Retail Industry Global Report — 2010 - Ascendant Capital Advisors

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Future Outlook Even though retail sales exhibited signs of recovery towards the beginning of 2010, there is skepticism regarding the retail outlook for the developed economies. Western Europe will remain depressed, restrained by markets such as Ireland, Spain and the UK, which continue to face problems such as high government borrowing, household debt and unemployment. North America is expected to witness a slight improvement but growth will be subdued because of more jobless claims. Multistore chains continue to respond to recessed retail consumption with store closings. The number of retail store closures in 2010 so far appears to be lower compared to that in 2009. However, it is still significant. Despite this, global retail sales growth is expected to be 7.3 percent in 2010, before slowing to 5.8 percent in 2011 and then rising again to 7.4 percent in 2012. In terms of volume growth, the global retail market is expected to return to comparable pre-2008 levels only by 2011 1 . To survive in these tough times, retailers must increasingly look to enhance their multi-channel retailing capabilities, as customers are tending to purchase more and more through multiple channels. The best performers in the retail industry will be those that optimally combine the brick-and-mortar experience with the electronic retailing experience, keeping in mind the interest of the customer. Given the pessimism prevailing in the retail segment, non-store and online sales will likely remain strong as 1 EIU buyers will continue to buy online to obtain lower prices. Off-mall value specialty stores and small-ticket discretionary categories may see a return to profitability and growth. It is expected that in the next couple of years online sales will be shipped directly from the manufacturer to the consumer on a just-in-time basis. Internet retailing through mobile devices offers a huge opportunity for growth, as growth in traditional online retail matures. This can be primarily attributed to the expected global growth in mobile Internet usage. Whatever the future holds, the Internet will continue to break down barriers to create a level playing field for companies, countries and individuals around the world. Global Retail Sales Retail Sales (USD billion) Retail Growth Rate Online Sales (USD billion) Online Growth Rate IMAP’s Retail Industry Global Report — 2010: Page 10 2005 2006 2007 2008 2009 11,100 11,900 13,200 14,500 13,900 – 7.2% 10.9% 9.8% -4.1% 181 222 271 304 349 – 22.7% 22.1% 12.4% 14.5% Source: EIU, August 2010
Appendix A: Global overview of retail and online retail Value chain of the retail market • The retail industry is composed of individuals and companies engaged in the sale of finished products to end-user consumers. It implies that retailing is the final step in the distribution of merchandise—the last point in the supply chain—connecting the bulk producers of commodities to the final consumers, Retailing covers diverse products such as food, apparels, consumer goods, financial services, leisure, etc. • Considering the nature of the business, retailing is extremely competitive and the failure rate of retail establishments is relatively high. While price is the most important arena of competition, other factors such as location, selection and display of merchandise, attractiveness of the establishment and reputation also matter. • Retail is usually classified by the type of products as follows: - Food products - Soft goods: clothing, apparel and other fabrics - Hard goods (hardline retailers): appliances, electronics, furniture, sporting goods, etc. • Traditionally, the retail business was dominated by smaller familyrun or regionally targeted stores, but this market is increasingly being taken over by multinational conglomerates such as Wal- Mart and Sears, indicating the era of “retail globalization.” Major formats of in-store retailers These larger retailers have managed to set up huge supply/ distribution chains, inventory management systems, financing pacts and wide-scale marketing plans. This dynamic nature of the retail business has created different business models and a wide range of new formats such as vending machines, door-to-door and telephone sales, direct-mail marketing, online retailing 1 , and traditional formats such as discount houses, specialty stores, department stores, supermarkets, and consumer cooperatives. This has led to the emergence of multichannel retailing, which refers to the concept of selling goods through multiple channels rather than just one, such as traditional stores. 1 Online retailing is a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order. Format Description Value Proposition Branded Stores Specialty Stores (Multi-brand) Department Stores Exclusive showrooms either owned or franchised by a manufacturer Focus on a specific consumer need, carry most of the brands available Large stores having a wide variety of products; organized into different departments, such as clothing, house-wares and toys IMAP’s Retail Industry Global Report — 2010: Appendix A-i Complete range available for a given brand, certified product quality Greater choice to the consumer, comparison between brands possible One-stop shop catering to varied consumer needs Supermarkets Extremely large self-service retail outlets One-stop shop catering to varied consumer needs Discount Stores Hyper-marts Stores offering discounts on the retail price by selling high volumes and through economies of scale Larger than a supermarket, sometimes with a warehouse appearance; generally located in quieter parts of the city Low prices Low prices, vast choice available including services as cafeterias Convenience Stores Small self-service formats located in crowded urban areas Convenient location and extended operating hours Shopping Malls Major formats of non-store retailers * An enclosure having different formats of in-store retailers all under one roof Format Description Value Proposition Direct Response Television (DRTV) Advertising Including Infomercials Catalog Sales/ Online Catalog Sales Vending Machines E-commerce Multi-level Marketing Retail Value Chain Marketed directly over television, with prominent display of a toll-free number and/or internet address, asking the consumer to take specific action leading to or making a product sale Customers select products from catalogs and fill out an order form. The order is brought to the sales executive, who completes the order through the warehouse Chewing gum to hot meals have been sold through these machines and have become an integral part of contemporary consumption Buying and selling of products or services over electronic systems such as the Internet and other computer networks Products and company are marketed directly to consumers and potential business partners by means of relationship referrals and word-of-mouth marketing Variety of shops available close to each other Rapidly and cost-effectively introduce a new product or revive an under-marketed product Lower prices than other retailers and lower overhead expenses due to the smaller size of the store No human efforts required; vending machines are beneficial for low-cost consumables Increases consumers’ ability to gather information about products and prices Cost of logistics is low Source: Image taken from Microsoft website * Those engaged in the sale of products using marketing methods which do not include a physical location
Page 1 and 2: An IMAP RETAIL Report Retail Indust
Page 3 and 4: Contents R E T A I L I N D U S T R
Page 5 and 6: Global recession hit retail hard Th
Page 7 and 8: Transformation in online retail Pos
Page 9 and 10: Social media takes retailers to soc
Page 11: HOT Investment Opportunities Change
Page 15 and 16: Thumbnail summaries of top 50 retai
Page 17 and 18: 12: Rewe-Zentral AG. (Germany)** Br
Page 19 and 20: 23: Centres distribeutrs E. Leclerc
Page 21 and 22: 34: Casino Guichard-Perrachon S.A.
Page 23 and 24: 45: Migros-Genossenschafts Bund. (S
Page 25 and 26: Thumbnail summaries of retail activ
Page 27 and 28: 12: The Netherlands Online Penetrat
Page 29 and 30: Summary of transactions 1 in the re
Page 31 and 32: 6: Dufry AG / Dufry South America A
Page 33 and 34: Appendix D: Niche focus areas M-Com
Page 35 and 36: Cross-border M&A requires local kno

Retail Industry Global Report — 2010 - Ascendant Capital Advisors

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