State of the Global Retailing Industry in 2014

TRENDS AND INSIGHTS IN THE GLOBAL RETAILING MARKET2013

POWERED BY PASSPORT FROM EUROMONITOR INTERNATIONAL

WHAT IS PASSPORT

NEW INSIGHTS: RETAILING FOR RETAILERS

WHAT IS NEW IN GROCERY RETAILING?

WHAT IS NEW IN NON-GROCERY RETAILING?

NEW RESEARCH IN NON-GROCERY

NEW RESEARCH IN NON-STORE

PASSPORT: RETAILING DATA UPDATE FOR 2014

© Euromonitor International

3

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OVERVIEW OF PASSPORT


WHAT IS PASSPORT








6

Retailing Overview: Key Highlights for 2013


13.9tnUS$ total retail

sales in 2013

12.3%Mobile internet sales as share of

internet retailing in 2013

124bnUS$ total retail sales

of Apparel & footwear online in

2013



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Unit Prices

Sales per store

Sales per square metre

Size of average store

Store density - stores per person

Store openings and closures

How can retailers use our data?


Unit price data are available for both market sizes and shares (store-based channels only).This is one of the basic retail metrics that offers comparable information on retailer profitability and sales efficiency



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Store density: People per store


Reverse per capita data which show people per store makes easy comparison and

helps answer questions such as: Can the UK reach a similar level to the rest of Europe

in discounters?



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New store openings


Volume data - number of stores shows convenience stores and discounters with most

new store openings in 2013 in Western Europe



10

How large are stores?


Unit price data such as square metre per outlet.

UK stores are generally smaller in comparison with other European markets



11

Sales space utilisation: Sales per square metre


Unit price - sales per square metre for comparison of different channels.

UK selling space one of the most profitable in Europe



12

Sales per square metre: Most productive retailers


Unit price review of sales per square metre - comparison of stores with different sizes

via brand share



13

Industry overlap


Retailing overlaps with most product system data on Passport which can be of great help to retailers finding out which products are in demand what consumers are purchasing.Most grocery retailers are interested in this information in order to find out: which products to stock which companies they need to

negotiate with most importantly - for private

label - which products to develop internally



14

Product systems provide insight into product sales and performance

This information is very important to retailers, particularly for private label development

What do we stack our shelves with?




15

Types of retailers


Sold mostly through specialist stores

Often retailers are vertically integrated

Lower share of private label

High to very high online sales

Apparel

Home and Garden

Electronics and Appliance

Personal Accessories and Eyewear

Luxury

Toys and Games

Food and Drink

Home Care & Tissue

Beauty and Personal Care

Pets

Tobacco

Health

Sold mostly through grocery retailers

Limited specialist channel involvement

Private label is important for retailers

Relatively low online sales

Grocery: Non-Specialists Key issues impacting non-specialists

Non-Grocery: Specialists Key issues impacting specialists



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Specialist vs non-specialist retailers


Grocery Retailers Overlap

Modern Grocery Retailers Most systems

Convenience Stores

Discounters

Forecourt Retailers

Hypermarkets

Supermarkets

Traditional Grocery Retailers

Food/Drink/Tobacco Specialists Tobacco

Independent Small Grocers

Other Grocery Retailers

Non-Grocery Retailers Overlap

Apparel and Footwear Specialist Apparel & footwear

Electronics and Appliance Specialists Electronics and Appliances

Health and Beauty Specialist

Beauty Specialist Retailers Beauty & personal care

Chemists/Pharmacies Consumer Health

Optical Goods Stores Eyewear

Parapharmacies/Drugstores Consumer health

Other Healthcare Specialist Retailers

Home and Garden Specialist Retailers

Home Improvement and Gardening Home and garden

Furniture and Homewares Stores Home and garden

Leisure and Personal Goods

Bags and Luggage Specialist Personal accessories

Jewellery and Watch Specialist Personal accessories

Media Products Stores Toys and games

Pet Shops and Superstores Pet care

Sports Goods Stores Apparel & footwear

Stationers/Office Supply Stores Persona Accessories

Traditional Toys and Games Stores Toys and games

Other Leisure and Personal Goods

Mixed Retailers Overlap

Department Stores Most systems

Mass Merchandisers Most systems

Variety Stores Most systems

Warehouse Clubs Most systems

List of all store based channels. Those in back are usually non-specialists offering wide range of products, those in blue are specialists where overlap with the corresponding industry is smaller, while those in orange have big overlap


WHAT IS PASSPORT








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Key findings for grocery retailing

NEW INSIGHTS: WHAT IS NEW IN GROCERY RETAILING?

