Contact: Laura E. Wilker
Deloitte Services LP
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Contact: Evonne Lum
Ogilvy Public Relations
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New York, January 16, 2005 — An upbeat global economy, technology investments that are beginning to yield returns and improved stock performance bear good news for retailers, according to Deloitte's expanded "2005 Global Powers of Retailing" study. However, competitive pressures and other challenges will ensure that retail executives do not sit back and enjoy the good news. The study, which covers the largest 250 global retailers — expanded from 200 in previous years — suggests that exciting times lie ahead for the industry.
The study, completed in conjunction with Stores magazine, will be released today at the 94th annual National Retail Federation Convention and Expo in New York. This year Wal-Mart maintains its place as the world's largest retailer, followed by Carrefour, the France-based global multi-format retailer. The fastest growing retailer is Canadian convenience and foodservice company Couche-Tard.
"We expanded the study to include the 250 largest retailers this year," noted Gilles Goldenberg, Deloitte Touche Tohmatsu's EMEA Lead for Consumer Business, "because there are a large number of companies that have sales in the low- to mid-US$2 billion range that we were not covering. They are simply too large to ignore."
The new additions include a mix of rising stars and solid, long-term performers. Their size and growth indicates, according to Goldenberg, that there is more than one way to achieve success in the marketplace. Among the 50 fastest growing retailers, Goldenberg finds, "Hard discounters are experiencing great growth. Other retailers, like Couche-Tard, have grown through acquisition. Some are riding trends, such as FOCUS Wickes' response to the housing boom. If there is a commonality among them it is that the majority are focused on one or two formats."
As a result of the improved economic environment, merger-and-acquisition activity has increased, culminating in the yearend mega-deal that joined Kmart and Sears. Other deals included Albertson's purchase of Shaw's and Star Markets, May Department Store's purchase of Marshall Field's from Target, and the merger of The Sports Authority and Gart Sports.
Among the industry segments that are facing unique challenges is food retailing. Traditionally a slow-growth segment within western markets, retailers looking for growth are taking the pioneer route and expanding to emerging markets. Food retailers were hit with several negative news stories. Reports on avian flu outbreaks and incidences of mad cow disease impacted both supplies and sales. Of longer term concern is the rise in awareness of the global trend toward obesity. Food retailers are coming under increased regulatory scrutiny, and they are responding in a variety of ways, including the introduction of private label organic and natural foods lines.
All retailers are focused on demographic trends as they pursue groups with enhanced buying power. The report identifies the aging Japanese population as an example of an attractive demographic group because their high saving rates translate into buying power. In the U.S., retailers, such as The Gap, are pursuing aging Baby Boomer women.
In addition to store rankings, the 46-page report contains an examination of the global economy by region. Written by Ira Kalish, Global Director of Economics at Deloitte Research, a part of Deloitte Services LP, the overview looks at the economic underpinnings in each region and their anticipated impact on retailing in the year ahead.
Also included in the study is a discussion of the top 10 issues facing global retailers. This section examines economic, marketing and technical challenges that retailers must meet to succeed in an extremely competitive world market. From increased attention to risk management to coping with the accelerating pace of change, retailers have their hands full while trying to maintain a laser sharp focus on customers and their shopping experience.
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