Deloitte reveals the World’s top retailersDOWNLOAD
19 January 2011: Australian retail giants, Woolworths and Wesfarmers, are now listed in the world’s top 25 retail companies, according to the Deloitte Global Powers of Retailing 2011 report released in Australia today.
The report, which identifies the 250 largest retailers by revenue globally for the fiscal year 2010, lists Woolworths in 20th (26th last year) and Wesfarmers in 23rd position (28th last year).
Wesfarmers, whose acquisition of Coles in November 2007 helped advance the West Australian-based company’s 2003-09 compound growth rate by 62.3%, jumped five positions since the last Global Powers of Retail report (January 2010).
Andrew Griffiths, Assurance & Advisory partner and Deloitte’s consumer business leader, said the resilience of the two iconic Australian companies had helped them to bounce back into the top echelons of the world’s retailing elite.
“Woolworths and Wesfarmers continue to perform well on a global basis despite the relative size of the Australian market,” said Mr Griffiths.
“The other companies in the top 25 originate mainly from heavily populated countries such as the United States, Germany, UK, Japan and France. If you add the fact that most of those also operate in multiple countries, unlike Woolworths and Wesfarmers, you get a far better appreciation of the relative strengths of Australian retailers.”
“Our report also showed that despite a growing global footprint, Top 250 performance by level of globalisation shows that going global is not a surefire strategy for sustainable growth,” said Mr Griffiths.
“Sales growth for domestic only retailers outpaced retailers with a more global base of operations. On the other hand retailers with a larger global presence were more profitable.”
Woolworths and Wesfarmers maintained their third and fourth places in the Asia-Pacific top ten, which for the first time includes a Chinese based retailer, Bailian. Building on last year’s regional dominance, Japanese retailers continue to hold six spots in the Asia-Pacific top ten.
This year’s report shows that fashion goods retailers have been the most active in terms of global expansion.
Mr Griffiths said: “Locally we’ve seen a number of large fashion brands such as Gap and Zara opening stores. The Australian market is attractive for a number of reasons. Many of our consumers have already been exposed to their products through online shopping and the US and European brands benefit from the similarity in culture and fashion tastes here in Australia.”
Globally: Cost cutting and better inventory management increases net profits
More than one-third of the world’s 250 largest retailers suffered a decline in sales, as the global economic downturn led to more cautious consumer behaviour and a drying-up of available credit. Despite these negative pressures, the efforts of many companies to cut costs and adjust their inventory levels have paid off, with net profit across the top 250 retailers increasing from 2.4 percent to 3.1 percent.
While approximately one-third of the 188 retailers that disclosed their bottom-line results saw their net profit decline, this is a significant improvement compared with prior years, when two-thirds experienced falling profits. This year only 13 companies operated at a loss—less than half the number of unprofitable companies in the previous year’s report.
Profitability up in all sectors
Profitability improved in every product sector, with fashion retailers showing a particularly strong performance, increasing their composite net profit margin from 4.1 percent to 7.6 percent against overall sales growth of just 0.7 percent. Even the bottom line for the historically low margin Fast Moving Consumer Goods sector (which includes food and accounts for more than two thirds of the Top 250 sales) improved, increasing 0.3 percent year-on-year to 2.5%.
The composition of the Top 10 retailers in the world remained the same in this year’s report. However, sales declined for four top 10 retailers – Carrefour S.A., Metro AG, Costco Wholesale Corporation (Costco), and The Home Depot, Inc. (Home Depot).
Another three retailers saw sales grow 1 percent or less. Tesco plc and hard discounters Schwarz Unternehmens Treuhand KG (Schwarz) and Aldi GmbH & Co. (Aldi) were the only companies among the Top 10 whose sales growth outpaced the Top 250 average.
To view the Top 10 Retailers, please download the full article shown below.