Small vs large store formats

Discounting

Middle East and Africa



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Towards modern grocery channels: A pronounced shift in emerging markets but traditional formats are still prominent

Convenience stores and discounters: Stronger growth than large formats, but remain dependent on developed markets in Asia and Europe

Grocery channel growth: Small modern grocery formats gain most


0.00.40.81.21.62.02.42.83.23.6

0250500750

1,0001,2501,5001,7502,0002,250

Traditional groceryretailers

Supermarkets Hypermarkets Conveniencestores

Discounters

% C

AG

R 2

013-2

018

US

$ b

illio

n -

consta

nt 2013

prices f

ixed 2

013 e

xchange

rate

s

Global Grocery Retailing by Channel - Market Sizes (RSP exc Sales Tax) 2008-2018

2008 2013 2013-18 CAGR %

China: Market Sizes - % Breakdown of Grocery Retailers 2008/2013

RSP exc Sales Tax 2008 2013

Modern Grocery Retailers 56.9 64.5

Traditional Grocery Retailers 43.1 35.5



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Sales per square metre: Price pressure and over-expansion puts extra pressure on hypermarkets

Demographic challenges impact large stores: How to remain a relevant channel for smaller households and retain a wide customer base

Maturity and over-expansion in large modern grocery retail formats


3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

2008 2009 2010 2011 2012 2013

US

$ p

er

sq

m -

co

nsta

nt 2

01

3 p

rice

s

fixe

d 2

01

3 e

xch

an

ge

rate

s 2

00

8-2

01

3

World: Unit Price - Sales per sq m by Channel 2008-2013

Convenience Stores DiscountersHypermarkets SupermarketsMass Merchandisers

20%

30%

40%

50%

60%

70%

1998 2003 2008 2013 2018

Sh

are

of h

ou

se

ho

lds

Households: Proportion of Households with 1 or 2 Persons by

Region 1998-2018

Western Europe North AmericaAustralasia Eastern EuropeAsia Pacific Latin AmericaMiddle East and Africa



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Fresh food: An increasingly key element in differentiating hypermarkets from smaller store formats and internet retailers

Services to make stores “destinations”: Innovations aim at allocating extra selling space to non-retail activities, eg banking and foodservice, in order to boost footfall

Hypermarkets’ differentiation strategies




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Expansion in emerging markets: Strong gains fuelled by making inroads against traditional channels

Channel consolidation: 7-Eleven, Family Mart, Lawson expand in Asia, Metro in Eastern Europe

Recent and future market entries: Indonesia, Kazakhstan, Myanmar, etc for global players

Convenience stores: Franchising drives emerging market growth


Metro: + 3,023 outlets

Others

+6,185

Western Europe

+5,880

Eastern Europe

+20,971

Asia Pacific

+50,2447-Eleven: +

13,270 outlets

Additional sites/outlets for convenience stores

globally 2008-2013



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Concepts: More sophisticated segmentation, ranging from value to premium. Carrefour launches Carrefour Bio to explore more premium positioning, while Lawson launches Lawson 100 Store to explore value proposition and compete better with fixed priced stores

Private label: Ambitious private label sales targets for Japanese companies, with more refined positioning

Innovations in convenience stores: Store concepts and private label


Value private

label



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Fastest modern grocery channels by region in 2013


Current value growth

% 2012-2013

Discounters

Convenience Stores

Discounters is the channel to see fastest growth in 2013 in developed regions, including North America and Western Europe

In Latin America and Eastern Europe, the convenience stores channel performs the best



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Growing impact of discounting on grocery retailing


Discounting - Key Points

Economic slowdown benefited discounters

Change in consumers’ purchasing habits is proving to last longer than originally anticipated

Discounters forecast to see 3% CAGR growth by 2018

Aldi and Schwarz lead the channel

Convergence between discounting and grocery retailing, ie discount areas in traditional supermarkets and hypermarkets, or more fresh food and brand choice in discounters

Rise of another discounting channel: variety stores

0% 5% 10% 15% 20% 25%

Aldi Group

Schwarz Beteiligungs

Wal-Mart Stores Inc

Edeka Zentrale AG

Rewe Group

Supervalu Inc

Dia SA

Leading Discounters 2013

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

0%

10%

20%

30%

40%

50%

CA

GR

20

13

-20

18

Dis

co

un

ters

sa

les s

ha

re o

f m

od

ern

gro

ce

ry r

eta

ilers

Discounters as % of Modern Grocery Retailers 2013 and Discounters’ Growth

Prospects 2013-2018

Discounters as a % of modern grocery retailing in 2013 % CAGR 2013-2018

42%



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Related publications available on Passport




