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Last year, in the 2019 edition of the Top 50 Global Retailers, we asked the question: “Who is the No. 1 global retailer today?”
Finding the correct answer to that question is becoming exponentially more difficult with each passing year. Everyone will have their own opinion and there are many legitimate ways to look at the field.
Looking across the field, at the end of 2019 Walmart still holds the top position for annual sales and in our points-based ranking system for most international operator. However, Amazon maintains its position as the largest publicly traded market capitalization while Alibaba is world champion in sales via marketplace platforms. Yum Brands has the largest physical presence when accounting for numbers of countries of operation. Meanwhile, in the world of virtual internationalization, British online grocer Ocado is now supplying the hardware and software that supports online grocery delivery to a list of primarily single-country retailers including Kroger in the United States, Canada’s Sobey’s, France’s Casino, Sweden’s ICA, the UK’s Marks & Spencer and Japan’s Aeon, and is actively seeking more partnerships.
Perhaps we need to reconsider our original question. Rather than ask, “Who is,” we might learn more by asking, “Who will be?” With that in mind, let’s examine both the absolute ranking for 2019 as well as shifts in momentum among the fast movers in the ranking.
Overall, our 2019 ranking of most international retailers resembles the 2018 version, particularly in the Top 10 — with two notable exceptions. First, Chinese-based marketplace operator Alibaba has jumped three places from seventh to fourth in the rankings. Second, perennial “most global” operator Tesco has officially fallen out of the Top 10 for the first time.
The fall in Tesco’s status might be a warning signal for some other retailers that are losing ranking points. French retailers Casino and Auchan were two of the “bottom five” retailers in this year’s dubious “most points dropped” rankings. In total, nine of our Top 50 retailers saw points dropped from a year ago, including two other French retailers, Carrefour and Leclerc.
Five retailers have gained significant momentum in the past 12 months. Amazon tops out our rankings for “most points gained,” with nearly two times as much momentum as the next-best retailer, IKEA, which benefited from restructuring its franchise operations and will be the least likely retailer to experience similar gains in the 2020 edition of this ranking. Lidl’s parent company, Schwarz Group, outpaced Alibaba, but just barely and has been able to maintain third position in the rankings while also maintaining some distance from the fast-moving Alibaba.
Costco continues to remain the slow and steady growth retailer in our Top 10, moving up from sixth to fifth place and also adding the fifth most points of any retailer over the past 12 months.
The top 10 most international
In 2019, Walmart unsuccessfully attempted to divest its British division, Asda, to a top local rival, Sainsbury’s. Antitrust authorities blocked the divestment on the grounds that a merger of Britain’s No. 2 and 3 retailers would create unfavorable conditions for consumers, giving them fewer options in where to shop. They also believed management would raise prices for consumers. Had the divestment been allowed, Walmart would have most certainly dropped points in this year’s rankings. However, it did not and as a result Walmart gained points and continues to enjoy a comfortable lead over Amazon, our number two most international retailer. As we think about “Who will be?” it seems certain that Amazon and Walmart will be two of the retailers that remain on the top of these rankings for many years to come. Will a third or fourth retailer join this battle for top position?
Amazon has recently launched operations or increased investments in a wide array of new countries, including Singapore, Turkey, Australia, India and Brazil. In each of these countries two things have happened soon after Amazon’s investment. One, Alibaba has attempted to match or even outpace Amazon’s investment with acquisitions and investments of its own. Two, the local press has declared that consumers are not ”catching on” to the Amazon way of shopping. Despite these obstacles, Amazon is a retailer with a treasure chest of options available with one of the world’s highest market capitalizations, a hot domestic economy in the United States where consumers have most certainly “caught on” to the Amazon way of shopping, and strong momentum coming from big and healthy countries such as Germany and Japan.
