nternational Retail

look at past and present

US strong growth 2007
Deceleration, to a modest recession by
early 2008
Full blown recession by 2009
look at past and present
The US economy has been spending too
much and borrowing too much for years
The rest of the world depended on the U.S.
consumer as a source of global demand.
look at past and present
Crisis in US triggered by a liquidity shortfall in the
banking system caused by the overvaluation of assets
Reason - collapse of the U.S. housing market.
Housing prices started to fall in late 2006.
By the summer of 2007 large defaults and
foreclosures on sub-prime mortgages
Beginning of the credit crunch in ugust 2007.
The slowdown in housing market activity slower
growth of consumer spending employment problems
by January 2008
Recession by 2009 - downturns in stock markets
around the world
look at past and present
By March 2009, the rab world -- lost $3
trillion due to the crisis leading to large
scale unemployment
Growth of GDP decrease - United Kingdom,
reland, Canada, Japan, China, ndia, New
Zealand
ndia (7.2%), China (9.1%), frica (3%) is
experiencing an economic slowdown.
East sia growth - 10.5% in 2007 .% in
2009.
South sia - 8.6% 5.6%
look at past and present
Reduced demand for the region's major
exports, namely tourism, manufacturing
and commodities
Reduced remittances Demand for labor
reduced
11 more million people in East sia and
the Pacific are in poverty in 2009
Effect of Recession on Retail
Consumers US, UK , Spain ( previous high
spenders)
More Value conscious
More attracted to private labels
Less impulse purchase
Less luxury goods purchase
Less likely to eat outside
Purchasers of high end luxury goods decline less
spirational luxury goods purchasers higher
decline
Effect of Boom on Retail
People buy feel rich
Loosen purse strings
Buy luxuries (travel more on holidays to
exotic places)
spirational goods are purchased more
Global Retailers
Top 250 Global Retailing - US$3.8 trillion
in 2008
5.5% > than 2007's total of US$3.6 trillion.
Global Retailers 2008
2011 top retailers US
almart
Name : almart
orld's 18th largest public corporation in 2011 (The ranking is
based on a mix of four metrics: sales, profit, assets and market
value)
Largest public corporation when ranked by revenue in 2011 ($28
Billion versus Microsoft's $66.8 billion)
almart is also the largest grocery retailer in the United States
almart has 8,500 stores in 15 countries, under 55 different names
The company operates in 3 formats : almart Stores U.S., Sam's
Club, and almart nternational.
The company does business in nine different retail formats: 1)
supercenters, 2) food and drugs, 3) general merchandise stores, )
bodegas (small markets), 5) cash and carry stores, 6) membership
warehouse clubs, 7) apparel stores, 8) soft discount stores and 9)
restaurants.
almart
Supercenters average approximately
185,000 square feet.
Discount stores average approximately
108,000 square feet.
Neighborhood Markets average
approximately 2,000 square feet.
Sam's Clubs average nearly 133,000
square feet.
almart
n US almart operates as Discount
Stores, Supercenters, and Neighborhood
Markets.
This also includes almart's online retailer,
walmart.com with1 million products
almart
t operates in Mexico as almex,
in the United Kingdom as sda,
in Japan as Seiyu,
and in ndia as Best Price.
t has wholly owned operations in
rgentina, Brazil, and Canada
Bharti walmart in mritsar
opened its first B2B wholesale cash and
carry store called "Best Price Modern
holesale" in mritsar, ndia on May 30,
2009
almart nternational
Estimated at about 80,000 - 100,000 sq feet, this store carries an
assortment of about 6,000 items ranging from fresh produce and
meat, to mattresses and major kitchen appliances.
The assortment mix seems to be 60% consumer and 0% B2B with
food service an important target.
"Mera Kirana" which is a demonstration store showing best practice
assortment planning and layout for retailers
The first wholesale cash-and-carry facility named "Best Price
Modern holesale opened in mritsar in May 2009, a second in
Zirakpur (Near Chandigarh), a third in Jalandhar, a fourth in Kota
and a fifth in Bhopal.
The store offers an assortment of approximately 6,000 items,
including food and non-food items, which are available to retailers
and business owners
More than 90 percent of these goods and services are being
sourced locally; thereby helping keep costs to a minimum
Global 10
orld's 10 largest retailers 2008 sales =
US$ 1.2 trillion
= 30.2% of total Top 250 sales
Tesco, Schwarz, and Costco enjoyed
double-digit increases.
Retail Sales Region
US 8 U.S. retailers (down from 87 in
2007 and 93 in 2006)
Captured 1.2% of Top 250 sales, versus
2.1 percent in 2007.
The sia/Pacific region - above-average
composite retail sales growth of 7.3% in
2008
Chinese retailers continued to grow at
double-digit rates in 2008.