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Africa, the most dynamic region for grocery retailers


72%TRADITIONAL GROCERY

RETAILING REMAINS PREDOMINANT IN 2013

MEA IS THE REGION WHERE MODERN GROCERY

RETAILERS POST FASTEST GROWTH IN 2013

99bnMEA’S CONTRIBUTION IN US$

TO MODERN GROCERY RETAILING IN THE NEXT FIVE

YEARS

Middle East and Africa - Key Points

Independent small grocers still dominate but continued shift from traditional to modern grocery retailers

Growth driven by young population, continued rise in disposable income, ongoing modernisation of the retail landscape and growing car ownership

Difficult region to enter due to cultural differences, business regulations but huge rewards for retailers

Franchising is the main route for international retailers

0%

2%

4%

6%

8%

10%

12%

14%

MiddleEastand

Africa

LatinAmerica

EasternEurope

AsiaPacific

NorthAmerica

Austra-lasia

WesternEurope

Y-o

-y g

row

th (

US

$ c

urr

ent fixed

exchange r

ate

s)

Retail Sales Growth by Region 2011-2013

2011-12 2012-13

12%



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Africa, a key interest for retailers


Research capabilities within Africa & Middle East

Researched markets in dark blue

Research data based on input from in country analysts based in the researched countries

Modelled countries received extra time for review and modelling

Additional research capabilities with new office in South Africa

Additional content for some of the key companies and countries in the region (opinion pieces, company profiles) including for modelled markets.



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Related publications available on Passport



WHAT IS PASSPORT








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Competition from internet retailing

Rising demand in emerging markets

Effect of continuing economic pressure on developed markets

Appetite for luxury goods in emerging markets (and beyond, in the shape of tourist shopping revenues)

Non-grocery retail: Key trends

NEW INSIGHTS: WHAT IS NEW IN NON-GROCERY RETAILING?

0

20

40

60

80

%

Grocery Retail as % of Total Spend 2013/2018(Chart shows the 10 markets forecast to see the biggest shift)

2013 2018

As the proportion of spending to subsistence products (ie

food and household) reduces, a greater share is available for discretionary purchases, benefiting the non-grocery channel. This represents space in the market that retailers can look to move into



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Competition from other channels

Savvier and more demanding consumers

Product penetration

Retail property options

Demographic and other socioeconomic data

Housing market

Fashion and trends

Technological innovations

Discretionary non-grocery spend easily affected by wider concerns

NEW INSIGHTS: WHAT IS NEW IN NON-GROCERY RETAILING?

Internet retailing is the obvious threat, but another issue for brand manufacturers especially is the move into non-grocery retail by big-box grocery chains, as they will often develop a private label offer, eg Tesco’s F+F and Walmart’s George apparel labels, both now international in scale


WHAT IS PASSPORT








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New channel: Optical goods stores…the basics

NEW INSIGHTS: NEW RESEARCH IN NON-GROCERY

The Small Print:

Specialist retailers with a primary focus on:

spectacles, and/or

contact lenses, and/or

sunglasses

Prescription and non-prescription sales both included

Revenue from services such as eye tests excluded

Optical goods stores were previously included within other healthcare specialists retailers. Broken out to provide greater visibility to a key distribution channel within the Eyewear system



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Optical goods stores: What is the data telling us?


Market size: US$87 billion

(1.3% of total non-grocery retail)

Who is interested? Optical goods stores and brand manufacturers. Luxury and apparel retailers.

Healthcare companies. Suppliers (lenses, plastics etc). Franchise operators

0 10 20

Russia

Italy

UK

Canada

Japan

Germany

Brazil

France

US

China

Value sales 2013 (US$ billion)

10 Biggest Markets 2013

6% share

0 5 10

Paris Miki

HVHC

Meganetop

Alain Afflelou

Guildinvest-Krys

Optic 2000

Fielmann

Specsavers

GrandVision

Luxottica


10 Biggest Companies 2013

Optical goods stores is a long-established channel serving consumers from across the income spectrum. This means stores are present in almost every market, and there are many established chains. However, beyond the top five global companies, multinational presence is extremely limited. Scope for consolidation perhaps?



36

New channel: Bags and luggage specialists…the basics


The Small Print:

Retail outlets specialising in the sale of bags or luggage

Includes backpacks, duffel bags, cross-body bags, business bags, wallets and coin pouches and other small bags, as well as handbags and suitcases

Duty-free sales are excluded from data

As many bags and luggage specialists are located beyond the departure gates, this

is a significant factor for our data

Broken out to provide greater visibility to a key distribution channel within the Personal

Accessories system



37

Bag and luggage specialists: What is the data telling us?


