Growth and earnings from overseas helped protect the best performing retailers from slow growing or stagnant domestic markets in much of Europe and North America.

In 2011, 23.8 per cent of the top 250 composite retail revenue was generated in foreign markets. Of the top 250 retailers, 49 began operations in a new country in 2011, with a combined total of 107 new market entries (up from 88 in 2010) involving 72 different countries (57 in 2010).

David White, Deloitte Australia partner and retail industry leader said this year’s report shows a growing number of retailers in mature markets, ramping up their efforts in foreign markets in search of more attractive growth opportunities.

“To do this they are employing multiple market entry strategies including franchising, licensing and joint ventures, in addition to owned expansion,” White said.

“With domestic growth prospects stalling for many retailers in North America and Europe, the relative strength of our own economy has tempted many overseas retailers to enter the Australian market.

“For local retailers, 2013 looks set to continue to be a challenging trading environment. Established overseas players already in Australia are planning to expand and there are a number of new entrants planning to launch in the coming year. I have no doubt that competition is going to be fierce, which will drive innovation and increase consumer choice.”

Keeping it local

Australia’s Woolworths and Wesfarmers continue to punch above their weight compared to the world’s Top 250. In this year’s rankings, Woolworths is up one place to 17 and Wesfarmers moved up from 21 to 18.

Compared to the majority of the top 20 global retailers who derive their income from stores located in a minimum of 10 different countries, Australia’s two largest retailers each manage to achieve more than US$50 billion in revenue by operating at home and in New Zealand.

“Undoubtedly, the recent arrival of sophisticated global retailers like Zara and Topshop into Australia, and the expansion plans of more established players like IKEA and Costco is increasing competition, however, we shouldn’t forget that Australian retailers still have a number of advantages including a greater knowledge of the local market, customers and seasons; an established customer base; and prime store locations,” said White.

“This year even more global brands are heading our way, with US retail heavyweights Williams Sonoma (Pottery Barn) and Abercrombie & Fitch (Hollister) launching flagship stores in Australia. Across all segments, local retailers need a response to this increased competition, developed around a well thought out customer focused strategy.”

Other key global results:

Burgeoning middle classes, youthful populations, and sizeable foreign direct investment in emerging markets such as China and parts of the Middle East and Africa helped some retailers to achieve a growth rate that was nearly four times faster than that for the top 250 as a whole.

These emerging markets accounted for almost half (24) of the 50 fastest-growing companies over the 2006-2011 period. Chinese and Russian retailers are well-represented among the fastest 50, as well as retailers from Africa/Middle East and Latin America.

Following a 40 per cent jump in revenue Amazon displaced Sears in the US top 10, dropping the beleaguered retailer out of the regional ranking.

A notable change from 2010 was that retailers of FMCG outpaced fashion and hardlines retailers, posting six per cent revenue growth. In 2011 revenue growth declined to five percent from seven percent in 2010 for fashion goods retailer.

For full coverage of Deloitte’s Global Powers of Retailing 2013 Retail Beyond report, see Inside Retail’s Digital Weekly, due out on Friday.