global retail sector profile

7/29/2019 Global Retail Sector Profile

1/35

Global Retail

Presented By:

Pulkit Bohra (PGDM 2012-14)

([email protected])

Conundrum The Consulting Club

IIM Ranchi


2/35

Agenda

Introduction What is Retail?

Global Retail: Leading Players

Global Retail: Retail Statistics

Global Retail: Issues and Trends Retail in India: Changing Landscape

Online Retail in India

Challenges Ahead


3/35

What is Retail?


4/35

Defining Retail Industry

Global Retail

Industry comprises companies engaged in the sale of finished goods

Defined on the basis of revenues generated by companies operating in thissector

Classification on the basis of the kind of products sold

The food retail subsector

involves companies

engaged in the sale of food

and beverages for off-premise consumption

through various channels

Food products sold in this

subsector include meat

and poultry, bakery,

grocery, organic foods, and

prepared foods

Non-food retailing involves

the sale of products other

than food and beverages

through various retailchannels

Non-food retailing broadly

includes following:

Apparel and footwear

Electronics and

computers

Pharmaceuticals

The restaurants and food

service subsector involves

sale of all food and drink

(soft and alcoholic) in orthrough restaurants and

cafes, quick service

restaurants, catering and

drinking places

Food Retail Non-Food Retail Restaurants & Food Services


5/35

Global Retail Industry on the Recovery Path

Global Retail Industry Size

Sales decline

during recession

Source: GCC Retail Industry, Alpen Capital, November 1, 2011


6/35

Retail: Some Quick Facts

Sales of Top 250 retailers: US$3.94 Trillion

Average Size of Top 250 Retailers: US$15.76 Billion

Composite y-o-y Sales Growth: 5.3%

Composite Net Profit Margin: 3.8%

Composite Return on Assets: 5.8%

Composite Asset Turnover: 1.5 times

Top 250 Retailers, 2010

Source: Annual Reports, Deloitte


7/35

Global Retail: Leading Players

# Retailers Country Sales (US$

Billion)

Dominant

Operational

Format

# of Countries

of Operation

CAGR

(05-10)

1 Wal-Mart US 418.95 HM, SC, SS 16 6.0%

2 Carrefour France 119.64 HM, SC, SS 33 3.9%

3 Tesco UK 92.17 HM, SC, SS 13 9.3%

4 Metro Germany 88.93 Cash & Carry 33 3.8%

5 Kroger US 82.19 Supermarket 1 6.3%

6 Schwarz Germany 79.12 Discount Store 26 9.8%

7 Costco US 76.26 Cash & Carry 9 8.0%

8 Home Depot US 67.99 Home

Improvement

5 -2.5%

9 Walgreen US 67.42 Pharmacy 2 9.8%10 Aldi Germany 67.11 Discount Store 18 5.9%


Notes: HM = Hyper market; SC = Super Center; SS = Super Store

Top 10* Sales: US$1.16 Billion

Top 250 Sales: US$3.94 Billion

Concentration of Top 10: 29.4%


8/35

Food Retail: Carrefour

Source: Annual Reports

Carrefour SA, is a French company primarily engaged in retail distribution.

It operates through various retail formats, including cash-and-carry outlets,

convenience stores, discount stores, hypermarkets and supermarkets. It

also offers e-commerce services.

The company has more than 15,000 stores in35 countries worldwide. Its

stores are either company-operated or franchised.

It employs approximately 476,000 people globally.

The companys auditor is KPMG


9/35

Food Retail : Tesco


Tesco Plc is an international retailer based in the UK. It entered the US

market in 2008.

The company operates through two business segments Financial services

(retail banking and insurance services) and Retailing.

The company has 4,331 stores worldwide, employing more than 470,000

people across 14 countries.

The companys auditor is PriceWaterhouseCoopers


10/35

Food Retail : Metro


Metro AG is a German trade and retail company. It acts as a holding

company for the Metro Group, which is organized into four independent

sales divisions

Galeria Kaufhof (department store), Media Market and Saturn

(consumer electronics company), Metro Cash & Carry, and Real

(hypermarket operator).

The company is active in 2,127 locations in 33 countries, employing

251,650 people.



11/35

Non-Food Retail : Wal-Mart


Wal-Mart Stores, Inc. operates retail stores in various formats around the

globe. It provides an assortment of merchandise and services to its

customers at low prices.

Wal-Marts operations comprise ofthree business segments Wal-Mart

US, Sam's Club and Wal-Mart International, with Wal-Mart US being the

largest of the three.