3. Schwarz Group
Privately held German conglomerate Schwarz Group has lost some momentum. The year 2020 was supposed to be when Schwarz’s discount supermarket Lidl in the U.S. would begin delivering profit and conquering new states. It was also supposed to be the year its discount small supercenter/compact hypermarket, Kaufland, would open for business in Australia. Neither of these things have happened. Lidl is struggling in the U.S., having experimented with several store types without generating runaway success. In Australia, the company declared it will cease its plans and look for a buyer for sites under construction. Is there a silver lining? Quite possibly. Lidl enjoyed its most successful first year of operation in any country, having launched in Serbia, going from 0 percent to 70 percent household penetration in 12 months and capturing 9 percent of all grocery spending in the small country. Meanwhile, Kaufland remains a top grocery destination for many countries in Central and Eastern Europe. If Schwarz can find a way to enter markets where there is a need for deep discount private label stores, the company will continue to top these rankings.
Alibaba moved up in our rankings with a flurry of activity. In 2018, it invested heavily in Turkish online retailer Trendyol, increasing its investments across 2019. Similarly, Alibaba continues to invest in partnerships in places like Spain where it has a relationship with the top department store chain there, El Corte Ingles, and in Southeast Asia through its Lazada investments. In its home region of Greater China, Alibaba continues to invest in a blend of offline and online forms of retail, increasing its stake in the Sun Art Group that runs RT Mart hypermarkets as well as Auchan stores in Mainland China and Taiwan. Alibaba will likely remain at No. 4 for the moment, with a slowing Chinese economy and other challenges. In February 2020, the company advised investors they would see a sales decline in China for the first time in the company’s history. Should this occur, we would expect Alibaba to reconsider its strategy for internationalization.
Costco continues to quietly surprise international retail experts. First, it makes consumers pay a membership fee to enter its warehouses. Second, consumers who shop at Costco routinely state that the pack sizes they purchase are “too big.” Third, Costco moves slowly, opening just one or two international locations each year, especially compared with other retailers around them that open hundreds of stores at a time. Fourth, Costco has resisted making wholesale investments in ecommerce, so far preferring to sell additional services online rather than core merchandise. Despite this, Costco opened its first-ever warehouse in China in the last 12 months and continues to improve in other international markets of operation, including in new countries like France and Iceland.
6. Ahold Delhaize
Dutch-Belgian conglomerate Ahold Delhaize is the top-ranked supermarket chain in this year’s ranking — the first company on this list to have a minimalist investment in non-food retailing. In the U.S., Ahold Delhaize’s brands including Food Lion, Hannaford and Stop & Shop sell non-food essentials, but not to the same scale as retailers higher in this year’s ranking. Similarly, while the company’s Dutch subsidiary Albert Heijn has a non-food marketplace in Bol.com and a drugstore chain in Etos, the bulk of the company’s sales in the Netherlands are everyday grocery items. The company is neither a fast-growth operator nor pushing for rapid global expansion, preferring to do strong work in each of its grocery markets along the east coast of the U.S., the entirety of the Benelux region and in Central and Southeastern Europe, as well as Indonesia. The company’s success in grocery and with Bol.com will keep it in our top tier of international retailers in the rankings to come, but will unlikely be enough to move it up from its position in next year’s update.
Carrefour once hoped to be the first major international hypermarket operator with big-box operations in more than 50 countries. Today, the company continues to selectively retreat from markets, having exited China in 2019, as well as other countries, mostly in the near and Far East, over the past decade. As the company looks to find success in the new decade, it is hanging its hopes on being recognized by consumers as the best healthy foods retailer with multiple store types and franchise operations that make getting healthy foods convenient. In the first half of 2019, Carrefour expanded its small store formats to exceed 7,000 proximity convenience grocery stores for the first time in its history. The company continues with plans to shrink its hypermarket stores and invest in ecommerce, particularly in France where the competition for online is strong and intensifying.
