Tesco has slipped from third to fourth place in the league table of the world’s biggest retailers, The Times has learnt.
According to a worldwide study by Deloitte Touche Tohmatsu, the accountants and business advisers, Britain’s biggest grocer has been overtaken by Metro, of Germany, best known in Britain as the owner of Makro, the cash-and-carry store.
The report, provided to The Times, also confirms that, although the world’s biggest retailers have all increased their sales in the past year, two thirds suffered a hit to profits, sacrificing margins to ensure that customers kept spending.
The news comes a day before Tesco is to update the City on trading in the crucial Christmas period. It is tipped to report like-for-like sales growth of about 3 per cent for its UK business for the six weeks to January 9. Some analysts are pressing for it to explain how an extra £100 million of vouchers for its Clubcard loyalty scheme, which were sent to members before Christmas, affected sales.
Ira Kalish, author of the Deloitte report, said: “This has been a tumultuous year for the global retail industry. Sales growth slowed and profitability fell, sharply for some.
“Many retailers ‘bought’ sales with heavy promotions which hit the bottom line hard. However, we are already seeing evidence that as economic recovery takes hold around the world, retailers should be able to return to a path of improving profitability.”
In the study period, companies’ fiscal 2008 years, ending in 2009, only retailers in the Middle East and Africa saw profitability rise. For the world’s top 250 retailers, sales grew by 5.5 per cent. Average profitability fell from 3.7 per cent to 2.4 per cent, with European retailers suffering the sharpest fall — from 4.1 per cent to 2.7 per cent.
Average profitability fell from 3.7 per cent to 2.4 per cent, with European retailers suffering the sharpest fall — from 4.1 per cent to 2.7 per cent.
Mr Kalish said that in Britain and America a “shift to value”, in which thriftier shoppers have eroded profit margins, would focus retailers’ minds on international expansion.
Apart from Tesco, British retailers in the top 50 include J Sainsbury (No 29), Wm Morrison (No 32) and Kingfisher (No 49), owner of the B&Q DIY chain. Marks & Spencer slipped from No 44 to No 51.
Mr Kalish said that Britain and the United States would endure a stilted recovery while consumers learnt to live within their means as they sought to repair household finances.
www.warren-knight.com thanks The Times