Carrefour Metro almart in ndia
Carrefour's 60,000 sq. ft Seelampur
wholesale store will stock nearly 30,000
product categories.
hen it opens, the Seelampur store will be
Delhi's first branded wholesale store from a
modern retailer.
Metro has five cash-and-carry outlets in
Bangalore, Hyderabad, Kolkata and Mumbai,
al-Mart operates two such stores in Punjab.
Retail Sales Region
Japan = second largest group of retailers by
country of origin (after the United States).
Following several years of decline, Japan's
share of Top 250 companies and sales
rebounded in 2008.
Of the 2 companies that joined or rejoined
the Top 250 in 2008, 9 are based in Japan
Japan's resurgence in the rankings strength
of the yen against the dollar than with real
sales growth.
Sale by countries
Globalization of retailers
European retailers most globally active, operating in an average
11.7 countries.
French and German retailers the largest companies on average
generated over 0% of their sales from foreign operations.
Most North merican retailers do not have significant foreign
operations
Over half 9 of the 93 US remained confined to US
n the sia/Pacific region and Japan not expanded much
n 2008, nearly 2/3rd of the Japanese retailers did business only in
Japan.
frica and the Middle East ell expanded -- but 92% of sales from
domestic operations.
Europe : Metro surpassed Tesco to become the region's second-
largest player behind Carrefour.
Metro Cash and Carry in ndia
Top retailers - US
US : 9 out of top 10 retailers were the same as in
2007 shuffling
Best Buy seized the number ten spot,
repIacing Safeway, which has been faIIing in
the ranks since 2000.
Declining sales at The Home Depot dropped the
company to third pIace behind Kroger
Costco overtook Target, and CVS traded
pIaces with Sears HoIdings.
CVS's acquired Longs Drug Stores to propeI to
number seven spot in 2007.
Top retailers sia / Pacific
sia / Pacific :
esfarmers acquired Coles Group in 2007
boosted to reach fourth place and remove
Coles from the list.
The merger of Japan's setan and
Mitsukoshi created the region's number
seven retailer, setan Mitsukoshi Holdings.
Top retailers Latin merica
Latin merica
D&S, however, is a short-lived addition, as
the company was acquired by al-Mart in
February 2009.
Chile's Cencosud displaced Brazil's Po
de car in the top spot
nalyzing by product portfolio
Logic
Four sectors are used for analysis:
Fast-Moving Consumer Goods
Fashion Goods
Hardlines & Leisure Goods
Diversified.
company is assigned to a specific sector
if 0% saIes from that sector
Diversified if all 3 sectors Less than 0%
FMCG
This year higher growth at 8.6%
Profitability G as thrifty consumers looked
for bargains.
The sector's composite net profit margin G
from 3.0% in 2007 2.2% in 2008.
Hardlines and leisure
The collapse of the housing market took a toll
on the hardlines & leisure goods sector in
2008.
The 56 retailers in this group
Sales from 6.8% (2007) .1% (2008) G
Profit from % (2007) 2.7% (2008) G
Six of 10 electronics specialty retailers had
negative earnings.
n 2008, the companies in this sector
operated in 9.1 countries
Fashion
38 companies
15.2% of Top 250 companies but just 8% of Top
250 sales.
Fashion retailers have suffered the most in the
economic downturn.
Sales 2008 : -0.6%
Profit : 8.1% (2007) .1% (2008)
High Global Presence : an average 12.6 countries
in 2008, the most of any sector and a significant
increase from 10.1 countries in 2007.
Diversified
Diversified retailers : 22 companies in
2008.
Sales growth = 1.8%, as was the group's
net profit margin= 2.1%.
Diversification holds the key
Diversification
Global operators performed better
100 retailers were 1-country operators
while 50 operated in 10 + countries.
10+ countries retailers grew sales a full
percentage point faster than the single-
country operators in 2008.
RO Sales (nternational Retailers) = 2 x
RO sales (Domestic Retailers)
Multiformat dvantage
ggressive growth world's largest
retailers have developed multiple sales
formats.
n 2008, 131 of the Top 250 (Multiple
formats), 119 (single-format operators).
Multi-format companies grew sales much
faster than their single-format competitors.
E-commerce
E-commerce Country ise
E-commerce = average 6.6% of these
retailers' total sales in 2008.
Europe = online sales= .1%
North merican retailers, excluding
(mazon, Dell, Office Depot, and Staples)
= 2.5%
ith those companies included in the
results, the figure jumps to =12%
The sia/Pacific = 0.8% of total sales.
Ecommerce - Hardlines & leisure
retailers
Hardlines & leisure retailers' sales online
sales = 2%.
However, this includes mazon, Dell,
Office Depot, and Staples, which
drastically skews the results.
Excluding these four e-commerce
powerhouses, the figure drops to 5.1% for
the rest nine companies.
Ecommerce Fashion & FMCG
Fashion (6 Retailers) = 5.2% of sales.
FMCG retailers miniscule = 0.9% of sales