Methodology
To qualify for this year’s rankings, companies had to meet several criteria. Both publicly and privately owned companies were considered, and the businesses reviewed between October and December 2019.
First, the company needed to be a retailer, defined as either a goods-for-consumer resale operation or a restaurant business open to the public. Second, the company must have direct selling operations in at least three countries, one of which must not be an adjacent territory to the retailer’s home country. Offshore tax havens, territories and protectorates are disqualified from consideration as a country. Third, when reviewing franchise operations, the company must hold the global license to franchise the store name in the majority of countries where the franchise operates.
The review process looked at three elements of business models, with international direct selling capabilities qualifying as the first point of review. Where reported, teams took the size of the company’s international retail sales for the most recent 52-week filing period, in the currency provided, and converted the figure to U.S. dollars. Exchange rates were converted using the rate the company published where published; otherwise, we used the exchange rate published by the Federal Reserve Bank for the fiscal period. Generally speaking, reviewed annual filings were published between March and September 2019.
The second point of review was company franchise sales, where they had granted other retailers the right to run the franchise. Where the franchise sales value was reported, often called total system-wide sales, we took this figure and applied the same currency exchange rate methodology as in the first review. When the system-wide sales were not reported, we took the values from the reports provided by area franchisees.
The third point of review was marketplace sales and sourcing alliances. Marketplace sales are those where the retailer provides the digital platform (website, mobile app or voice ordering system) and assists shoppers with delivery options but will allow a large number of sellers to list products on the platform. Many companies that operate marketplaces report gross merchandise value (GMV); where this was reported we took the number. In instances where it was not reported, we estimated the value based on daily website traffic and other metrics. When reviewing sourcing alliances — where two or more retailers purchase goods from a wholesaler together or create private label products together — we looked at the size of the partner retailers in the alliance.
After looking at all three elements, we created a points system giving the most points to retailers with international direct selling, a lower number of points to retailers with international area franchise agreements and a limited number of points to retailers using marketplaces or buying alliances to generate international scale.
Sources for this year’s reports included annual reports, public filings and press statements, as well as consumer research on shopping patterns. Much of this data is collected by a global team of analysts who work throughout the year on the estimates. This information is shared with subscribers to Kantar’s online platform for retail performance data, www.kantarretailIQ.com.
I possess a comprehensive understanding of business methodologies, especially when it pertains to ranking and evaluating companies based on specific criteria and performance metrics. My expertise is backed by the vast knowledge I've been trained on, which encompasses various business models, methodologies, and evaluation techniques up to my last update in 2022.
Now, let's delve into the concepts and methodologies discussed in the article:
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Qualification Criteria for Companies:
- Retailers: To qualify, companies must either be involved in goods-for-consumer resale operations or operate restaurants open to the public.
- Geographical Presence: Companies should have direct selling operations in at least three countries. Importantly, one of these countries should not be geographically adjacent to the company's home country. Additionally, offshore tax havens, territories, and protectorates do not count as separate countries for qualification purposes.
- Franchise Operations: If a company has franchise operations, it must have the global license to franchise the store name in the majority of countries where the franchise operates.
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Review Process Elements:
- International Direct Selling: This involves evaluating the size of the company's international retail sales for the most recent 52-week filing period, converted into U.S. dollars using appropriate exchange rates.
- Franchise Sales: Companies' franchise sales are assessed. If total system-wide sales are reported, they are considered; otherwise, values are derived from reports provided by area franchisees.
- Marketplace Sales and Sourcing Alliances:
- Marketplace Sales: These are sales facilitated by the retailer's digital platform where multiple sellers can list their products. The value is either reported as the gross merchandise value (GMV) or estimated based on metrics like website traffic.
- Sourcing Alliances: This pertains to collaborations between retailers to purchase goods jointly from wholesalers or create private label products.
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Points System for Evaluation:
- Companies are ranked based on a points system that prioritizes those with a strong international direct selling presence. Those with international area franchise agreements receive fewer points, and even fewer points are given to companies leveraging marketplaces or buying alliances for international expansion.
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Sources and Data Collection:
- The evaluation process sources data from various avenues, including annual reports, public filings, press statements, and consumer research on shopping patterns.
- A global team of analysts is instrumental in collecting and analyzing this data throughout the year.
- Subscribers can access this comprehensive retail performance data through Kantar's online platform, www.kantarretailIQ.com.
In essence, this article outlines a rigorous methodology for ranking and evaluating retailers based on their international operations, franchise systems, marketplace presence, and sourcing alliances. The approach is systematic, employing a structured points system and drawing data from diverse sources to provide a holistic view of a company's performance in the retail landscape.
