 Lowe's U.S. $50,521 4 23 Best Buy U.S. $45,085 5 30 IKEA Netherlands $35,290 6 44 Yamada Denki Japan $20,588 7 50 Apple Stores U.S. $18,828 8 54 Kingfisher U.K. $16,803 9 55 Groupe Adeo France $16,725 10 60 Suning Commerce China $15,608
  • 39. Top 10 Diversified retailers, 2012 39 Sector rank Top 250 rank Company Country of origin Retail sales (US$ millions) 1 7 Metro Germany $85,832 2 10 Target U.S. $71,960 3 27 Sears Holdings U.S. $39,854 4 43 Lotte Shopping S. Korea $20,978 5 57 Marks & Spencer U.K. $15,852 6 62 El Corte Inglés Spain $14,671 7 75 Otto Group Germany $12,978 8 97 Falabella Chile $10,269 9 99 Liberty Interactive U.S. $10,018 10 108 Beisia Group Japan $9,355
  • 40. Top 10 e-retailers The revolution is over, and the rebels have won 40 Top e-retailer sales rank FY12 Top 250 sales rank FY12 Name of company Country of origin FY12 e-commerce sales (US$ mil) 1 16 Amazon.com, Inc. U.S. 51,733.0 2 50 Apple Inc. / Apple Stores U.S. 8,600.0 e 3 1 Wal-Mart Stores, Inc. U.S. 7,500.0e 4 75 Otto (GmbH & Co KG) Germany 7,410.6 e 5 142 Beijing Jingdong Century Trading Co., Ltd. (Jingdong Mall) China 6,663.3 e 6 2 Tesco PLC U.K. 4,761.5 e 7 99 Liberty Interactive Corporation U.S. 4,397.4 8 207 Dell Inc. U.S. 4,370.0 9 20 Casino Guichard-Perrachon S.A. France 3,422.6 e 10 n/a Jia.com China 3,204.7 g e = estimate g = gross transaction volume
  • 41. E-commerce activity among the Top 250 North America dominates, but growth is fastest in Asia 41 E-commerce sales as share of retail revenue* E-commerce year-over-year sales growth* Top 250 7.7% 24.8% Asia/Pacific 6.2% 34.8% Europe 5.2% 25.3% Latin America 7.6% 19.5% North America 11.7% 18.8% Diversified 13.8% 21.9% Fashion 6.8% 24.4% FMCG 1.7% 26.3% Hardlines/Leisure 14.8% 23.8% * Average for all companies in the sector with e-commerce sales
  • 42. Top 30 retailers by Q ratio Name of company Country Q ratio H & M Hennes & Mauritz AB Sweden 7.66 Tractor Supply Company U.S. 5.84 Inditex, S.A. Spain 5.82 BİM Birleşik Mağazalar A.Ş. Turkey 5.13 CP ALL Public Company Limited Thailand 4.98 Amazon.com, Inc. U.S. 4.93 Dollar Tree, Inc. U.S. 4.77 The TJX Companies, Inc. U.S. 4.64 Ross Stores, Inc. U.S. 4.61 Next plc U.K. 4.54 Fast Retailing Co., Ltd. Japan 4.34 Whole Foods Market, Inc. U.S. 4.12 Coach, Inc. U.S. 4.11 Open Joint Stock Company "Magnit" Russia 4.11 Nike, Inc. U.S. 3.90 Name of company Country Q ratio Woolworths Holdings Limited S. Africa 3.80 Dairy Farm International Holdings Limited Hong Kong SAR 3.70 Compagnie Financière Richemont SA Switzerland 3.08 L Brands, Inc. (formerly Limited Brands, Inc.) U.S. 3.03 The Sherwin-Williams Company/ Paint Stores Group U.S. 3.02 PetSmart, Inc. U.S. 2.97 President Chain Store Corp. Taiwan 2.71 Apple Inc. / Apple Stores U.S. 2.66 The Home Depot, Inc. U.S. 2.63 Shoprite Holdings Ltd. S. Africa 2.62 The Gap, Inc. U.S. 2.59 Bed Bath and Beyond Inc. U.S. 2.59 AutoZone, Inc. U.S. 2.44 Belle International Holdings Limited Hong Kong SAR 2.40 Williams-Sonoma, Inc. U.S. 2.3642
  • 43. Composite Q ratio by country and dominant format 43 By country Q ratio U.S. 1.78 Russia 1.77 Mexico 1.44 Hong Kong 1.34 South Africa 1.00 Canada 0.85 UK 0.83 China 0.81 France 0.76 Japan 0.49 Germany 0.36 Format Q ratio Apparel, footwear, specialty 3.19 Non-store 2.96 Electronics 2.07 Home Improvement 1.85 Other specialty 1.53 Discount 1.25 Drug 1.22 Supermarkets 0.97 Convenience 0.81 Department 0.77 Hypermarkets 0.70
  • 44. Composite Q ratio by sales and market cap 44 Sales Q ratio Top ten 1.07 Top 30 1.08 Top half 1.32 Bottom 10 0.44 Bottom 30 0.82 Bottom half 1.19 Market cap Q ratio Top 10 2.25 Top 30 1.68 Bottom 10 0.18 Bottom 30 0.29
  • 45. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. 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 deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 190,000 professionals are committed to becoming the standard of excellence. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. © 2014. For information, contact Deloitte Touche Tohmatsu Limited.

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