The retail industry suffered during 2009, with more than a third of the world’s top retailers endured declining sales over the year, according to the latest Deloitte figures.
Deloitte Touche Tohmatsu’s 2011 Global Powers of Retailing report said that 90 companies suffered declining sales in 2010, up from about one-quarter in 2008, while for the whole group, sales-weighted, currency-adjusted retail sales rose just 1.3%, as it said deleveraging by consumers and and slow growth of credit continued to “plague the industry”.
However, it said that profitability showed a marked improvement on the previous year as retailers “tightened their belts in anticipation of slowing sales”. On a composite basis, net profit margin rose to 3.1% against 2.4% in 2008.
Deloitte said that retailers of food and other FMCG goods once again gained ground among the global Top 250. it said that despite sluggish composite retail sales growth in the sector, it accounted for more than half of Top 250 companies and more than two-thirds of Top 250 sales. It added that the bottom line for this “historically low-margin sector” improved to 2.5% from a composite net profit margin of 2.2% in 2008.
While the top 10 FMCG retailers remained “fairly stable” during 2009, there was some movement around the bottom of the Top 10, with Auchan falling away on the back of stagnant sales, and US drugstores creeping up the rankings with Walgreens into 8, and CVS Caremark becoming a top 10 retailer.
While Wal-Mart remained the leading retailer in the world, Tesco climbed back up to third place from fourth, Schwarz Group and Kroger climbed up a place, while Costco jumped two places into sixth place.
Sales declined for four of the Top 10 retailers – Carrefour, Metro, Costco and Home Depot, while three others had sales growth of 1% or less. Tesco and hard discounters Schwarz Group and Aldi were the only Top 10 companies to outpace the Top 250s 1.3% composite growth rate.
Profitability in the Top 10 retailers lagged behind the rest of the group, with the eight companies that disclosed their bottom-lines, they generated a “composite net profit margin of 2.6%, compared with 3.1% for the top 250 as a whole”.
The report found that European retailers are the most international, with more than one-third of their 2009 sales from outside their home country. For Top 250 retailers in Germany and France, foreign operations generated more than 40% of overall sales. Only around 20% of the European retailers were single-country operators in 2009, compared with more than 40% for the Top 250 overall.