The company has more than 8,400 stores in 15 countries, serving more

than 200 million customers each week.

It employs approximately 2,100,000 people.

The companys auditor is Ernst & Young


12/35

Non-Food Retail : CVS Caremark Corporation


CVS Caremark Corporation is one of the largest providers of prescriptions

and related healthcare services in the US through its 7,000 stores and its

CVS.com retail website.

The company comprises of two business segments Retail Segment and

Prescription Benefit Management.

The average number of prescriptions managed orfilled by the company in a

year is more than 1 billion. It employs approximately 211,000 people.

CVS Caremark Corporation drives value for its customers by managing their

pharmaceutical costs as well as improving healthcare results through its

stores.

The companys auditor is Ernst & Young


13/35

Non-Food Retail : Costco Wholesale Corporation


Costco Wholesale Corporation operates an international chain of

membership warehouses, under the name of Costco Wholesale.

The warehouses are designed to help small to mid-size businesses reduce

costs in purchasing for resale or for everyday use.

Some of the product categories that the company offers include groceries,

candy, appliances, television and media, automotive supplies, tyres, and

toys.

Costco Wholesale Corporation is open only to members and offers three

types of memberships Business, Gold Star (individual) and Executive.

It employs approximately 79,000 people.



14/35

Restaurant & Food Services : McDonalds


McDonalds Corporation franchises and operates more than 30,000

McDonalds restaurants, serving nearly 50 million people in more than 100

countries worldwide.

Independently-owned and operated distribution centers, approved by the

company, distribute products and supplies to most McDonalds

restaurants.

In 2009, of its 32,478 restaurants in 117 countries, 26,216 were operated

by franchisees and 6,262 by the company.


The companys auditor is Ernst & Young.


15/35

Restaurant & Food Services : Compass Group Plc


Compass Group Plc is a UK food service provider, which operates in over 50

countries worldwide.

The company provides services to a wide range of consumers in hospitals,

schools, sporting or cultural events, workplaces and remote environments.

Its well-known brands include Catering to You and Outtakes.


The companys auditor is Deloitte & Touch


16/35

Restaurant & Food Services : Yum! Brands


Yum! Brands, Inc. (Yum) is one of the largest restaurant companies, with

37,000 restaurants in more than 110 countries and approximately 1.4

million associates.

The company develops, operates, franchises and licenses a worldwide

system of restaurants that prepare, package and sell a range of food items.

The well-known restaurant brands of the company include KFC, Pizza Hut,

Taco Bell and Long John Silvers.




17/35

Global Retail: Share of Top 250 sales, by Country


1.20%2.60%

6.50%

8.80%

11.60%

5.40%

1.80%9.50%

41.70%

11.10%Africa/ME

Canada

UK

Japan

Other EU

Other APAC

Latin America

France

US

Germany


18/35

Global Retail: Sales by Product, 2010


8.00%

66.60%

15.60%

9.80%

Fasion

FMCG

Hardlines & Leisure

Diversified


19/35

Retailers: Value Chain Analysis

Retailers

Procurement through third party vendors

Fully integrated retailer*

*A fully-integrated retailer is one which operates by itself, at each level of the value chain


20/35

Value Chain Analysis Retailers (Food / Non-food) Procuring from

Third-Party Vendors

Procurementof products

Transportationand Distribution

Display, Sales &Marketing

Feedback

Source: KPMG

Manufacturers Distributors Retailers

Feedback

Display, Sales &

Marketing


21/35

Value Chain Analysis Fully Integrated Retailers

Transportation and

Distribution

Display, Sales &

MarketingFeedback

Processing and

PackagingFarming and

procurement

Source: KPMG


22/35

Trends in Global Retail Industry

Source: Deloitte

Trend Description

Globalization is not a new theme any more

Retailers continue to look to enter new markets

in Asia, Africa and South America

Retailers have learnt to deal with barriers in

emerging markets. They are customizing their

business model as well as product offerings to

meet local needs & preferences.

Retailers will not only be looking for growth in

emerging markets; they will also look to

innovate in multi-channel strategies, mobile

and data analytics to maintain or grow their

market shares in developed markets.

