Global Powers of Retailing
2013
Retail Beyond
Ira Kalish
Deloitte Services LP
January 14, 2013
What to expect in 2013
• Europe will emerge from recession, the euro will survive
• The US will solve its problems (sort of) and grow faster
• China will rebound and tiptoe toward reform
• Japan will embark on a radically new path
• India will engage in further reforms
• Brazil will return to normal growth
• Other emerging markets will grow rapidly
2
Europe
• Recession continues
‒Fiscal tightening
‒Troubled credit markets
‒Perceived currency risk
‒Low business confidence
3
Eurozone Economic Indicators
% change quarter to quarter, annual rate
Source: Institute for International Finance
Europe
• ECB provides a credible backstop
‒Offers unlimited support
‒Bond yields decline
‒Markets rebuild confidence in euro
Yield on 10 year bond
4
Source: Capital Economics
Europe
• Small signs of progress
‒Risk spreads decline
‒Capital flight reverses
‒Bank deposits stabilize
‒Business confidence grows
European Bank Deposits
% change year ago
‒Competitiveness improves
5
Source: Capital Economics
Europe
• Consumer outlook modest at best
‒High unemployment
‒Declining real wages
‒Weak confidence
‒Higher taxes
Bank lending to households
% change year to year
‒Focus on exports
6
Source: Capital Economics
United States
• Surprisingly strong economy
‒Aggressive monetary policy
‒No fiscal policy
7
Source: Institute for International Finance
United States
• Fiscal cliff averted
‒Bush-era tax rates remain for most
‒Upper income households taxes rise
‒Payroll tax rises
8
United States
• Debt ceiling debacle looms
‒Republicans want spending cuts
‒Obama wants clean bill
‒Obama could simply issue debt
‒Is the Republican threat credible?
9
United States fiscal situation
Federal government spending and revenue
Billions $US annual rate
10
United States
• Positive signs
‒Modest job growth
‒Modest real income gains
‒Major housing rebound
‒Improved credit markets
11
Source: Institute for International Finance
United States
• Continued weakness
‒Manufacturing weakened in late 2012
‒Capital spending declined
‒But new orders suggest a turnaround
New orders: non-defense, non-aircraft capital goods
12
United States
• Consumer situation
‒Consumer balance sheets improved
‒Cash flow better after paying down debts
‒Very strong spending on automobiles
‒Retail grows modestly
13
Source: Institute for International Finance
China
• Short term revival
‒Stimulus appears to have worked
‒Loosened monetary policy
‒Growth from investment
Exports by destination
US$, % chg year over year
14
China
• Longer term challenges
‒Moving to the next stage of growth
‒Shifting from investment to consumption
‒Dealing with demographics
‒Reforming without offense
15
China
• Influences on retailing
‒Rising wages
‒Shift to higher skilled workforce
‒Investment in second tier cities
‒Continued income disparity
16
Japan
• The situation until now
‒Deflation
‒Weak export demand
‒Declining competitiveness
‒Weak consumer demand
‒Poor monetary stimulus
‒Dysfunctional politics
17
Source: US Federal Reserve
Japan
• A new age dawns
‒New Prime Minister Shinzo Abe assumes office
‒Promises massive fiscal stimulus
‒Promises more aggressive central bank
‒Already yen has fallen
18
Japan
• The uncertain outlook
‒Japan faces increased competition from China, Korea
‒Japan has daunting demographics and no immigration
‒Economy requires numerous reforms
‒Much will depend on new policies
19
The other BRICs
• India: greater hope for reform
• Brazil: stimulus will result in faster growth in 2013
• Russia: moderate growth, more energy investment
20
The next tier of emerging markets
• Countries to watch:
‒Bangladesh
‒Colombia
‒Indonesia
‒Mexico
‒Nigeria
‒Peru
‒Philippines
‒Turkey
‒Vietnam
21
Big issues influencing retailing
• Energy
• Demographics
• Fiscal problems
• The role of women
• The internet
22
Top 250 retailers
Top 10 retailers worldwide
Retail
sales
rank
(FY11)
24
Name of company
Country 2011 retail
of origin revenue
(US$mil)
2011 Group
revenue
(US$mil)
2011 group
net income
(US$mil)
2006-2011 retail
revenue
CAGR*
1
Wal-Mart Stores, Inc.
U.S.
446,950
446,950
16,387
5.1%
2
Carrefour S.A.
France
113,197
115,277
563
0.9%
3
Tesco PLC
U.K.
101,574
103,244
4,502
8.3%
4
Metro AG
Germany
92,905
92,905
1,032
2.2%
5
The Kroger Co.
U.S.
90,374
90,374
596
6.5%
6
Costco Wholesale
Corporation
U.S.
