Projections show that the global retail market will decline in 2020 due to the COVID-19 pandemic. However, the market is expected to recover in 2021. The market is still dominated by physical retail stores although online stores are witnessing a high growth rate. Seven of the top 10 largest retailers in the globe are situated in the United States. The United States is the largest retail market in the globe. Asia Pacific market is expected to witness the fastest growth rate between 2020 and 2025.
Total Global Spend
- A report by OBERLO indicates that between 2017 and 2023, the global retail spending will increase from $22.975 trillion to $29.763 trillion.
- Another report by Research and Markets shows that the global retail market will decline from $2,1821.4 billion in 2019 to $21,622.6 billion in 2020 due to the economic slowdown occasioned by COVID-19 pandemic.
- However, the market is expected to recover and grow at a compound annual growth rate of 5% between 2021 and 2023 to reach $25,122.2 billion.
Online vs Brick-and-Mortar
- Online retail sales are on the rise as shown by the recent statistics. In 2014, the online retail market was worth $1.34 trillion. By 2018, the market’s value was already $2.84 trillion.
- In 2020, the forecasted revenue from online retail is $4 trillion. By 2021, the market is anticipated to reach $4.88 trillion.
- In 2019, the global brick-and-mortar or in-store retail channel made sales worth $21.7 trillion. The total global retail sales for the same year totaled $25 trillion.
- In the same year, the total global online sales totaled $3.53 trillion. Total online retail revenues are projected to reach $6.54 trillion by 2022.
- Thus, despite the continued growth and popularity of online retail channels, physical stores remain a vital part of retail shopping.
- Other statistics show that 73% of consumers shop using multiple channels. According to Salesforce, 87% of consumers started their purchase journey online in 2018. The report also shows that consumers of all ages including 58% of Gen Z and 62% of Baby Boomers prefer shopping from physical stores.
- According to National Retail Federation, the number of physical retail stores in the US increased by almost 3,100 stores between 2017 and 2018. Such statistics indicate that physical retail stores are not being phased out.
Large vs SMB
- The top 10 largest retailers are Walmart, Costco, Amazon, Schwartz Group, The Kroger Co., Walgreens Boots Alliance, Inc., The Home Depot, Inc., Aldi, CVS Health Corporation, and Tesco PLC.
- For 2018, Walmart accumulated $515,405 in revenue, which was a 2.8% growth from the previous year.
- Amazon remains the largest online retailer in the globe.
- The top 250 retailers in the globe have demonstrated remarkable stability in the recent past. For year 2018, the average revenue of the top 250 retailers was $19.0 billion. 55 companies from the list reported revenue higher than the top 250 average.
- Most of the top 250 companies (88) are located in Europe. 84 companies are located in North America with 77 being in the United States.
- On average, SMB retailers have a monthly revenue $22,358.88. SMBs from Australia and New Zealand make more than the average monthly revenue with $26,395 and $26,475, respectively.
- North American SMB retailers made $22,430 while the UK-based SMBs made $19,223 per store.
- The average gross margin of SMB retailers is 50.96%. Beverage SMBs post the highest margins with 60.68% followed by cosmetic stores with 57.95% and jewelry with 56.80%.
- The average transaction value in a typical SMB retail is $53.98.
Capex vs Opex
- The average capital expenditure growth in the global retail sector is 9.37%. The highest growth was recorded in the third quarter 2019 with a growth rate of 106.96%.
- The lowest was recorded in the fourth quarter 2016 at a rate of -40.75%.
- In 2020, the retail sector faced a -27.65% contraction in capital expenditure in cumulative twelve months ending third quarter 2020.
- In the third quarter 2020 year-on-year, the sector experienced a capital expenditure contraction of -4.66%.
- With regard to opex, marketing expenses account for 10% of the retail price. Payroll takes 18%, rent 15%, and 3% transportation.
- According to Retail Global Market Report 2020-30, the Asia Pacific region was the largest accounting for 34% of the total market in 2019. The second was North America with 29%. The Middle East region was the smallest.
- According to Statista, the United States is the leading retail market in the globe with sales of over $5 trillion. The market is dominated by the world’s largest retailers such as Walmart, Amazon, and Costco.
- Out of the top 10 global retailers in 2018, 7 were located in the United States. 6 of them had a revenue of over $100 billion.
- The European retail market is also dominated by a few retailers. Tesco, Schwarz Group, Aldi, and Carrefour are the top players. Between 2013–2018, the European retailers experienced a CAGR in revenue of 4.6%.
- According to Mordor Intelligence report, the Asia Pacific market is anticipated to experience the fastest growth rate in the retail sector between 2020 and 2025 fueled by rising population, robust economic growth, shifting consumer trend, and penetration of international companies.
- In 2019, the Asia Pacific market recorded $5.5 trillion retailing sales.
- According to Euromonior, although the region is forecasted to witness a 1.5% sales decline in 2020 due to COVID-19, it is expected to recover the fastest with a projected 6% growth in 2021.
- E-commerce in Asia pacific will be the key driver with a projected growth of 8.8% between 2020 and 2024.