Migros and Coop continue to move up in the top 50 largest retailers

The world’s 250 largest retailers generated revenue of 4.4 trillion U.S. dollars* in fiscal year 2016. This represents an overall growth of 4.1 percent, according to Deloitte’s new report, *Global Powers of Retailing 2018*. Europe’s share of the Top 250’s revenue fell from 39.4 percent to 33.8 percent over the course of ten years. The gap with North America is widening, while Asian retailers are gaining ground. However, the four Swiss retailers mentioned in the report are all making up ground.

Looking at the subsectors, it is evident that the clothing and accessories retail segment is not leading growth for the first time in four years. However, it remains the most profitable and globalized among the other subsectors. The hardware and leisure goods sector recorded growth of just under 8 percent in 2016, nearly twice as much as the Top 250 combined. Providers of fast-moving consumer goods (FMCG)¹ are by far the largest (with average retail sales of nearly 21.7 billion U.S. dollars) and the most frequently listed companies in the ranking: The 135 retailers account for 54 percent of the Top 250 companies and two-thirds of the revenue.

Not only did Europe’s share of the Top 250’s revenue decline, but the number of European companies in the ranking also fell: Only 82 retailers are headquartered in Europe (FY 2015: 85, FY 2014: 93). Despite this declining share, European retailers remain the most active globally, as they seek growth opportunities outside their saturated home markets. They generated nearly 41 percent of their total revenue abroad—almost twice as much as the Top 250 companies combined.

«The importance of European companies in the global retail market has declined over the past ten years. This is due to the slower recovery of European economies following the global financial crisis, the uncertainty surrounding Brexit, and the weak performance of some major retailers headquartered in Europe. However, the outlook for the future is promising: the global economy is growing steadily, and the indicators for European retailers are positive,» explains Konstantin von Radowitz, Head of Consumer & Industrial Products at Deloitte. «Swiss retailers particularly welcome the more robust global economic growth. However, they must also address the negative consequences of rising income inequality and protectionist measures, as well as the impacts and opportunities that digital technologies present for traditional retail in Switzerland.»

Swiss retailers are weathering international competitive pressure

Swiss market leaders Migros and Coop moved up in the ranking of the world’s 250 largest retailers: Migros (retail sales of 24.1 billion U.S. dollars) ranks 39th, and Coop (retail sales of 22.4 billion U.S. dollars) has climbed to 43rd place. Both have thus moved up two spots compared to the previous year. Sales at Swiss travel retailer Dufry significantly exceeded the regional average; the company ranks 127th (152nd the previous year). The Basel-based company has expanded successfully in recent years. Retail sales totaled 7.7 billion US dollars in 2016 and have grown by an average of 24.4% annually since 2011. The Geneva-based luxury goods company Richemont rose three spots to 138th place.

Transformative Change, Revitalized Trade

The 2018 Global Powers of Retailing report also analyzes how the rules of retail are being rewritten in the wake of transformative change. Innovation, collaboration, consolidation, integration, and automation are necessary to breathe new life into the retail industry. Retailers’ business operations will undergo fundamental changes, both now and in the future.

The four trends addressed in the report:

• Developing top-notch digital skills. From the consumer’s perspective, shopping isn’t about comparing online versus offline or which channel is preferred for purchasing a product. Consumers are less concerned with choosing a channel and more with convenience: Decision-making and information-seeking before a purchase are fluid processes, and customers switch back and forth between online and offline channels on their way to making a purchase.
• By combining offline and online approaches, lost ground is being regained. Many players who initially lagged behind in digital developments are now catching up and rapidly and significantly gaining ground.
• Enabling unique and exciting shopping experiences. Traditional brick-and-mortar stores are not yet threatened with extinction: 90% of global retail sales are still generated in-store. However, to keep pace with the demand for convenient shopping and the endless range of products available online, unique customer experiences and strong brand loyalty are crucial.
• Reinventing Retail with the Latest Technologies. Rarely has there been an opportunity to transform retail business models as quickly and comprehensively as we are seeing today, driven by rapid technological progress and groundbreaking innovations. Topics such as the Internet of Things (e.g., automated payment systems), artificial intelligence (e.g., order assistance via Amazon Echo or Google Home), augmented and virtual reality, and robotics should be on every retailer’s radar.

The world's ten largest retailers and Swiss companies

The five largest retailers were able to maintain their positions at the top. A combination of organic growth, acquisitions, and exchange rate fluctuations caused shifts among the rest of the top 10. The ten largest companies now account for 30.7 percent of the total retail sales of the Top 250; last year, that figure was 30.4 percent. Seven of the leading global retailers are still headquartered in the U.S., and two in Germany.

«The retail industry is facing a fundamental transformation. Customers are setting the agenda and are increasingly becoming the focus of attention. Thanks to today’s technology, they are constantly connected, and their shopping behavior is accelerating the changes in the retail industry,» says Karine Szegedi, Partner for Consumer & Industrial Products at Deloitte. «In the retail sector, traditional business models are changing rapidly, leading to unprecedented upheavals. But these changes are also necessary—both online and offline—to meet the expectations of discerning customers and redefine their shopping experiences.» The spread of new technologies, such as smartphone payments and self-checkout, is rapidly transforming the retail sector in Switzerland, as Swiss customers are increasingly using these technologies while shopping. The line between online and offline customers continues to blur.”