Every year Deloitte ranks the top 250 retailers based on revenue. This year Amazon made it into the top 10 global retailers for the first time.
Walmart continues its long-held dominance at the top of the list and the world’s four largest retailers maintained their positions on the industry’s leader board, but acquisitions, divestitures, and exchange rate volatility shuffled the rest of the top 10.
Companies are included in the Deloitte’s top 250 list based on their retail revenue for FY2015, encompassing companies’ fiscal years ended through June 2016.
Retail revenue for the top 250 companies included in Deloitte’s Global Powers of Retailing totalled more than US$4.3 trillion in FY2015, resulting in an average size of US$17.2 billion per company. To join the ranks of the top 250, retailers needed to earn at least US$3.5 billion.
Amazon, which was ranked 186th when it first entered the top 250 in 2000, cracked the top 10 for the first time based on its FY15 data. Fueled by a constant stream of product and service innovations, it has posted robust, double-digit growth since its inception in 1994.
“Amazon’s growth has been significantly driven by its prime service which attracts younger, higher income customers. While Amazon doesn’t disclose data on growth for its prime service, some estimate the number of worldwide members to be 80 million and growing at around 50 per cent CAGR,” the report states.
The local edition of the report which focuses on Australia, says the significance of Amazon entering the top 10 of the largest 250 retailers in this year’s report should not be under-estimated.
“If Amazon isn’t on the agenda at board meetings for Australian retailers, then it should be ,” said David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.
With the rumoured arrival of the US giant to Australia’s shores some time in 2017, the potential for major market disruptions is huge, he says.
“We are already seeing several retailers setting up task forces to assess the potential impact of an Amazon market entry, but it’s not yet clear what exactly the company has planned for Australia. But we do know that where Amazon has entered new markets, impacts on local retailers have been seismic and across almost all categories and channels. So retailers can’t afford to wait and see what Amazon does – they need to be developing strategies and taking action now.”
“Amazon’s retail sales are now larger than Target, and based on their own retail sales growth aspirations of circa 18 per cent per year, and a retail sales target of US$240 billion by 2020, it is only a matter of time before they overtake the likes of supermarket giants Tesco, Aldi and Carrefour. But to grow at that sort of rate, Amazon will need to keep expanding into new categories – and grocery has been touted as one of their key focus areas to start with,” the report says.
Just two Australian companies made the top 250. Wesfarmers was the highest Australian company on the list, appearing at 21, followed by Woolworths Limited at 24. This was the first year Wesfarmers outranked Woolies, largerly due to the continued growth of the Bunnings brand, in contrast to Woolworths which shuttered Masters, its home improvement business.
There are 39 of the top 250 global retailers operating in Australia, the same total number as last year. Although there was some changes, four lessor-known foreign retailers operating in Australia dropped off Deloitte’s 250 list (Arcadia Group, Lagardere Travel Retail, Prada Group and Groupe Vivarte) and were replaced by four new entrants (TJX, John Lewis Partnership, Decathalon and Debenhams).
“With just 16 per cent of the Top 250 retailers globally operating in the Australian market, we can expect to see more new global retailers bring their operations to our shores in 2017. New entrants coupled with the threat of Amazon should make for another fascinating year for the Australian retail market,” the Australian report states.
Innovative Australian retailers were featured in the trend section of the global report. T2 was praised for its “instagrammable” store design, while Myer and eBay’s virtual reality department store which launched last year was selected as an example of experimental retail.
Ecommerce a growth driver
The number of top 250 retailers without a transactional website continued to drop in FY2015 to 31. These digital hold-outs were mostly operators of supermarkets, hard discount stores, or convenience stores.
For FY2015, ecommerce sales information was available for 182 of the top 250 retailers. For those retailers engaged in ecommerce, the pace of growth of online sales has decelerated, but it remains much higher than the growth in overall revenue.
Online sales grew at a composite rate of 18.3 per cent in FY2015 for the 151 top 250 retailers with ecommerce operations — 4.5 times faster than this group’s total retail revenue growth rate of 4.1 per cent.
This compares with ecommerce growth of 20.3 per cent in 2014 and 21.1 per cent in 2013. If Amazon.com, JD.com, and Vipshop—the three web-only etailers among the top 250—are excluded from the analysis, 2015 ecommerce growth drops to 15.5 pe rcent and total growth falls to 3.5 per cent.
Although online growth has slowed, a greater share of retail sales continues to shift to digital channels. In FY2015, ecommerce accounted for 8.7 per cent of the combined retail revenue of the top 250 ecommerce-enabled companies, up from 7.6 per cent in 2014 and 6.2 per cent in 2013.
For many Top 250 retailers, ecommerce is the primary driver of revenue growth, the report states. In FY2015, digital sales generated 35.3 per cent of the combined retail revenue growth for the 151 companies with online operations (22.5 percent excluding Amazon, JD, and Vipshop). For 62 retailers, online sales accounted for the majority of their growth, if not their only growth.
More than one-quarter of the retailers with ecommerce-enabled websites (41 companies) reported negative retail revenue growth in FY2015. For the vast majority of those companies (33 retailers), ecommerce helped to offset contracting sales. For another 12 retailers, growth would have been negative without the contribution made by their ecommerce operation.
The 10 largest retailers
- Walmart, US
- Costco, US
- The Kroger Co, US
- Schwarz Unternehmenstreuhand KG (Lidl), Germany
- Walgreens Boots Alliance, US
- The Home Depot, US
- Carrefour, France
- Aldi, Germany
- Tesco, UK
- Amazon.com, US
The 10 largest etailers
- Amazon.com, US
- JD.com, China
- Apple, US
- Walmart, US
- Suning Commerce Group, China
- Otto, Germany
- Tesco, UK
- Vipshop, China
- Liberty Interactive Corporation, US
- Macy’s, US