WORLD RETAIL SCENARIO

Shamla
 China-Retail Industry Overview
• Retail sales saw steady growth in 2013
– China is the world’s second largest retail market after the US

• Online retail market continues to scale up

– China’s online retail market became the world’s largest online
market in 2013.
– Online payment is increasingly popular, as is mobile payment

• Luxury market slows in spite of the presence of luxury brand

in the online retail market
• The size of China’s middle-class growth is
transforming the retail landscape
– McKinsey & Co. estimates that there were 230 million
middle class consumers in China in 2012, and the
number will increase to 630 million by 2020.

• Consumers, entrepreneurs turn pessimistic due

to weaker economic sentiment
Competitive advantage
• The Top 100s see steady development
• Foreign retailers in the Top 100s outperform domestic players
• Foreign retailers facing increasing challenges ahead-
– failure to understand Chinese customers,
– adopting limited localization strategies,
– selling over-priced products
– reluctance to design products specifically catering for the China
market.
– Domestic retailers typically focus their operations on respective
regional markets due to huge regional differences in consumer tastes
across the country.

– Among all major retail formats, Internet retail recorded the highest
sales growth for 2013.

– As to traditional channels, specialty stores, in general, saw higher

growth than hypermarkets and supermarkets
Key Highlights
• Mobile and social commerce continue to power ahead

• Consumers’ changing lifestyle brings about a new retail scene

• Retailers pursue a smaller-sized format; community stores in focus

• Affordable luxury is gaining popularity

• Food safety concerns return amid recent food scandals

• Retailers put increasing emphasis on sustainable development

• M&A continues to see strong growth

• Better regulatory environment for the retail sector

Challenges
• High operating costs remain a major operational
challenge
• Anti-corruption measures and reduced pre-paid card
sales weaken consumer sentiment
• Securing the right store location is not an easy task
• High staff turnover in the retail sector; difficult to
recruit and retain talents
North America- Retail industry in 2014
• Leading region in the global retail industry with a 37 percent share
of the largest 250 retailers.

• US brands such as Saks, Target and Nordstrom established bases in

Canada

• 90 percent of sales are currently made in store.

• Digitally enhanced spaces are created to showcase their products.

• Also provides additional information through hand-held technology

both pre and post sale.
Latin America- Retail industry in 2014
• sustained economic growth between 2-7%
• High disposable incomes in the upper middle class and
the lack of a culture of saving are the driving forces.
• lower middle class increasingly demanding for
automotive, household goods and clothing.
• Young, fashion-conscious consumers dominate, with
strong brand awareness and an appetite for the latest
high tech products.
• Brazil is the strongest retail market, with numerous
new shopping and automotive retail facilities.
• Mexico, Chile, Colombia and Peru are also growing,
driven in part by US and European investment.
• Retail banks are also undertaking modernization
programmes across major cities.
 UK - Retail industry in 2014
• Upward growth driven by an improving economy

• increasing corporate investment is encouraging a slow and steady

build for retail

• Food retail accounts for over 70% of core retail spending

• Over 90 percent of retail spending is through physical stores.

• Online presence also gaining relevance

• greater scrutiny around investment decisions, particularly for retail

banking
Europe- Retail industry in 2014
• Investment and development in Eastern Europe is constant and
growing.

• Poland is entering its third decade of dynamic growth with new

overseas retailers and luxury brands entering the market.

• Thirty new global brands set up operations in the country last year.

• In Russia, a retail boom is just beginning with 63 new complexes in

40 Russian cities completed in 2013.
• Netherlands, certain retailers have had a slow year, although growth

continues in the food sector

• A trend in Western Europe sees investment in outdated shopping centres

to allow retailers to expand locally.

 Africa- Retail industry in 2014
• Africa’s middle classes are predicted to reach 1.1 billion by 2060, making it
the world’s fastest growing continent

• Retail market in Sub saharan Africa continues to grow.

• African economy stabilize with maturing markets demanding more

advances and readily available consumer goods.

• Majority of the companies headquartered in South Africa are expanding

aggressively into markets outside of South Africa and Nigeria.

• Ghana, Zambia, Mozambique, Botswana, Kenya, Tanzania and Uganda are

a few hotspots where significant expansion in retail are expected
Middle East- Retail industry in 2014
• A growing retail sector

• Drivers include
– Increasing populations,

– local and expatriate wealth,

– strong household consumption and

– a thriving luxury tourism industry

• Luxury vehicle manufacturer Jaguar Land Rover experienced a

36 percent increase in sales in Middle East in 2014
• Most dynamic markets, and those with the highest potential for growth,
are the United Arab Emirates, Qatar, Saudi Arabia and Kuwait.

• With many substantial developments in the pipeline, international

retailers continue to enter the market, competing with established global
brands.
 Asia East- Retail industry in 2014
• A hospitable environment for retailers.

• a drastic shift from a ‘build it and they will come’ approach to more
strategic decision making when it comes to retail facilities.

• Developed markets such as Hong Kong, Singapore, Malaysia and Japan

continue to benefit from both strong domestic demand and an influx of
tourist dollars from China, India and the West.
• Automotive retailers are anticipating huge growth opportunities in China,
where 22 million vehicles were sold last year.

• Vietnam and Indonesia are still largely based on independent retailers,

and are seen as longer term prospects.
Australia- Retail industry in 2014
• Domestic retailers have emerged in better shape after a downturn

• increased investment from foreign retailers continue for the next

five years.

• Two sectors in retail– consumer goods and fast moving consumer

goods (FMCG).

• FMCG has enjoyed a CAGR of 2.4 percent, forecast to continue up

to 2019.

• negative growth of nine percent on average but expected to return

in the next 5 years