Growth in Emerging Markets


23/35


Source: Deloitte

0 5 10 15 20

N America

Africa

Mid-East

Cent America

Oceania

Southeast Asia

E Asia

E Europe

Cent Europe

W Europe

7

10

3

2

3

1

3

8

5

2

3

2

1

3

2

4

9

11

2

6

5

1

1

1

Franchising/Licensing Organic Growth Acquisition JV

In 2010, 40 retailers began operations in new country, with a combined total of 88 new market entries

Market expansion by Top 250 retailers, 2010


24/35


Source: Deloitte

Trend Description

Retailers are entering new markets through

various channels

Retailers to focus on multi-channel strategy

As consumers become more tech-savvy,

retailers will focus on seam less integration

across retail channels

They will have their presence in internet based-

as well as physical retailing

Some retailers are using online medium to test

grounds in new geographies before physical

expansion

Multi-Channel Retailing


25/35

Other Global Trends/Issues

Mergers and acquisitions picking up

Growth of private labels

Emphasis on cost management

Shift in consumer demand

Organic Foods, Eat at Home

Retailers pushing pressure on suppliers for discounts

Shrinkage and loss prevention

Customer-centric merchandising practices

Sustainability and Environment


26/35

Retail in India


27/35

Bright Future Prospects

One of the top 5 retail markets of the world

Accounts for 22 %of Indias GDP

Market estimated to reach US$650 billion by 2015

Organized retail penetration to cross 10% in next 5 years

Source: Indian retail: Short-term blips but long term prospects bright, CRISIL Research, May 2012

Overall retail growth in India Organized retail growth in India


28/35

Changing Landscape of Retail in India: Post FDI


29/35

Changing Landscape of Retail in India: Post FDI

Source: Economic Times

At least 10 states in India are opposing FDI in Retail


30/35

Saga of Online Retail in India


31/35

Both external and internal drivers are likely to propel online retail

growth in the coming years

Rising per capita disposable income

Growing employment and opportunities

Increasing percentage of households with at

least one computer

Growth in broadband penetration

Improving incomes and greater internet

access will likely benefit the online retail sector

Consumers greater comfort to purchase online

Improved online presence of retail categories

Broader web shopping capabilities (mobile and

tablet devices)

Innovative new shopping models (increased

personalization, greater integration of social

media tools in the online shopping experience,

improved back-end logistics, flash sites,

subscription models, shopping walls etc.) Online loyalty programs

Aggressive promotional offers from online

retailers (daily deal sites)

Technology, innovation, and increasing comfort to shop

online will drive online retail spending

ExternalDrivers

InternalDrivers


32/35

50

44

19

14

36

26

33

16

20

23

2

1

19

30

8

5

6

19

18

5

6

2

17

6

19

11

14

10

12

10

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

India

China

US

UK

Brazil

Social Digital Shoppers Digital Shopaholics Rational Online Shoppers

Value Seekers Occasional Online Shoppers Techno-Shy Shoppers

Source: Digital Shopper Relevancy, Capgemini, 2012

Indians are already comfortable with Digital Retail

Social Digital Shoppers: Heavy users of social media who want to share opinions and experiences through social mediaDigital Shopaholics: Early adopters and experimenters who actively use smart phone apps and in-store technology

Rational Online Shoppers: Internet is preferred mode of shopping but little interest in mobile apps and social media

Value Seekers: Price sensitive customers who barely care about digital shopping. They shop online to get best deals

Occasional Online Shoppers: Infrequent shoppers who generally use digital channels for comparing and tracking delivery

Techno-Shy Shoppers: Shoppers who do not feel confident while using digital technology in any step of shopping

Only 11% of the surveyed Indian population falls into the Techno-Shy Category, implying a

strong inclination toward digital shopping

Additional 11% Indian respondents fall under Occasional Shopper and Value Seeker category.It shows great confidence for digital innovation and sends a strong signal to retailers

Percentage of digital shopper segments by country, 2012 (Capgemini)


33/35

Mobiles opening up new avenues for consumer interaction in

Retail Industry

SelfCheckout &

Scanning

M-Commerce

LoyaltyPoints

Promotions

Coupons

In-storeNavigation

Payments

ShoppingLists Scanning & Self

Checkout

M-Commerce

Loyalty Points

PromotionsCouponsIn-store Navigation

Payments

Shopping Lists

Source: Getting your retail environment ready for mobile, GS1 MobileCom, 2010


34/35

Challenges for Retail in India

Shortage of Skilled Manpower There are very few courses specific to the retail sector and

graduates/post graduates from other streams are recruited.

Lack of Industry Status

Due to the absence of industry status, organized retail in India

faces difficulties in procurement of organized financing andfiscal incentives.

Real Estate

In most cities, it is difficult to find suitable properties in central

locations for retail, primarily due to fragmented private

holdings, infrequent auctioning of large government owned

vacant lands and litigation disputes between owners


35/35

THANK YOU

global retail sector profile

Documents