Agrokor's retail operations climbed 30 places on the list of largest world retailers


Agrokor’s retail position improved by 30 places and is now ranked 192nd out of 250 world’s largest retailers

Agrokor’s retail position improved by 30 places compared to last year’s list of the world's 250 largest retail chains and due to 4.809 million dollars of income generated in 2014, is now positioned as 192nd in the latest Deloitte report Global Powers of Retailing 2016. The leading 250 retail chains in the world have had income of USD 4,3 trillion in the fiscal year 2014, maintaining constant growth that was 4,3% in the previous year, which is clearly a positive sign for the entire sector that, not so long ago, in 2011, had a declining income. World retail image differs from one region to another, for example retailers in North America, Africa and Middle East achieved income increase, while the ones operating in Asia-Pacific, Europe and Latin America show a decline of income.

“The improved of position in 2014 is the result of Agrokor’s acquisition of Mercator Group which made us a leader in five regional markets as well as the entire retail market of southeast Europe. This successful acquisition was accomplished very efficiently in a truly short period of time, all according to world’s best practices and it generated significant synergy effects for our Group and employees as well as for our partners.” said Darko Knez, Executive Vice President for Retail Business Group in Agrokor and continued “This report also places a special focus on the influence that digital technology has on retail, another field in which Agrokor is the regional leader in implementing the best retail technology and innovation, such as smart shopping carts and cash registers, mobile applications, online sales under Konzum klik and the A007 platorm, as well as our MultiPlusCard loyalty program. We believe that all these things are a good foundation  for continual growth in the next period. At the same time we will continue, as we have so far, to work with dedication to preserve the position of the biggest, but also the best regional retailer in introducing new technologies and innovation, as well as global retail practices and creating added value for our shoppers.”

“Slower economic growth in several markets, lower inflation, drop in oil prices and strengthening of US dollar are components that influenced the dynamics of achieving various income by retailers in different regions.”, commented Marina Tonžetić, partner in Deloitte’s Croatian office. “For retailers in the USA, the strengthening of dollar represents a higher purchasing power of domestic consumers, and it also helped the economic growth and achieving higher employment. On the other hand, Chinese economy went through a significant decrease caused by a decline in exports and reduced investment intensity. Private expenditures stayed on the same levels,  and the luxury sector underperformed.”

Profit in the monitored regions also shows a discrepancy, mostly in the direction of declining. Report states that the leading 250 retail chains in 2014 had a 2,8% composite net income margin compared to 3,4% in 2013.

Influence of digital technology

The Deloitte report also emphasizes the influence of technology on brick-and-mortar stores and indicates rapid expansion of customer’s digital connectivity. Digital behavior and customer expectations are changing much faster making it difficult for retailers keep up which leads to digital gaps. The following trends were observed on this subject:
•             There is no unique formula for the application of digital technology. Even though every market is shifting to the adoption of digital technologies, the paths they are taking are somewhat different. For instance, some developing markets skip the introduction phases of using digital technologies that were previously experienced in developed markets.
•             There is no “one-size-fits-all” - Digital behavior of customers varies depending on demographic factors such as age and income level, but also depending on the type of searched products.
•             Customers demand more quality digital tools. Digital tools and channels can expand a retailer’s reach and increase income, but at the moment customers feel unsatisfied with existing digital offer of many retailers.

“There is a discrepancy between customer’s expectations and the current retailer offer related to the growing desire of customers to make digital a part of their shopping experience”, said Marina Tonžetić. “It is possible that some of the retailers underestimate the effects of digital technologies and some have recognized a true opportunity that should be seized.”

The “Global Powers of Retailing 2016: Navigating the new digital divide” study published by Deloitte Touche Tohmatsu Limited (Deloitte Global) shows 250 leading retail chains in the world by income and analyzes their position based on publicly available data for the fiscal year of 2014, and it includes companies that end their fiscal year in June 2015. Their success was analyzed according to geographic regions, primary product sector, activities in electronic trade and other factors. The report also makes an image of fifty largest retail chains in the world, the perspectives of world economy and analyses market capitalization in the retail sector.