Asian retailers are most optimistic about domestic consumer confidence, scoring an average of 2.8 on a sliding scale between -5 (very pessimistic) and 5 (very optimistic), according to a global retail research report by the World Retail Congress, following an international survey of 100 C-suite directors at retailers with an annual turnover of more than $1 billion, 60 percent of whom were the chairman, CEO, president or managing director.
On the contrary, Australia retailers are most pessimistic at -1.3 whilst, globally, the stark contrast between those that are more positive and those that are more negative creates an almost neutral industry index of -0.1. A gulf is developing in the global retail industry between retailers headquartered in Western Europe, North America and Australia and those in Asia, South America, Eastern Europe, Africa and the Middle East, with the former less optimistic about market conditions and more cautious than their counterparts.
By sector, leisure and grocery markets are the most confident, whilst convenience retailers and financial services are most pessimistic.
Across the sample, the total proportion of company retail sales coming from China is expected to double in the next three years from the current 2 percent to 4 percent. In keeping with this trend, China has also been identified by most of the retailers to have the biggest growth opportunities.
Western Europe is expected to account for a significantly lower proportion of company retail sales by 2014, and to tumble from the current 33 percent to 28 percent.
On an average, total international retail sales are expected to rise by 10.2 percent with 65 percent of those surveyed anticipating an increase of at least 10 percent. Only 6 percent of retailers expect total international retail sales to decline, whilst 29 percent expect them to remain static in the next three years.
Retailers in North America see the greatest growth potential from international retail sales at +22 percent, followed by those in Asia (+17 percent), Western Europe (+14 percent), South America (+10 percent), Australia (+8 percent) and the Middle East (+4 percent).
Despite the volatility of today’s financial markets, retailers are largely positive about the sector’s medium to long term prospects, expecting significant increases in their domestic market generally, business sales and net profit. In relation to short term prospects, Australian retailers are most gloomy, anticipating an overall market decline of 7.5 percent, and business sales and net profit down by 2.5 percent. Generally, retailers in Asia and South America are most positive, expecting strong growth across the board throughout the short, medium and long term.
Despite the rise in e-commerce, most retailers still expect traditional bricks and mortar to account for the greatest levels of sales growth in the next three years. With regards to international operations, 58 percent expect store-based activities to deliver the greatest levels of sales growth, compared to 48 percent domestically.
The global picture does, however, mask significant regional variations. Locally, retailers from Western Europe expect greatest growth to come from online (68 percent); North American retailers expect an even split between store-based activities (50 percent) and online (50 percent); Asian businesses anticipate a third of growth will come from stores, a third from online and a third from other sources. In South America, domestic growth is expected to be driven entirely from store-based business, whilst in the Middle East it is expected to account for 71 percent. In Australia, it is believed that 50 percent of growth will be driven by online sales.
For retailers in the Middle East, Asia and Australia, a similar pattern of growth is expected internationally. However, in South America, 50 percent of growth is anticipated to come from online as opposed to 0 percent domestically whilst, in North America, it is expected to account for a far lower proportion internationally (20 percent) than at home (50 percent).
The importance of store presence remains a theme throughout the research, with retailers in all regions expecting their store portfolio to grow substantially by 2015. Globally, 67 percent expect to have substantially more stores, 16 percent expect a smaller amount of growth and 12 percent believe that their presence will remain static, with just 5 percent believing that their store portfolio will be substantially lower.
More specifically, retailers in all regions with the exception of Australia expect their number of overseas stores to grow significantly in the next three years. A significant increase is anticipated from 61 percent of retailers, with 35 percent expecting their portfolio to remain around the same with no plans to expand or contract.
Retailers in all regions appear to concur on the anticipated levels of growth from online sales by 2015, with circa 10 percent expected across the board.
-IndiaRetailing Bureau
