Wesfarmers has overtaken Woolworths to become the 21st largest retailer in the world by revenue, making it the largest Australian-owned retailer in the country, according to figures released by Deloitte.
According to Deloitte’s 2017 Global Powers of Retailing Report, the contrasting performance of both Australian retail giants in the hardware sector, highlighted by the closure of Masters, caused Woolworths to drop to rank 23 globally, whereas the success of Bunnings propelled Wesfarmers up two ranks.
Every year, the report highlights the 250 largest retailers in the world. Walmart remains top of the global rankings, with an estimated $480 billion in revenue. On the opposite end of the scale were this year’s newcomers, which included PETCO and American Eagle Outfitters.
Woolworths and Wesfarmers remain the only two Australian-owned and operated retailers on the list, but are part of a wider community of 39 top 250 operators Down Under.
“With just 16 per cent of the top 250 retailers globally operating in Australia, and US-based retailers making up nearly 50 per cent of that total, we can expect more new global retailers to bring their operations to our shores in 2017,” said David White, national leader of Deloitte’s Retail, Wholesale and Distribution Group.
“New entrants, coupled with the threat of Amazon, should make for another fascinating year for Australian retail.”
White said, however, Australian retailers are slowly fighting back, with investments in store design, concept and flagship stores on the rise.
“So these new entrants will find Australian retailers better prepared and skilled to take on this new challenge compared to five years ago,” he said.
The total number of the top 250 operating in Australia remains at 39, the same as last year. Another four have entered the Australian market, while four still operating in Australia are no longer in the Top 250.
The new entrants include: American retailer, The TJX Companies Inc., entered the Australian market via the opportunist acquisition of Trade Secret, which operates 35 stores in Australia; UK department stores, John Lewis and Debenhams, which joined forces with established operators – Myer and Harris Scarfe – in Australia; French leisure good retailer Décathlon, which has yet to have a significant impact on the Australian market.
“While Australia is not a huge market for either John Lewis or Debenhams, the move allows them to, initially at least, expand internationally into a stable market on a relatively small scale,” White said.
He said one of the key differentiators international retailers have brought to Australia is in their store design and customer experience model, leveraging their experience from larger markets. He said their report also indicates more Australians may expand overseas this year.
“In 2016, we started to see more Australian retailers expand their own operations into the US, Europe and Asia-Pacific, but the numbers are still relatively small,” he said. “With competition in the domestic market threatening saturation in certain categories, we can expect to see more Australian retailers take a leap of faith into overseas markets in 2017.”