1. Analysis
December 2, 2021updated 24 Dec 2021 8:03am

Filings buzz in retail: 22% increase in digitalization mentions since Q2 of 2020

By Emil Filipov

Mentions of digitalization within the filings of companies in the retail sector were 22% higher in the second quarter of 2021 than in Q2 of 2020.

In total, the frequency of sentences related to digitalization between July 2020 and June 2021 was 169% higher than in 2016 when GlobalData, from whom our data for this article is taken, first began to track the key issues referred to in company filings.

When retail companies publish annual and quarterly reports, ESG reports and other filings, GlobalData analyses the text and identifies individual sentences that relate to disruptive forces facing companies in the coming years. Digitalization is one of these topics - companies that excel and invest in these areas are thought to be better prepared for the future business landscape and better equipped to survive unforeseen challenges.

To assess whether digitalization is featuring more in the summaries and strategies of retail companies, two measures were calculated. Firstly, we looked at the percentage of companies which have mentioned digitalization at least once in filings during the past twelve months - this was 85% compared to 67% in 2016. Secondly, we calculated the percentage of total analysed sentences that referred to digitalization.

Of the 50 biggest employers in the retail sector, Alibaba Group Holding Ltd was the company which referred to digitalization the most between July 2020 and June 2021. GlobalData identified 261 digitalization-related sentences in the China-based company's filings - 3.9% of all sentences. NIKE Inc mentioned digitalization the second most - the issue was referred to in 2.9% of sentences in the company's filings. Other top employers with high digitalization mentions included Nordstrom Inc, Macy's Inc and adidas AG.

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Across all retail companies the filing published in the second quarter of 2021 which exhibited the greatest focus on digitalization came from Lojas Americanas SA. Of the document's 1,108 sentences, 60 (5.4%) referred to digitalization.

This analysis provides an approximate indication of which companies are focusing on digitalization and how important the issue is considered within the retail sector, but it also has limitations and should be interpreted carefully. For example, a company mentioning digitalization more regularly is not necessarily proof that they are utilising new techniques or prioritising the issue, nor does it indicate whether the company's ventures into digitalization have been successes or failures.

In the last quarter, retail companies based in South America were most likely to mention digitalization with 1.88% of sentences in company filings referring to the issue. In contrast, companies with their headquarters in Africa mentioned digitalization in just 0.42% of sentences.