LONDON/WASHINGTON: The retail sector is facing the dual challenge of consumers cutting their expenditure and the rise of heavy discounters, but these trends also offer some opportunities to those companies with the size, flexibility and financial muscle to react accordingly.
While advanced markets such as the US and Western Europe are forecast to see the biggest declines in consumer expenditure levels, the world's five biggest retailers are also increasing their presence in fast-growing markets, but even here it seems the outlook is somewhat mixed.
Wal-Mart has been one of the few beneficiaries of the current downturn, and sales in its home market of the US rose by 3.8% in the first quarter of this year to $61.2 billion (€43.7bn; £38.5bn) overall.
Mike Duke, its president/ceo, argued the company is "building our brand by reducing costs, sharpening our merchandising and updating our stores."
He added that "customers trust Wal-Mart," and "as a result of the increasing shift to value, they have long-term loyalty to the Wal-Mart brand because we save them money."
However, the firm's international sales declined by 11.1%, to $21.2bn, hampered in particular by a downturn in China.
Carrefour, the hypermarket group, saw its total sales fall by 2.8%, to €22.7bn, with French revenues down 5.1% to €9.5bn, including a slide of 7.2% in "hard discount" sales.
Revenues also declined in Spain, Italy, Belgium, Poland, Turkey and Greece, while Latin American sales posted an uplift of 3.2% to €2.9bn, and Asia enjoyed an uplift of 14.7% to €2.1bn.
Within this, like-for-like sales actually fell in China, Taiwan and Indonesia, meaning growth was boosted by expansion and favourable currency exchange.
Tesco, the UK-based supermarket chain, saw its sales rise 13.4% for the year to March, with underlying profits increasing by 10% in all.
According to its ceo, Terry Leahy, this was because of the company "lowering prices, introducing more affordable products and offering even sharper promotions."
Profits in Asia rose 17.9% to £355m, by 24.9%, to £496m, in Europe, and by 12.7% to £2.4bn in the UK.
By contrast, its US arm, Fresh & Easy, recorded a loss of £142m, and not only were "lower than anticipated," with but Tesco has now slowed the roll-out of the new format in America.
Metro Group saw Metro Cash & Carry sales fall 6.4% to €7.0bn, with declines of 5.3% in Germany, 5.8% in Western Europe and 11.6% in Eastern Europe, and growth of 16.2% in Asia, to €612m.
Revenues through its 437 Real stores in Germany and Eastern Europe declined 4.9% to $2.6bn, and its department store chain Galeria Kauhof was down 3.8% to €792m.
However, its consumer electronics arm Media Market and Saturn did register an improvement of 10.5% to €4.6bn on an annual basis.
Overall, it seems that the diverse operations of the world's biggest retailers are not insulating them from some of the impacts of the downturn, but are affording them the ability to cut costs and build loyalty among consumers.
Whether this relationship will last beyond the current downturn, however, is open to question.
Data sourced from company reports; additional content by WARC staff