The Consumer Goods Forum and Planet Retail launch landmark report revealing global trends in international trade
· International trade still plays a key role for leading grocery and health & beauty firms
· However, expansion rates are slowing as firms adopt more cautious approach
· Rate of internationalisation expected to pick up again by 2020
· Asia is the world’s fastest-growing region for local, regional and global investment
Paris, London 28 October, 2015 – The Internationalisation of Retail study, from the Consumer Goods Forum and Planet Retail, shows international trade still has an important role to play. It accounted for 35.3% of total sales for the top 10 players in 2014, a small increase on the figure for 2012. Internationalisation is continuing to be pushed by the largest players; the top 10 firms are seeing the largest increases in the average number of markets and international sales.
Selective international growth
Although international sales are growing, the evidence shows that the international expansion rates of the world’s leading retailers slowed in 2014. While the top 100 grocery and health & beauty retailers added an additional 61 markets between 2010 and 2012, only five net new markets were added between 2012 and 2014.
This suggests that leading companies have become more selective regarding their global portfolios. It has often been smaller markets that have been discarded, while focus on expansion in key overseas markets remains. Firms such as Carrefour and Tesco have both scaled back their international presence after going through a process of selling off non-core markets.
Global market trends
In terms of growth regions, the research shows a shift among the top 100 between 2010 and 2014. The overall trend is a move away from Western Europe, with Africa & Middle East, Central & Eastern Europe and Latin America all making the largest relative gains. Asia remains the world’s fastest-growing region; markets such as Indonesia, the Philippines and Vietnam are all registering real growth and attracting investment from local, regional and global players.
The report also identifies a new type of shopper, created by longer-term socio-demographic changes and advances in technology. Smaller households living in smaller homes, along with decreasing car ownership rates, have reduced the popularity of big weekly shopping trips to out-of-town hypermarkets. The reliance of many of the leading global grocers on these big-box channels has hit them hard over the past half-decade as consumers have shifted towards favouring smaller proximity formats (discount and convenience) and online.
Looking ahead to the next five years, the report suggests the rate of internationalisation will pick up. Not only will there be a rise in the average number of operational markets, but the percentage of sales derived from non-domestic markets will also rise. For the top 100 as a whole, the proportion of international market sales is predicted to grow from 24.4% in 2014 to 26.7% by 2020.
Peter Freedman, Managing Director of the Consumer Goods Forum said: “This report shows that FMCG retailers need to think globally if they’re going to grow and prosper. All global players realise that the traditional consumer experience is being transformed by technology. Retailers and manufacturers across the world need to work together and consider new markets so that they are able to reap the benefits of this new era for consumers.”
Robert Gregory, Global Research Director at Planet Retail said: “Although the retail landscape is facing unprecedented change, one thing remains constant - retailers are continuing to globalise and look beyond their home markets in search of future growth. We’re seeing signs that retailers are looking to go global through a more cautious and modest approach, with a greater degree of flexibility than before.”
The research was conducted by analysing the performance of the top 100 largest grocery and health & beauty retailers in 2014, as globally ranked by Retail Banner.
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About The Consumer Goods Forum
The Consumer Goods Forum (“the CGF”) is a global, parity-based industry network that is driven by its members to encourage the global adoption of practices and standards that serves the consumer goods industry worldwide. It brings together the CEOs and senior management of some 400 retailers, manufacturers, service providers, and other stakeholders across 70 countries, and it reflects the diversity of the industry in geography, size, product category and format. Its member companies have combined sales of EUR2.5 trillion and directly employ nearly 10 million people, with a further 90 million related jobs estimated along the value chain. It is governed by its Board of Directors, which comprises 50 manufacturer and retailer CEOs. For more, please visit: www.theconsumergoodsforum.com.
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About Planet Retail
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