The global retail market will grow 4.8% to $6.7 trillion in 2020, according Kantar, the world’s leading research and consulting company. Kantar’s Retail IQ service, which tracks, analyses and forecasts the performance of 1,500 of the world’s biggest retailers, estimates global online sales will increase 15.7% in 2020 to reach $861 billion; accounting for 13.4% of retail sales, up from 12.1% in 2019 and just 6.8% in 2015. In 2020, at a regional level, N America is expected to grow 3.9% to $2.9 trillion with online sales representing 14% of total sales, while Europe is expected to growth 3.8% to $2.1 trillion, with 8% of sales online and APAC region growing 8.6% to $1.4 trillion with a world-leading 19% of sales through online channels.
In the subsequent five years to 2025, Kantar forecasts the global retail landscape will experience a compound annual growth rate (CAGR) of 5.0%, expanding to $8.6 trillion. Offline sales are expected to grow 3.5% CAGR to reach almost $7 trillion, while online sales are expected to achieve 13% CAGR, growing to $1.63 trillion, representing 13.6% share of the retail landscape by 2025.
Over the 2025 forecast period Kantar forecasts that Walmart will retain its crown as the world’s biggest retailer. Amazon will remain the world’s #2 retailer, although closing the gap substantially. China’s JD.com is forecast to be the remain the world’s fastest growing retailer, which will take it to #3 retailer in the world by 2025. Germany’s Aldi is forecast to climb from #9 on the global ranking to #6 by 2025. Kantar forecast that most of the world’s major international retailers will significantly increase the percentage of sales generated through online activity. Walmart is forecast to grow online sales to represent 10% of all revenue over the forecast period. Kroger and Home Depot are two other vendors where we forecast online revenue will represent 10% plus of total sales.
In apparel, the global market is expected to expand by $64 billion in sales by 2025. Five global retailers; Uniqlo owner Fast Retailing, TJX, Zara-owner, Inditex, H&M and Old Navy, are forecast to contribute almost half of the growth.
Behind the numbers, Kantar has identified seven macro-trends that will reshape the retail landscape in the first half of the new decade. To unlock growth retailers will need to remain relevant by constantly seeking ways to redefine commerce and creating seamless experiences across diverse channels. They’ll also need to establish more meaningful connections with consumers through effective use of data-driven insights. With consumers placing greater emphasis on sustainability, brands will also need to demonstrate they’re aligned with consumers’ values in authentic ways.
1. Asia is inspiring global retailers: With mobile-first, data-powered models, Asia’s digital retail landscape is inspiring global retailers to roll out new channel-less, online2offline initiatives. Growth potential is not limited to China, with India and Indonesia offering new opportunities, thanks to the spread of giants such as Alibaba, and innovative incumbent players such as Flipkart and on-demand retail models like Grab.
2. Cross-border – Opening up the world through unified practices: Cross-border trade is becoming a big topic for market regulators, with 2020 bringing more unified practices, particularly for ecommerce. While Alibaba and Amazon bring simplification, cross-border will disrupt pricing corridors, inventory management, and create grey areas in legislative frameworks.
3. Margins – Balancing growth with profitability calls for evolution in retail economics: Established retailers are under increasing pressure toadopt new financial models to allow for more resources and relevance, calling for a structural retail evolution. Margin continues to be a priority, but it is to be achieved through innovation, differentiation and new partnerships.
4. Visibility – Standing out from the crowd requires new mindsets and skillsets: The proliferation of touchpoints, inception moments and evolving retail economy makes it harder for brands to ensure visibility and show up in a consistent manner where the consumer expects to find them. Stores will evolve to reflect shopper desire for both simplification and engagement.
5. Accessibility – Exploiting everywhere being a sales and marketing opportunity: Retail seeks to inspire loyalty by creating solutions and building ecosystems that are in sync with new consumer lifestyles. As these evolve to create seamless online-offline connections, they enable better decision-making, boost speed, and automate shopping.
6. Purpose – Resonating with consumers’ values in genuine ways: Retail is no more just about business but about vision. Shoppers, especially centennials, want to push for social change and find purpose. A demand from consumers and a requirement by investors influence relationships with suppliers, communications with shoppers, and trade execution.
7. Relevance – Embracing algorithmic retail to connect with consumers: Algorithmic retailing will infuse activities at every channel, creating constant connection with shoppers. For brands, this is a great opportunity to leverage retailer platforms to activate new purchasing moments, both physical and digital.
Malcolm Pinkerton, vice president retail IQ, commented: “As we progress into this new decade omnichannel will fast become mainstream, with emerging markets setting the pace of change. Designing for missions and occasions, not channels and touchpoints, will define the winners. Recognising ‘everywhere’ is now a sales and marketing opportunity and that being accessible at each one, will be essential to unlocking growth.”
Derya Guvenc, principal analyst, Retail I, commented: “Retailer business models will come under intense pressure to transform, as the need for agility and innovation intensifies to accommodate consumer expectations. To adapt, brands should drive for total value chain approach to category planning and assortment management for ‘total customer growth’. While efficiency and profitability are high on the agenda, enhancing sustainability credentials must be a near-term priority for brands if they’re to remain on consumers’ preference list.”