The Top 250 global retailers generated aggregated revenues of US$4.4 trillion in fiscal year 2016 which ended through June 2017, representing composite growth of 4.1%, said Deloitte recently.
According to the firm’s recently published report titled Global Powers of Retailing 2018, the global economy is currently in the midst of a period of relatively strong growth and benign circumstances.
“Growth has accelerated in Europe and Japan, stabilized in China and the US, and revived in many other emerging markets,” said Dr. Ira Kalish, Deloitte Global Chief Economist. “For retailers, the stronger economic growth is most welcome. Yet they must also contend with the negative consequences of rising income inequality, protectionist actions, and the potential impact of monetary tightening.”
Europe loses ground to Asia Pacific and some emerging markets
Europe’s share of the Top 250 dropped again, with 82 retailers based in Europe (85 in FY2015, 93 in FY2014) and the gap widened versus North America, Deloitte observed.
Struggling European economies, Brexit, and weak performances by some European retailers in recent years caused Europe’s share of the Top 250 revenues to drop from 39.4% to 33.8% during FY 2006-2016, according to the report.
Retailers from China, Japan, and the rest of Asia Pacific are gaining ground, accounting for 15.4% of Top 250 revenues in 2016, compared with 10.4%.
Top five maintain their leading positions
The top five largest retailers maintained their positions on the leader board, said Deloitte, adding that a combination of organic growth, acquisitions, and exchange rate volatility shuffled the rest of the Top 10, which now accounts for 30.7% of the overall Top 250’s retail revenue, compared to 30.4 % last year.
For the first time in four years, the apparel and accessories retailers were not the clear growth leaders, but they remained the most profitable sector, Deloitte noted.
In addition, retailers of fast-moving consumer goods (FMCG) are by far, the largest companies (average retail revenue of nearly US$21.7 billion) as well as the most numerous (135 retailers accounting for 54% of all Top 250 companies and two-thirds of Top 250 revenue), according to the report.
Deloitte has also identified the following trends.
Building top-notch digital capabilities
Retailers across the globe are rapidly adapting to the fact that, from the consumer perspective, shopping is not about bricks versus clicks or one channel versus another. Instead, consumers are channel-agnostic.
Combining bricks and clicks makes up for lost time
Many players that may have initially been on the sidelines, failing to keep up with digital trends, are now making up for lost time in a big way.
Creating unique and compelling in-store experiences
Physical retail stores are not going away—90% of worldwide retail sales are still done in physical stores. But to compete with the convenience and endless aisle assortment offered online, meaningful customer experiences and brand engagement is crucial.
Reinventing retail with the latest technologies
The Internet of Things, artificial intelligence, augmented and virtual reality, and robots should be on every retailer’s radar.
“It is a transformative time in retail. The shopper is clearly in the driver’s seat, enabled by technology to remain constantly connected and more empowered than ever before to drive changes in shopping behavior”, said Vicky Eng, Deloitte Global Retail Sector leader.
“Across the retail industry, disruption of traditional business models has given way to unprecedented and transformative change—change required online and offline to better serve more demanding shoppers and redefining customer experience,” she noted.