Loblaw Companies Ltd. the top-earning Canadian retailer in 2018

08 June 2018 Consulting.ca 5 min. read
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In a recent report on the global retailing landscape, Loblaw Companies Limited retains its position as Canada’s largest retailer. The Hudson’s Bay Company, however, has posted the highest year-over-year growth of the six Canadian retailers to crack Deloitte’s Top 250 Global Powers of Retailing.

In a retail environment where traditional brick-and-mortar firms like Sears are collapsing amid incursions from e-retailers, while dominant supermarkets compete on razor thin margins with discounters, consulting firm Deloitte has released its annual Global Powers of Retailing report. It identifies the 250 largest retailers in the world based on public data and highlights the most relevant retail trends.

Loblaw Companies Limited – which includes discount grocer No Frills, upscale grocer Loblaws, and fast fashion retailer Joe Fresh – remained the top earning retailer in Canada. The company dropped one spot to 30th place, posting FY2016 retail revenues of $34.24 billion.Canadian Retail HeavyweightsGrocery retailers Metro and Overwaitea (Save-On-Foods) also dropped slightly in their rankings. Metro dropped 3 spots to 101, with $9.65 billion in revenues, while Overwaitea barely made the ranking, dropping six spots to 249, with $3.621 in retail revenues. Grocery retailer Empire (Sobey’s, FreshCo) maintained its #53 ranking, with $18.07 billion in revenues.

Meanwhile, department store Hudson’s Bay was the strongest Canadian performer in the rankings, rising 27 spots to #87, and posting revenues of $10.97 billion. The firm’s growth was driven by its acquisitions of GALERIA Kauhof – a German department store – and Gilt Groupe, an online shopping and lifestyle website. Hudson’s Bay also experienced organic growth in the extension of Saks Fifth Avenue and Saks OFF 5th into Canada, as well as through its expansion into the Netherlands.

HBC’s stellar compound annual growth rate (CAGR) from FY2011-2016 (30.3%) made it the only Canadian firm to crack Deloitte’s 50 Fastest-growing retailers, coming in at number 8. Chinese e-retailers Vipshop and JD.com ranked first and third on the Fast 50 with 104% and 62% CAGR, respectively, while US grocer Albertsons came in second with 74% CAGR from 2011-2016.

Rounding out Canada’s entries into the Retail Top 250 was Canadian Tire, which rose one spot to #111, with $8.64 billion in retail revenues.

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Deloitte’s report identifies a number of key themes affecting Canadian retail, including e-commerce disruption, omnichannel opportunities, making unique store experiences, grafting new tech into retail, and expanding abroad.

Leading e-retailers like Amazon continue to disrupt the traditional retail model, actively forgoing short-term profit in order to expand their customer base. Traditional players are increasingly feeling the pain from nimble e-retailers, with Amazon’s Prime service seeing 80% year-over-year growth since 2013. Unprofitable stores are closing as more shopper go online – Sears, for example, closed its last stores in Canada in January of this year. In the US, a record total of 6,885 stores closed in 2017.

According to Deloitte, those who shop online, on mobile, and in-store are likely to spend more than double those who only shop at physical stores. As such, retailers are looking to expand across all channels to grab consumers. Notably, Amazon acquired Whole Foods to give it a bricks-and-mortar presence, giving it more than 450 physical pickup points in the US. In Canada, Whole Foods has lowered its prices and become an access point for Amazon products like the Echo and Kindle.

Retailers that were behind in terms of digital advancements are making up for lost time with partnerships. To offer home delivery, Loblaws recently partnered with Instacart. The home delivery service is already a partner with Kroger, Publix, and Aldi in the US. And grocery sales through e-commerce channels is growing, with a 30% jump in the last year – driven by huge demand in China and South Korea.

Though 90% of retail sales are still done through physical stores, retailers will have to increasingly create meaningful customer experiences in order to retain customers. Many stores are creating exciting ‘experiences’ in their stores, with added services beyond what would be available in an e-store. Some grocers, for example, are adding in-store health clinics and on-site nutritionists and dieticians.

Voice-controlled shopping powered by AI is further disrupting the traditional purchase path. Amazon holds a 68% share of the smart speaker market with its Echo line, and its AI assistant Alexa moved into Canada in August of last year. Alexa, however, is not yet available in French, which limits the technology’s penetration in Quebec.Top 10 retailers, FY2016Unmanned stores which leverage tech and automation are another ‘new frontier’ in retail shopping. Though in its early stages, stores like Amazon Go where consumers can self-scan items with a smartphone app and then use the phone to pay, all without interacting with humans, have the potential to take off.

Lastly, North American retailers have fairly low levels of globalization, with only 13.6% of FY2016 revenues coming from foreign operations. In contrast, 41% of European retailers revenues came from foreign operations. Deloitte surmises that Canadian retailers can look for growth opportunities abroad.

The Global Top 10

Unsurprisingly, Walmart was the top-grossing retailer in the world, with Costco and Kroger coming in at second and third, respectively. Schwarz Group, the parent company of German discount grocer Lidl came in at fourth, while German discount competitor Aldi ranked eighth. Amazon rose four positions to sixth place with 19.4% retail revenue growth – the highest figure among the top 10 retailers.