Contact: Andrew Griffiths
Deloitte
Consumer Business Leader
02 9322 7035
Contact: Amanda Kennedy
Deloitte
Media and Comms Manager
0418 806 477
Australian retailers remained steady in the Top 30 global retailers according to the annual Deloitte 2007 Global Powers of Retailing report.
Deloitte Australia’s Consumer Business Leader, Andrew Griffiths, said, “both retailers have been solid performers with compound annual sales growth rates for the past five years at 12.5 per cent for Woolworths and 9.6 per cent for the Coles Group”.
“The strength of the Australian retail market is demonstrated by the fact that two of our major retailers are included in the global Top 30, despite the size of the overall Australian retail market,” Mr Griffiths said.
Woolworths and Coles Group were in third and fourth places respectively in the Asia-Pacific Top Ten.
The report also found that these Australian companies have a high market capitalisation to assets ratio. On this measure, Woolworths’ has risen from 28th place to 13th place. Coles Group jumped from 47th place to 41st place.
“Both Coles Group and Woolworths are seen as highly valued brands, with non-tangible assets such as brand equity, differentiation, innovation, future potential, customer loyalty, execution and customer experience highly valued by the financial market.
“Both retailers have grown, not just in sales terms, but in brand value terms as well. Given current market activity and recent sales results, it is likely that in the future, there may be a shift in the positioning of both Woolworths and Coles Group in the league tables.”
Mr Griffiths said the inclusion of Wesfarmers Limited/Bunnings in the Top 20 fastest growing retailers is also worth noting.
“While Wesfarmers have dropped from 15th place to 19th place, their five year sales compound annual growth rate is still an impressive 23.3 per cent. That puts them in the Top 200 global retailers at position 196.
“It seems Australians still haven’t had enough of their home DIY, a trend we would expect to see again next year with annual sales growth in the home improvement segment globally of 10.5 per cent.
“Overall, a strong global economy stimulated consumer spending and the big emerging markets of China, India and Russia continue to experience robust economic growth.”
Total global retail sales for the Top 250 reached $3.01 trillion, up 6.0 per cent from last year’s $2.84 trillion total. $885 billion of this total (or 29.4 per cent) is contributed by the Top Ten global powerhouses, who recorded an 11.7 per cent gain from the previous year. This group comprises of six US companies, one UK and three European companies.
Some new challenges facing global retailing, and predictions identified in the report include:
- value creation: a loss of consumer tailwinds. The share of economic growth in developed economies put towards consumer spending will shrink over the next five years
- cash rich, but investment challenged. Retailers will come under intense investor pressure to use their cash to improve asset turnover and shareholder value - resulting in more M&A activity, higher dividends, more debt reduction and more store openings
- technology: the arrival of market transparency. Consumers will continue to shift spending online, away from traditional retailers, as they have access to an increasing amount of information on products, pricing, features and product performance. Information parity between consumers and retailers as a result of the use of online shopping comparison sites will reduce the value of and need for retail workers who actually try and sell the consumer something
- digital business convergence: marketing to the YouTube generation. The success of online, on-demand video will lead to an explosive use of this medium by traditional advertisers. The interactivity of video blogs are also likely to make them a tool used by non-government organisations and other activist groups to embarrass retailers they see as engaged in politically incorrect activities
- the changing face of the global consumer and worker. Retailers are likely to look to emerging markets for growth as over the next ten years, three significant demographic changes take place. The population between ages 50 and 70 will explode in mature markets; there will be only modest growth in population between the ages of 20 and 35 and a decline between ages 35 and 50, making it harder to hire entry level workers while simultaneously challenging to hold onto middle and upper management; and retailers in developing markets will have no such problems in finding a workforce in the younger age groups or consumers in their rapidly multiplying middle class.