Market size: US$53 billionWho is interested? Luxury retailers, fashion and accessory retailers. Bag and luggage brands. Leather

and other materials suppliers

0 100 200

Portugal

Belgium

Taiwan

Austria

Italy

France

Australia

Switzerland

Singapore

Hong Kong, China

Value sales 2013 (US$)

10 Highest per Capita Spend Markets 2013

11% share

0 5 10

Loewe

Samsonite

Miu Miu

Chanel

Bottega Veneta

Hermès

Prada

Gucci

Coach

Louis Vuitton


10 Biggest Brands 2013

Beyond the top five brands, this is a very fragmented channel. Global luggage brands with their own stores are particularly rare. Due to the importance of luxury brands, and the somewhat niche nature of the channel, it is absent from a number of emerging markets



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Interplay with Personal Accessories and Eyewear systems


Things to Remember:

Personal Accessories and Eyewear data include sales tax - retailing size data including sales tax are available on Passport

Personal Accessories and Eyewear research currently covers 32 markets only

A key element of the Eyewear system’s distribution measure can now be fleshed out within retailing data



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New data: Luxury retail…the basics


The Small Print:

Retailers selling luxury brands, as defined by the luxury industry - list available

Multi-brand retailers must have listed luxury brands making up over half of their range

Luxury department stores house at least one luxury “shop-in-shop” concession

Side benefit - extensive top-down research should benefit retail coverage of top luxury marques

Available for 2011-2013

Luxury retail is an important and distinct element of retail, particularly with the arrival of Euromonitor International’s Luxury system, but brands remain small within the context of the total retail environment. Data within the luxury retail tree are also contained in non-grocery retail, but duplicating it in a dedicated section allows luxury brands to be viewed in context with each other



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New data: Luxury retail…the basics


Market size: US$91 billion

(about 5% of the combined size of the four channels with non-luxury sales

included)

Who is interested? Luxury and non-luxury retailers; luxury brands and suppliers. Store fitters.

Property developers. Franchise operators

0

15

30

45

US

$ b

illio

n

Luxury Retail by Region

2011 2012 2013

0

20

40

60

80

100

2011 2012 2013

US

$ b

illio

n

Luxury Retail by Channel

Luxury Jewellery and Watch

Luxury Department Stores

Luxury Bags and Luggage

Luxury Apparel and Footwear

Bags and luggage and apparel and footwear specialists are fastest growing formats, more suitable for new emerging markets than jewellery and watch specialists, which have high unit prices, and department stores, which require large-scale property investment and multi-brand involvement


WHAT IS PASSPORT








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New data: Apparel and footwear internet retailing…the basics

NEW INSIGHTS: NEW RESEARCH IN NON-STORE

The Small Print:

Internet retail brands that generate a significant proportion of sales through apparel products

Not restricted to apparel specialists, also includes department store online brands

Brand shares for 2011-2013 only

Shares for Apparel and footwear internet retailers



43

Apparel and footwear internet retailing: What is the data telling us?


0

15

30

%

Amazon.com’s Share of Apparel and Footwear Internet Retailing by Country 2013

Who is interested? Apparel retailers, brands and

manufacturers; fulfilment operators; landlords; financial

cards providers



44

Mobile internet retailing…the basics


The Small Print:

Analysis by type will show sales completed using a mobile phone or tablet as a percentage of internet retailing

Covers 2011-2016

It might be very new, but mobile internet retailing is rightly seen as the next big thing in retailing (or one of them). The new data on the penetration of mobile internet retailing within total internet retailing give a useful picture of how advanced this trend is in each market.It should be noted that the location-based qualities of mobile internet give this the potential to enhance store-based sales also



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Mobile internet retailing: What is the data telling us?


This datagraphic(available on Passport) demonstrates that mobile internet retailing is already significant in markets across the world. In emerging markets such as India, the current internet retailing consumer base is generally more affluent and more likely to own a smartphone, hence the high penetration, but for many emerging market consumers, smartphones will be the gateway to the internet, rather than computers, raising the profile of this purchase format further



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All mobile phone/smartphone/social networking related content on Passport

Massive interest from clients re online activity and the influence that m-commerce could hold

Data from other systems eg mobile phone penetration (C&C) and smartphone prevalence (Consumer Electronics)

Survey data re mobile phone related habits such as shopping and socialising

Mobile internet retailing complements existing Passport offer



WHAT IS PASSPORT








48

Shares

PASSPORT: RETAILING DATABASE UPDATES

Passport does not show shares less than 0.1%Many companies and brands are hiddenActual share of “Others” is 56%, while Passport shows 74.4% as smaller brands are not shown



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The Retailing system provides data for over 6,000 global companies and over 8,500 global brand names. Duplicate company and brand names appearing in more than one market are counted only once.

