Global Powers of Retailing 2014: Retail Beyond

Transcription

1 Global Powers of Retailing 2014: Retail Beyond Ira Kalish Deloitte Touche Tohmatsu Limited Scott Bearse Deloitte Consulting LLP 13 January Follow #nrf14

2 RETAIL BEYOND For information, contact Deloitte Touche Tohmatsu Limited.

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 Mobile Wireless RFID/NFC GPS Connected-Cameras 3D Printing Big Data Nano-technology 3D Holographics Voice and Image Recognition Biometrics Magnetic Resonance Imaging DNA Sequencing

6 The new customer experience Retail Everywhere Anything, anywhere, to anyone

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 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 7.5 Interest rate on 5 year private sector loans Spain Italy Germany France

16 Europe What is right with Europe? Less support for austerity Unit labor costs Looser monetary policy Weak euro Improved competitiveness Expanding exports

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 Case Shiller Home Price Index Sales of existing homes

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 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 29 TOP 250 RETAILERS

30 Top 10 retailers worldwide The most churning in years 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, % 2 Tesco PLC U.K. 101, % 3 Costco Wholesale Corporation U.S. 99, % 4 Carrefour S.A. France 98, % 5 The Kroger Co. U.S. 96, % 6 Schwarz Unternehmens Treuhand KG Germany 87,236 e 6.6% 7 Metro AG Germany 85, % 8 The Home Depot Inc. U.S. 74, % 9 Aldi Einkauf GmbH & Co. ohg Germany 73,035 e 7.5% Target Corporation U.S. 71, % e = estimate

31 Top 10 European retailers Continued dominance of food retailers European rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 2 Tesco U.K. $101, Carrefour France $98, Schwarz Germany $87,236 e 4 7 Metro Germany $85, Aldi Germany $73,035 e 6 14 Auchan France $59, Edeka Germany $55,944** 8 20 Casino France $53,375** 9 22 Rewe Combine Germany $48,984** E. Leclerc France $44,807 e e = estimate ** Revenue includes wholesale and retail sales 31

32 Top 10 North American retailers The relentless rise of Amazon, Target, and Costco N. America rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 1 Wal-Mart U.S. $469, Costco U.S. $99, Kroger U.S. $96, Home Depot U.S. $74, Target U.S. $71, Walgreen U.S. $71, CVS Caremark U.S. $63, Amazon.com U.S. $58, Lowe's U.S. $50, Best Buy U.S. $45,085 32

33 Top 10 Asia Pacific retailers Suning displaces two other Chinese retailers 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, Seven & i Japan $58,329** 4 19 Wesfarmers Australia $54, Lotte Shopping S. Korea $20, Yamada Denki Japan $20, AS Watson Hong Kong SAR $19, Suning Commerce Group China $15, Isetan Mitsukoshi Japan $14, Uny Group Japan $12,398** ** Revenue includes wholesale and retail sales 33

34 Top Latin America retailers Dominance of Chile and Mexico Lat. America rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 51 Cencosud Chile $17, Falabella Chile $10, Soriana Mexico $7, FEMSA Comercio Mexico $6, Lojas Americanas Brazil $5, Coppel Mexico $5, Comercial Chedraui Mexico $4, El Puerto de Liverpool Mexico $4, SMU Chile $4,291** ** Revenue includes wholesale and retail sales 34

35 Top Africa/Middle East retailers Dominance of South Africa Africa/ME rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 94 Shoprite Holdings S. Africa $10,534** Steinhoff International Holdings S. Africa $7, Pick n Pay Stores S. Africa $7,110** BİM Birleşik Mağazalar Turkey $5, SPAR Group S. Africa $5, Emke Group/Lulu Group International UAE $4,560 e Woolworths Holdings S. Africa $4,001 e = estimate ** Revenue includes wholesale and retail sales 35

36 Top 10 Fast-Moving Consumer Goods retailers, 2012 The usual suspects Sector rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 1 Wal-Mart U.S. $469, Tesco U.K. $101, Costco U.S. $99, Carrefour France $98, Kroger U.S. $96, Schwarz Germany $87, Aldi Germany $73, Walgreens U.S. $71, CVS Caremark U.S. $63, Aeon Japan $63,100 36

37 Top 10 Fashion Goods retailers, 2012 Fewer department stores on list Sector rank Top 250 rank Company Country of origin Retail revenue (US$ millions) 1 36 Macy's U.S. $27, TJX U.S. $25, LVMH France $22, Inditex Spain $20, Kohl's U.S. $19, H & M Sweden $17, The Gap, Inc. U.S. $15, Isetan Mitsukoshi Japan $14, J. C. Penney U.S. $12, J. Front Retailing Japan $12,117 37

38 Top 10 Hardlines & Leisure Goods retailers, 2012 Rising importance of Amazon and Apple Sector rank Top 250 rank Company Country of origin Retail sales (US$ millions) 1 8 Home Depot U.S. $74, Amazon.com, Inc. U.S. $58, Lowe's U.S. $50, Best Buy U.S. $45, IKEA Netherlands $35, Yamada Denki Japan $20, Apple Stores U.S. $18, Kingfisher U.K. $16, Groupe Adeo France $16, Suning Commerce China $15,608 38

39 Top 10 Diversified retailers, 2012 Sector rank Top 250 rank Company Country of origin Retail sales (US$ millions) 1 7 Metro Germany $85, Target U.S. $71, Sears Holdings U.S. $39, Lotte Shopping S. Korea $20, Marks & Spencer U.K. $15, El Corte Inglés Spain $14, Otto Group Germany $12, Falabella Chile $10, Liberty Interactive U.S. $10, Beisia Group Japan $9,355 39

40 Top 10 e-retailers The revolution is over, and the rebels have won 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, 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 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, Dell Inc. U.S. 4, Casino Guichard-Perrachon S.A. France 3,422.6 e 10 n/a Jia.com China 3,204.7 g 40 e = estimate g = gross transaction volume

41 E-commerce activity among the Top 250 North America dominates, but growth is fastest in Asia E-commerce sales as share of retail revenue* E-commerce year-over-year sales growth* Top % 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 41

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 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 Dollar Tree, Inc. U.S The TJX Companies, Inc. U.S Ross Stores, Inc. U.S Next plc U.K Fast Retailing Co., Ltd. Japan 4.34 Whole Foods Market, Inc. U.S Coach, Inc. U.S Open Joint Stock Company "Magnit" 42 Russia 4.11 Nike, Inc. U.S Name of company Country Q ratio Woolworths Holdings Limited S. Africa 3.80 Dairy Farm International Hong Kong Holdings Limited SAR 3.70 Compagnie Financière Richemont SA Switzerland 3.08 L Brands, Inc. (formerly Limited Brands, Inc.) U.S The Sherwin-Williams Company/ Paint Stores Group U.S PetSmart, Inc. U.S President Chain Store Corp. Taiwan 2.71 Apple Inc. / Apple Stores U.S The Home Depot, Inc. U.S Shoprite Holdings Ltd. S. Africa 2.62 The Gap, Inc. U.S Bed Bath and Beyond Inc. U.S AutoZone, Inc. U.S Belle International Holdings Limited Hong Kong SAR 2.40 Williams-Sonoma, Inc. U.S. 2.36

43 Composite Q ratio by country and dominant format By country Q ratio U.S 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 Apparel, footwear, specialty Q ratio 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

44 Composite Q ratio by sales and market cap Sales Q ratio Market cap Q ratio Top ten 1.07 Top Top half 1.32 Bottom Top Top Bottom Bottom Bottom Bottom half

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