88,915
88,915
1,542
8.1%
7
Schwarz Unternehmens
Germany
Treuhand KG
87,841
87,841
n/a
8.0%
8
Aldi Einkauf GmbH &
Co. oHG
Germany
73,375
73,375
n/a
5.5%
9
Walgreen Co.
U.S.
72,184
72,184
2,714
8.8%
10
The Home Depot, Inc.
U.S.
70,395
70,395
3,883
-2.3%
e = estimate
e
CAGR = compound annual growth rate
e
Share of Top 250 retailers by region/country, 2011
25
Share of Top 250 retail revenue by region/country, 2011
26
Top 10 North American retailers
27
N. America
rank
Top 250 rank
1
1
2
Company
Country of origin
Retail revenue
(US$ millions)
Wal-Mart
U.S.
$446,950
5
Kroger
U.S.
$90,374
3
6
Costco
U.S.
$88,915
4
9
Walgreens
U.S.
$72,184
5
10
Home Depot
U.S.
$70,395
6
11
Target
U.S.
$68,466
7
14
CVS Caremark
U.S.
$59,599
8
20
Best Buy
U.S.
$50,705
9
21
Lowe's
U.S.
$50,208
10
23
Amazon.com
U.S.
$46,491
Top 10 European retailers
European
rank
Top 250 rank
1
2
Carrefour
France
$113,197
2
3
Tesco
U.K.
$101,574
3
4
Metro
Germany
$92,905
4
7
Schwarz
Germany
$87,841
5
8
Aldi
Germany
$73,375
6
12
Auchan
France
$60,515
7
15
Edeka
Germany
$59,460
8
19
Rewe Combine
Germany
$51,331
9
22
Casino
France
$47,107e
10
24
E. Leclerc
France
$45,407e
e = estimate
28
Company
Country of origin
Retail revenue
(US$ millions)
e
Top 10 Asia Pacific retailers
Asia Pacific Top 250 rank
rank
Country of origin
Retail revenue
(US$ millions)
1
13
Aeon
Japan
$60,158
2
16
Seven & i
Japan
$57,966
3
17
Woolworths
Australia
$54,614
4
18
Wesfarmers
Australia
$52,208
5
40
Yamada Denki
Japan
$23,483
6
48
Lotte Shopping
S. Korea
$19,077
7
50
AS Watson
Hong Kong
$18,444
8
59
Bailian
China
$15,930
9
62
Isetan Mitsukoshi
Japan
$15,373
10
65
GOME
China
$14,923
e = estimate
29
Company
e
e
Top 10 Latin America retailers
Lat.
America
rank
Top 250 rank
1
34
Grupo Pão de Açúcar
Brazil
$27,988
2
63
Cencosud
Chile
$14,967
3
111
Falabella
Chile
$9,145
4
131
Soriana
Mexico
$7,945
5
153
Lojas Americanas
Brazil
$6,128
6
156
FEMSA Comercio
Mexico
$5,992
7
191
Comercial Mexicana
Mexico
$4,727
8
196
Comercial Chedraui
Mexico
$4,602
9
215
El Puerto de Liverpool
Mexico
$4,232
10
217
Coppel
Mexico
$4,220
e = estimate
30
Company
Country of origin
Retail revenue
(US$ millions)
e
e
e
Top Africa/Middle East retailers
Africa/ME Top 250 rank
rank
Country of origin
Retail revenue
(US$ millions)
1
93
Shoprite Holdings
S. Africa
$10,717
2
133
Steinhoff International
Holdings
S. Africa
$7,761
3
135
Pick n Pay Stores
S. Africa
$7,560
4
165
SPAR Group
S. Africa
$5,607
5
185
BİM Birleşik Mağazalar
Turkey
$4,907
6
198
Landmark Group
UAE
$4,518
7
213
Emke Group/Lulu Group
International
UAE
$4,250
e = estimate
31
Company
e
Top 250 new market entries by sub-region, 2011
This is the big story
*Includes franchised, licensed, and other partnership or distribution arrangements
Excludes companies entering a new country through e-commerce or other non-store methods, except for companies that operate
primarily as non-store retailers
Source: published company data
32
Top 10 Fast-Moving Consumer Goods retailers, 2011
33
Sector
rank
Top 250
rank
Company
Country of origin
Retail revenue
(US$ millions)
1
2
1
2
Wal-Mart
Carrefour
U.S.
France
$446,950
$113,197
3
3
Tesco
U.K.
$101,574
4
5
5
6
Kroger
Costco
U.S.
U.S.
$90,374
$88,915
6
7
Schwarz
Germany
$87,841
7
8
Aldi
Germany
$73,375
8
9
Walgreens
U.S.
$72,184
9
12
Auchan
France
$60,515
10
13
Aeon
Japan
$60,158
Top 10 Fashion Goods retailers, 2011
34
Sector
rank
Top 250
rank
Company
Country of origin
Retail revenue
(US$ millions)
1
2
37
42
Macy's
TJX
U.S.
U.S.