Some examples of channels with the highest number of brands

UK Apparel & Footwear - over 70 companies

US Internet Retailing - over 90 companies

Egypt Electronics and Appliance Specialists - 25

China - most department stores, hypermarkets and supermarkets

Shares in Passport




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Modern and traditional channels

Includes independents

Channel coverage: Grocery


Channels Shares Additional data

Grocery Retailers Yes

Modern Grocery Retailers Yes

Convenience Stores Yes

Discounters Yes

Forecourt Retailers Yes

Chained Forecourt Retailers Yes

Independent Forecourt Retailers No

Hypermarkets Yes Grocery vs non-grocery

Supermarkets Yes Grocery vs non-grocery

Traditional Grocery Retailers Yes

Food/Drink/Tobacco Specialists Yes

Independent Small Grocers No

Other Grocery Retailers Yes



51

Additional data available for:

Luxury retailers within:

Apparel and footwear specialists

Bags and luggage specialists

Jewellery and watch specialists

Department stores

Channel coverage: Non-grocery


Channels SharesNon-Grocery Retailers Yes

Apparel and Footwear Specialist Retailers Yes

Electronics and Appliance Specialist Retailers Yes

Health and Beauty Specialist Retailers Yes

Beauty Specialist Retailers Yes

Chemists/Pharmacies Yes

Optical Goods Stores Yes

Drugstores/Parapharmacies Yes

Other Healthcare Specialist Retailers Yes

Home and Garden Specialist Retailers Yes

Home Improvement and Gardening Stores Yes

Furniture and Homewares Stores Yes

Leisure and Personal Goods Specialist Retailers Yes

Bags and Luggage Specialist Retailers Yes

Jewellery and Watch Specialist Retailers Yes

Media Products Stores Yes

Pet Shops and Superstores Yes

Sports Goods Stores Yes

Stationers/Office Supply Stores Yes

Traditional Toys and Games Stores Yes

Other Leisure and Personal Goods Specialist Retailers Yes

Mixed Retailers Yes

Department Stores Yes

Mass Merchandisers Yes

Variety Stores Yes

Warehouse Clubs Yes

Other Non-Grocery Retailers Yes



52

Data available for:

4 non-store channels

43 product categories

Additional data:

Apparel and footwear internet retailing shares

Mobile internet retailing breakdowns

Pure vs multi-channel internet retailers shares

Channel coverage: Non-store


Channels Shares Additional data

Non-Store Retailing Yes

Direct Selling Yes

Homeshopping Yes

Internet Retailing Yes Mobile Internet

Vending Yes

Product data

Internet Retailing/Direct Selling/Homeshopping Channels

Beauty and Personal Care

Apparel and Footwear

Consumer Electronics and Video Games Hardware

Consumer Healthcare

Consumer Appliances

Home Care

Home Improvement and Gardening

Housewares and Home Furnishings

Media Products

Food and Drink

Traditional Toys and Games

Other

Vending Channel

Packaged Drinks Vending

Packaged Foods Vending

Personal Hygiene Products Vending

Tobacco Products Vending

Hot Drinks Vending

Traditional Toys and Games Vending

Other Products Vending



53

US: Data on 22 states and regions


Pacific

Mountain

Middle Atlantic

New England West North

Central

East North Central

Northeast

West South Central

East South

Central

South Atlantic

South

Regional data available for the US: Sizes in value and number of outlets 2002-2018

West Midwest



54

Pure play vs multi-channel




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Data available in four data points:

Value sales excluding VAT - default data point for sizes

Value sales including VAT - for sizes only

Outlets/sites - for store-based retailers

Selling space - for store-based retailers

80 researched markets

Additional metrics:

Employment in retailing

Grocery vs non-grocery retailing

Other points




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Euromonitor Retailing team is working with third parties to produce very interesting content which available both on Passport and on blog.euromointor.com for free and have been received extremely well so far

Asia Pacific Top 500 Retailers Top 5 – produced in collaboration with Retail Asia

Internationalisation of Retailing for ICSC World Retail Summit

Retail Theft Barometer in conjunction with Checkpoint

Retailing Trends in North and South America

Further content




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State of the Global Retailing Industry in 2014

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