Global Powers of Retailing 2016: Navigating the new digital divide

Global Powers of Retailing 2016Navigating the new digital divide Global Powers of Retailing 2016 3ContentsIntroduction 4 Global economic outlook 5 Navigating the new digital divide 10 Top 250 Global Powers of Retailing 12 Top 250 highlights 20 Top 10 highlights 23 Geographic analysis 24 Product sector analysis 28 Fastest 50 31 Top 50 e-retailers 34 Q ratio analysis 40 Study methodology and data sources 44 Endnotes 46 Contacts 47 Global Powers of Retailing 20164 Welcome to Deloitte Touche Tohmatsu Limited’s (“Deloitte Global”) 19th Global Powers of Retailing report. This report identifies the 250 largest retailers around the world based on publicly available data for fiscal 2014 (encompassing companies’ fiscal years ended through June 2015) and analyzes their performance based on geographic region, primary product sector, e-commerce activity and other factors. The report also provides a look at the world’s 50 largest e-retailers, an outlook for the global economy and an analysis of market capitalization in the retail industry, as well as an introduction to and executive summary of findings from the forthcoming Deloitte Global publication Navigating the new digital divide: A global summary of findings from nine countries on digital influence in retail. Global Powers of Retailing 2016 5Global economic outlookIn the world of retailing, much attention has lately been focused on the competitive threat to stores coming from online retailing, the challenge of cybersecurity, and the difficulty in deciphering the tastes and price sensitivities of an increasingly fragmented consumer market. Yet through all of these and other issues, one thing remains constant. That is the considerable impact on retailers of economic strength and weakness, of inflation and deflation, and of currency and asset price movements. This section examines the current and anticipated economic environment, with the goal of distilling what it means for the world’s leading retailers and their suppliers. Key economic issues that influence retailers Currency movementsIn the past year, the value of the US dollar has risen strongly against most major currencies. This was driven by low oil prices, the relative strength of the US economy, expectations of tighter US monetary policy, and the easing of monetary policy in Europe and Japan. The result has been disinflationary pressure in the US, weakness in the US manufacturing sector, weakness of US corporate profits, stronger export growth in Europe and Japan, and serious challenges for emerging markets. As for the latter, the downward pressure on emerging market currencies has compelled local central banks to tighten monetary policy, the result being slower economic growth. Moreover, the rapid accumulation of dollar-denominated debt in emerging countries means that dollar appreciation boosts the risk of default. This could potentially hurt the financial sector in emerging markets. For retailers, the strength of the US dollar has meant increased purchasing power for US consumers and rising import prices for consumers in other locations – especially those in emerging markets.Oil pricesIn the past year, oil prices have plummeted. This resulted from a sharp increase in US shale oil production, a decision by Saudi Arabia to boost output, and relatively weak demand in a variety of markets including Europe, Japan, and major emerging markets. The result has been disinflationary pressure in most countries, a sharp rise in the value of the dollar, and a boost to consumer spending power in major markets. Going forward, it seems likely that prices will stay in a relatively narrow band. Although capital spending by the energy sector has been dramatically cut, a sharp drop in output is unlikely. Moreover, even if production declines lead to a spike in prices, this would rapidly lead to increased investment in shale production, thereby causing an increase in output fairly quickly. Thus, there might effectively be a ceiling on global oil prices. For the world’s leading retailers, the weakness of oil prices has mostly been good news. Lower fuel costs have translated into increased purchasing power for consumers as well as reduced inflationary pressures. Indeed this has resulted in increased real (inflation-adjusted) wages in most major markets. On the other hand, the sharp decline in capital spending by energy companies has had a negative impact on business investment in the US, Canada, and other major oil producers. The result of low oil prices has been weak economic growth in a diverse range of oil-exporting countries including Canada, Russia, Venezuela, and Malaysia, to name a few. Low inflationIn the developed world, as well as in China, inflation has been at historically low l