Aldi, much like its historical corporate structure, is experiencing a tale of two halves. One half of its operations — Aldi South — is growing rapidly and disrupting traditional supermarkets in places like the U.S., U.K. and Australia and with newly opened physical stores in Shanghai, China. The other half — in Germany, the Netherlands and Denmark — is finding growth difficult amidst changing shopper preferences and new competitors. Aldi’s reaction has been to restructure. The Aldi North division, historically run independently and at a distance, is quietly and slowly aligning with the faster-growing and more international Aldi South division. As the company simplifies operations and attempts to innovate in Northern Europe, all eyes are on how the strong growth engines of the U.S. — both Aldi stores and Trader Joe’s stores — plus Australia, the U.K. and Ireland — transform a company where the German language has dominated to a company where English competes to be the new lingua franca. The big question for Aldi right now is how to balance the two halves in the best possible way to drive growth in all locations.
IKEA restructured dramatically in 2019 to stimulate new ways of retailing. The company most famous for making consumers work hard — in terms of getting to stores, packing heavy goods without assistance and then assembling furniture at home with very basic “picture book” instructions — is aggressively trying to reposition for consumers who have grown up in an age of Airbnb and Uber and expect to enjoy life on the go watching mobile how-to videos rather than trying to work out how to do something by looking at a piece of paper without a voiceover. The restructuring has enabled the company to climb in this year’s rankings, primarily because other retailers have fallen or lost points rather than because IKEA has performed strongly in the period. The company is now working on subletting retail space to other retailers at its warehouses around the world and investing in customer-friendly services to stimulate sales to a generation of shoppers not familiar with the old ways of “do-it-yourself” homemaking. As a result of these monumental changes, IKEA may only enjoy its No. 9 ranking for a very short period of time.
Auchan has fallen down our rankings, from No. 9 last year to No. 10 this year. The drop did not come as strongly as expected, with the company selling its Italian operations to local retailer Conad. Next year the company will drop in the ranking as a result of this exit, as well as potential other divestments in an extremely challenging retail environment in Auchan’s core countries of France, Russia, Spain and Poland.
The next 20 most international
When looking at the next 20 retailers, it is important to ask two questions. First, are there any companies with strong momentum that are likely to move up in next year’s rankings? Second, could any of these smaller companies merge, like Ahold and Delhaize did in 2015/2016, creating a Top 10 operator?
Retailers with strong momentum
Only two retailers in the second tier of international operators enjoy outright momentum based on the format they operate — ecommerce marketplaces. These are China’s JD.com at No. 19 and South Africa’s Naspers at No. 29. Both companies are facing some headwinds with economic challenges in emerging markets including China and Africa, plus heightened competition from bricks-and-mortar retailers looking to expand in online retailing.
Durable goods-based retailers
Several durable goods-based retailers made strong gains in 2019, notably the U.S.’s Home Depot at No. 15, Lowe’s at No. 25 and France’s Adeo Group at No. 26, all specializing in DIY home improvement goods. These companies are likely to carry momentum into 2020 as the U.S. economy surges and consumers invest in making their homes more beautiful and buy and sell properties with more confidence than in the recent past.
Fast fashion and on-the-go retailers
The bulk of the second-tier international retailers that continue to grow their ranking points — those currently ranked 11 to 29 —are a mix of fast fashion, convenience drugstores and fast food retailers, with one thing in common: a focus on helping shoppers with busy lifestyles find satisfaction through on-the-go retail solutions.
On the fashion side, No. 18 Inditex, which operates Zara and other fashion chains, continues to grow despite challenges in the industry. Likewise, H&M remains in the Top 25, now at 22, having been ranked 21 last year. Should the fashion industry recover from its challenges, we could see both these companies move up the ladder. This is unlikely to happen in 2020, but discount fashion chain TJX, which operates TJ Maxx/TK Maxx will move up. The company was No. 30 last year and sits at No. 30 this year, fractions of ranking points behind retailers that may struggle to grow in 2020.
