Sky-high inflation, interest rate hikes and increased recession fears changed the consumer behavior resulting in excess inventory. Consequently, the global top 25 retailers by market capitalization (MCap) witnessed a 1.3% ($40bn) quarter-on-quarter decline in their cumulative MCap from $3.37 trillion in Q3 2022 to $ 3.33 trillion in Q4 2022, reveals GlobalData, a leading data and analytics company.

Amazon, Costco, CVS Health and Avenue Supermarts were the only companies in the top 25 to report a significant drop in their MCap in Q4 2022, whereas Nike, Ross Stores, Pinduoduo, etc, gained considerably.

Ragupathy Jayaraman, Business Fundamentals Analyst at GlobalData, comments: “The global retail industry is facing headwinds in the form of interest rate hikes and inflationary pressures. Increasing inventories and supply chain risks are also casting doubt on the growth prospects of the sector. Contrarily, the retail industry is looking towards changing trends such as omnichannel shopping, social commerce, and technological innovation.”

Amazon lost $294.3 billion in Q4 2022 compared to previous quarter, its biggest decline in almost two decades. The company’s performance was impacted by various factors such as supply chain issues, the war in Ukraine, higher costs. Consumers’ growing preference to in store (offline) shopping also impacted most of the e-commerce retailers overall.

Nike was the biggest gainer in the top 25 global retail stocks with a 40.4% Q-o-Q growth in Q4 2022. Its valuation increased by more than $50 billion in the quarter, thanks to the improved economic outlook in the US, and the relaxation of zero COVID-19 policy in China. In the next few quarters, the company anticipates a bump in sales in China, its key growth market.

Jayaraman concludes: “Retail giants Ross Stores, TJX, Pinduoduo and Inditex reported more than 25% growth in their market cap in Q4. More than 80% of the top 25 global retailers reported a growth in their valuation. Although home improvement projects dwindled in the US, Home Depot was able to post a 14% Q-o-Q growth in valuation in Q4 2022. Alibaba reported more than 10% growth in its valuation in Q4 2022, thanks to its cost optimization initiatives and improved operating efficiency.”