$26,405
$23,191
3
45
LVMH
France
$20,760
4
5
47
49
Inditex
Kohl's
Spain
U.S.
$19,157
$18,804
6
53
J. C. Penney
U.S.
$17,260
7
55
H&M
Sweden
$16,974
8
62
Isetan Mitsukoshi Holdings
Japan
$15,373
9
68
Gap
U.S.
$14,549
10
95
Nordstrom
U.S.
$10,497
Top 10 Hardlines & Leisure Goods retailers, 2011
Sector
rank
35
Top 250 Company
rank
Country of
origin
Retail sales
(US$ millions)
1
2
10
20
Home Depot
Best Buy
U.S.
U.S.
$70,395
$50,705
3
21
Lowe's
U.S.
$50,208
4
5
23
30
Amazon.com
IKEA
U.S.
Netherlands
$46,491
$34,314
6
40
Yamada Denki
Japan
$23,483
7
52
Kingfisher
U.K.
$17,354
8
57
Groupe Adeo
France
$16,157
9
64
Staples
U.S.
$14,966
10
65
GOME
China
$14,923
Top 10 Diversified retailers, 2011
Sector
rank
36
Top 250 Company
rank
Country of
origin
Retail sales
(US$ millions)
1
2
4
11
Metro
Target
Germany
U.S.
$92,905
$68,466
3
27
Sears Holdings
U.S.
$41,567
4
5
48
54
Lotte Shopping
El Corte Inglés
S. Korea
Spain
$19,077
$17,143
6
60
Marks & Spencer
U.K.
$15,863
7
74
Otto Group
Germany
$13,903
8
92
J. Front Retailing
Japan
$10,843
9
102
Beisia Group
Japan
$9,840
10
103
Liberty Interactive
U.S.
$9,616
Top 30 retailers by Q ratio
Name of company
Country
Q ratio
Name of company
Country
Q ratio
BİM Birleşik Mağazalar A.Ş.
Turkey
6.49
Next plc
U.K.
3.06
CP ALL Public Company
Limited
Thailand
6.47
The Sherwin-Williams Company U.S.
2.98
H & M Hennes & Mauritz AB
Sweden
5.5
PetSmart, Inc.
U.S.
2.86
Inditex, S.A.
Spain
5.13
Shoprite Holdings Ltd.
S. Africa
2.71
Coach, Inc.
U.S.
4.98
Family Dollar Stores, Inc.
U.S.
2.56
Apple Inc. / Apple Stores
U.S.
4.26
Open Joint Stock Company
"Magnit"
Russia
2.43
Dairy Farm International
Holdings Limited
Hong Kong
SAR
4.15
AutoZone, Inc.
U.S.
2.39
Amazon.com, Inc.
U.S.
4.03
Compagnie Financière
Richemont SA
Switzerlan
d
2.39
Belle International Holdings
Limited
Hong Kong
SAR
3.98
The Home Depot, Inc.
U.S.
2.31
Whole Foods Market, Inc.
U.S.
3.91
Bed Bath and Beyond Inc.
U.S.
2.25
Tractor Supply Company
U.S.
3.85
The Gap, Inc.
U.S.
2.17
Dollar Tree, Inc.
U.S.
3.78
Limited Brands, Inc.
U.S.
2.17
The TJX Companies, Inc.
U.S.
3.73
President Chain Store Corp.
Taiwan
2.09
Ross Stores, Inc.
U.S.
3.64
El Puerto de Liverpool, S.A.B. de
Mexico
C.V.
2.07
Fast
Retailing Co., Ltd.
37
Japan
3.41
Williams-Sonoma, Inc.
2.06
U.S.
Composite Q ratio by geography
By country
Q ratio
Hong Kong
1.65
U.S.
1.59
Mexico
1.30
Russia
1.19
By region
Africa/ ME
1.11
Asia Pac less Japan
1.08
Latin America
1.06
Europe
38
Q ratio
.82
South Africa
.88
Canada
.79
Emerging markets
1.14
U.K.
.62
Developed markets
1.11
France
.60
Japan
.40
Germany
.21
Composite Q ratio by format and product
By format
39
Q ratio
By product
Q ratio
Apparel/Footwear
3.05
Hardlines
1.85
Electronic specialty
2.65
Fashion
1.69
Discount store
1.61
Hardlines less Apple
1.10
Home improvement
1.47
FMCG
.76
Non-store
1.46
Diversified
.55
Other specialty
1.15
Discount dept. store
.92
Supermarket
.84
Drugstore/pharm
.83
Hypermarket
.63
Convenience/Forecourt
.60
Department store
. 58
Electronic less Apple
.42
Concluding thoughts
“Economic forecasting was invented to make
astrology look respectable.”
--John Kenneth Galbraith
“I know I know nothing, but at least I know that.”
-- Willem Buiter, Citibank Chief Economist
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