In general, the FTSE 100 presents Marketplace either as a spread in the report that covers the Marketplace information for the whole company (Group-wide) or as separate sections in the report for each of the markets the company operates in and having a few paragraphs of Marketplace information within each of those sections (sector-specific).
Out of the FTSE 100 reports, 23 have no Marketplace, 7 have multiple sector-specific Marketplace sections, 69 have a Group-wide Marketplace section and one report has both Group-wide and sector-specific Marketplace sections, those 70 companies discussing a Group-wide Marketplace will be our focus.
An average Group-wide Marketplace section discusses trends in the company’s markets, backed up by data. Some of the Marketplace spreads are not contained in the contents page as they are part of another section, such as Performance or Chief Executive’s Review, however this is not ideal as it means that the navigability to this section is reduced. Marketplace sections that don’t include discussion of trends mainly discuss the size of the markets the company operates in and the growth opportunities in those markets. The inclusion of third-party data is important because it brings an element of objectivity to the discussion.
- 90% of the reports had the Marketplace section in the contents page.
- 94% discuss trends.
- 90% cover sector-specific trends.
- 70% cover macroeconomic trends.
- 59% include third-party data.
Taking this a step further, an exceptional Group-wide Marketplace section not only includes trends with data, but information about the competitive landscape and an explanation of how the company is responding strategically to the trends. Case studies can showcase specific examples of how the company is responding to market trends, rather than the broad response given by strategic aims. In the Unilever 2014 Annual Report, a case study is included in the Marketplace section which details Unilever’s response to the trend of advertising moving to digital platforms.
- 30% include information about competitors, with 13% naming competitors in their field.
- 26% include spreads that signpost to other sections. The most common section to be signposted to is Strategy which occurs in 33% of these reports.
- 13% consistently give strategic response to trends.
- 10% include market share of the company.
- 10% have case studies.
- None of the reports explicitly talk about their key differentiators, which are aspects of the company that make them distinct from their competitors.
Looking forward to the 2016 reporting season, we hope to see a greater percentage of reports with a Marketplace section. The Marketplace is a valuable part of an Annual Report. It is a chance to demonstrate that the company is aware of what is going on in its operating environment, which could reassure an investor that the company is going to keep up with trends and not fall behind the competition. This is especially true if there is a strong connection in the report between Marketplace information and the other aspects of the company, such as strategy and business model. For this reason, we would also like to see a greater number of reports with signposting and a strategic response to trends in their Marketplace section.
If you are interested in producing an exceptional Marketplace section in your next Annual Report and want to know how our consultancy can help you achieve that, get in touch.