More internationals eye Australia

 

hmGlobalisation of the Australian retail market is expected to continue in 2015, with more internationals planning to either set up shop or take over local retail brands, according to Deloitte’s 2015 Global Powers of Retailing report.

Thirty seven of the world’s top 250 retailers are now operating in Australia following an influx in 2014 of seven new companies including H&M, Uniqlo, Forever 21, and Sephora.

This figure is compared to just two in 2013, which saw US brands Williams-Sonoma and Abercrombie & Fitch make their Australian debuts.

The Deloitte report found that nearly half of the top 250 retailers operating in Australia originate from the US, with apparel and footwear the largest category, closely followed by supermarkets.

The report notes that what should be of concern to Australian retailers is that 85 per cent of the top 250 retailers aren’t operating in Australia, stating that “competition is only likely to increase”  naming British retailer, Marks & Spencer as one brand closely eyeing Australia, while US furniture giant, Ashley Furniture, is expected to expand its presence in Australia this year after opening its first store in 2014.

The report also highlights that there are only eight Chinese companies in the top 250, none of which are currently in Australia.

“With the growth in the middle classes in China and a rapidly growing domestic retail market, it’s only a matter of time before we see more Chinese retailers appear in the top 250—and, of course, their entrance into the Australian market,” the report stated.

Last year also saw several major acqusitions of Australian brands including South African-based retailer Woolworths’ takeover of Australian department store, David Jones, as well as the $6.7
billion global acquisition of Pepkor by Steinhoff Holdings.

“We are likely to see further interest by overseas retailers in underperforming Australian retail companies. If nothing else, 2014 has shown us that international retailers continue to see value in both the Australian retail market and Australian retailers themselves,” Deloitte stated.

David White, Deloitte Australia partner and retail industry leader, says the local market can expect to see further interest by overseas retailers in the Australian retail market due to the weakening dollar and ever increasing competitive pressures.

“As major global players continue to enter the Australian market, and existing global retailers expand their store footprint, Australian retailers across all segments will continue to face significant challenges and increased competition. The ability to innovate, drive improved processes, and to connect with the consumer will be critical in order to remain competitive,” White said.

According to the 2015 Global Powers of Retailing report, Woolworths and Wesfarmers continue to represent Australia in the top 25, at 18th and 22nd respectively.

While this is lower than last year’s rankings, (15th and 19th respectively), the drop is largely driven by a circa 11 per cent devaluation in the Australian dollar against the U.S. dollar.

Excluding this exchange rate movement, Woolworths and Wesfarmers would have remained in the top 20, with both growing their retail revenue in excess of circa four per cent excluding exchange rate fluctuations. Woolworths is number two in the Asia Pacific top 10, after Japanese retailer, Aeon.

The composition of the top 10 global retailers remains the same as last year, with Wal-Mart continuing to be the world’s largest retailer by some margin, however, there has been some movement in the rankings within the top 10.

Costco has leapfrogged Tesco into second place, driven both by its impressive ongoing sales growth as well as a strengthening in the Euro compared to the US dollar. Tesco dropped from second place last year to fifth, as a result of both declining sales and a weaker British pound against the U.S. dollar.

Deliotte

Comments

1 comment

  1. Indira posted on January 14, 2015

    Need more stores over here in Adelaide, SA. This state needs lot more experience in retail experience. I moved from Melbourne VIC and its a sad case of retail here. It would be great for the state too to see more brandings here - These days I go to Melbourne to see my friends and shopping. Adelaide has lot to offer but we need strong retail experience. It could be a destination for shoppers!! reply

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