Convenience store operators and quick service restaurant retailers have maintained their positions from a year ago and may move up as they pursue a mixture of investments in healthier on-the-go eating options as well as expanding franchise systems to be less focused on a single brand of stores and incorporate more flexibility in ways of reaching consumers. This year, Japan’s Seven & I holdings, the owner of the global 7-Eleven franchise system, moves up from No. 15 to No. 12. Others in the sector such as McDonald’s, Spar International, Walgreens Boots Alliance, AS Watson and Aeon retain their positions without too much movement.
A few retailers in this group are facing some serious financial problems, such as France’s Casino and Germany’s Metro AG, particularly in international markets and will likely lose some momentum in next year’s rankings. Grocers such as Intermarché and Tesco will likely hold their positions.
Top 50 retailers to note
While still small compared with companies like Walmart, Amazon, Schwarz Group and Alibaba, there are a number of interesting retailers in the third tier of this year’s Top 50 — those ranked from No. 31 to No. 50. Strong growth retailers to watch in next year’s rankings include China’s Tencent (35), Uniqlo operator Fast Retailing (37), the U.S.’s eBay (38) and Canada’s Couche-Tard (41). Some electronics chains on this list, like Germany’s Ceconomy (31) that runs MediaMarkt stores, the U.S.’s Best Buy (33) and Netherlands-based Euronics International (50), are unlikely to move up to the next tier due to showrooming and new ways of consuming video and music entertainment. Ecommerce operators such as Z Holdings (49), formerly Yahoo Japan, and Korea’s Lotte Shopping (48) will also struggle to grow as some top tier retailers attack them in their home markets. We are already looking forward to seeing what happens to next year’s rankings. We hope you are too.
To qualify for this year’s rankings, companies had to meet several criteria. Both publicly and privately owned companies were considered, and the businesses reviewed between October and December 2019.
First, the company needed to be a retailer, defined as either a goods-for-consumer resale operation or a restaurant business open to the public. Second, the company must have direct selling operations in at least three countries, one of which must not be an adjacent territory to the retailer’s home country. Offshore tax havens, territories and protectorates are disqualified from consideration as a country. Third, when reviewing franchise operations, the company must hold the global license to franchise the store name in the majority of countries where the franchise operates.
The review process looked at three elements of business models, with international direct selling capabilities qualifying as the first point of review. Where reported, teams took the size of the company’s international retail sales for the most recent 52-week filing period, in the currency provided, and converted the figure to U.S. dollars. Exchange rates were converted using the rate the company published where published; otherwise, we used the exchange rate published by the Federal Reserve Bank for the fiscal period. Generally speaking, reviewed annual filings were published between March and September 2019.
The second point of review was company franchise sales, where they had granted other retailers the right to run the franchise. Where the franchise sales value was reported, often called total system-wide sales, we took this figure and applied the same currency exchange rate methodology as in the first review. When the system-wide sales were not reported, we took the values from the reports provided by area franchisees.
The third point of review was marketplace sales and sourcing alliances. Marketplace sales are those where the retailer provides the digital platform (website, mobile app or voice ordering system) and assists shoppers with delivery options but will allow a large number of sellers to list products on the platform. Many companies that operate marketplaces report gross merchandise value (GMV); where this was reported we took the number. In instances where it was not reported, we estimated the value based on daily website traffic and other metrics. When reviewing sourcing alliances — where two or more retailers purchase goods from a wholesaler together or create private label products together — we looked at the size of the partner retailers in the alliance.
After looking at all three elements, we created a points system giving the most points to retailers with international direct selling, a lower number of points to retailers with international area franchise agreements and a limited number of points to retailers using marketplaces or buying alliances to generate international scale.
Sources for this year’s reports included annual reports, public filings and press statements, as well as consumer research on shopping patterns. Much of this data is collected by a global team of analysts who work throughout the year on the estimates. This information is shared with subscribers to Kantar’s online platform for retail performance data, www.kantarretailIQ.com.