Ira Kalish, Chief Global Economist, Deloitte; Ian McGarrigle, Chairman, World Retail Congress

1. An economic tour of retail around the world
Ira Kalish, Chief Global Economist, Deloitte
Ian McGarrigle, Chairman, World Retail Congress

2. Headline Verdana BoldDeloitte shines a spotlight on economics and the global consumer
Dr. Ira Kalish, Chief Global Economist
Deloitte Global

3. 3© 2018. For information, contact Deloitte Touche Tohmatsu Limited.
Global economic outlook

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• Slower growth of working age
populations
• Declining labor force
participation in some markets
• Slow productivity growth,
despite rapid leaps in
technology
Global issues
Modest growth in developed economies
0
1
2
3
4
5
6
Germany Japan Korea United Kingdom United States
Source: OECD/Haver Analytics
Productivity growth in the last three recoveries
percent, annual average
1992-1999 2002-2007 2010-2015

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• Tight labor markets have not
generated accelerating wages
• Excess capacity dampens prices
• Deflationary psychology lingers
Global issues
Low inflation despite tight labor markets
Core inflation low except in UK

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Global issues
Asset price bubbles and monetary policy
Global equity index
FTSE 100 in US dollars
• Equity, bond, and property
prices have soared
• One explanation is very low
interest rates
• Another is a herd mentality
generating a bubble
• Future tightening of monetary
policy could prick the bubble,
seize up credit markets

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• Growth accelerating, fueled by exports and consumer spending
• Inflation remains low, but Fed starts to tighten
• Income growth is slow, but consumers are eager to spend
• Risks include higher interest rates and trade wars
United States
Strong economy with risks

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China
Stable growth, rising debt
• Growth remains strong, partly fueled by government stimulus
• Consumer spending remains small share of economy
• Debt is fueling growth, leading to concerns about financial stability
• Demographics bode poorly for growth

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Eurozone
Strong growth, uncertain politics
Eurozone real retail sales index
• Strength in Germany, Spain, Netherlands
• Rebound in growth in France
• Risk: fraying politics
• Very strong growth
• Weak euro boosts exports
• Declining unemployment helps retail
• Inflation remains low, ECB policy loose

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United Kingdom
Brexit hurts retail
UK real retail sales growth
• Drop in pound caused rise
in inflation, drop in real
wages, decline in retail
sales
• Uncertainty about Brexit
causes weakening of
investment
• Agreement between UK
and EU means that Britain
won’t fall off cliff

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Japan
Rebound in growth
Japan real growth of consumer spending
• Growth rebounds due
to strong exports,
fueled by weak yen
• Despite tight job
market, wages
stagnate, hurting retail
sales
• Possible rise in national
sales tax bodes poorly
for consumer spending
• Demographics are a big
worry

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Global Powers of Retailing
Highlights

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Wal-Mart continues its stint as the world’s largest retailer
Top 10 retailers
e: estimate
#1
#2
#3
#4
#5
#6
#7
Costco Wholesale Corporation
The Kroger Co.
Schwarz Group
Walgreens Boots Alliance, Inc.
Amazon.com, Inc.
The Home Depot, Inc.
Wal-Mart Stores Inc.
Aldi Group
Carrefour S.A.
CVS Health Corporation
#8
#9
#10
US
US
US
Germany
US
US
US
Germany
France
US
$ 485.8
$ 118.7
$ 115.3
$ 99.2
$ 97.0
$ 94.6
$ 94.5
$ 84.9 e
$ 84.1
$ 81.1
+4
-1
-2
+2
FY2016 Retail revenue (US$ billions)Country of origin#: FY2016 Top 250 rank
Change in rank

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Percentage share of Top 250 revenue by region and by top countries
Geographic breakdown
North
America
47.8%
Europe
33.8%
Latin
America
1.4%
Asia
Pacific
15.4%
Africa/
Middle East
1.5%
US
45.7%
China/HK
3.7%
Japan
7.2%
Other Asia
Pacific
4.6%
France
7.9%
Germany
9.6%
UK
4.9%
Other
Europe
11.4%

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Product sector breakdown
9.8%
Apparel and
accessories
Fast-moving
consumer goods
(FMCG)
66.4%
Hardlines and
leisure goods
17.0%
Diversified
6.8%%
Share of
revenue
TOP 250
Companies by sector
43
135
51
21
Percentage share of Top 250 revenue by primary product sector

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