consumer and retail m&a dealsconsumer and retail m&a deals

Personal care A healthy deal pipeline To see claims translate into actual sales was gratifying. They learned that rapidly evolving consumer preferences require more effective analytics and tools to build loyalty. Theres been inflation, fears of a recession, companies cutting back, layoffs in the market. So far, we see some resilience, but will that hold up? While uncertainty over COVID-19 remains, we expect investments to continue to rally in a market that has adapted to pandemic conditions and is prepared for any surge in variant virus cases. Beyond macroeconomic trends, organizations must reflect internally and define how planned M&A in retail (including strategic partnerships) fits with their value proposition and long-term strategic goals. Please enable JavaScript to view the site. The premise is that you have to be doing things more right; you have to be investing in sustainable products, organic products, fair-trade laborthe list goes on. I want it to be easy. Sherry Frey: Another question thats come up is specifically from medium-size brands wondering, What do we do? With an eye on the future, offline retailers are constantly shifting to online commerce, with their online retailers expanding in the other direction into bricks and mortar. Were finding that companies are doing quite a lot on the sustainability front but arent making those claims on their packaging. Thats what a lot of our conversations have been about: not overall spending but what is going on within my categorysay, salty snacks or carbonated beverages. Enabling shoppable tags with product information, embedding the brand website into the social media app, and enabling in-app transactions can help reduce friction on the shopping journey. KPMG retail executive outlook | 2022 Holiday shopping report. Sherry Frey: I agree. These KPMG reports help companies understand consumers, uncover the signals of permanent change and create a basis for transforming business to meet customer demands. Monica Toriello: If youre standing in a grocery store aisle and you see a product that claims to be good for the planet or good for society, are you more likely to buy that product? Technology is the other major influence, opening up varied opportunities to snap up e-commerce targets with direct-to-consumer channels. Perspectives Retail and consumer products trends: The battle for customer loyalty Empowered consumers are shaping the future of retail As retail markets continue to face plenty of external pressures, the battle for customer loyalty among a more empowered consumer base is starting to heat up. Retail Customer definition and meaning - Define Retail Customer The confluence of obstacles retailers face can make the next steps daunting. European and American players are expected to be most active, driving multiple cross-border transactions and merger propositions - although supply chain disruption is making valuation trickier and delaying deal completion. +1 617-988-1474. Get the latest KPMG thought leadership directly to your individual personalized dashboard, Partner, Global Deal Advisory Consumer & Retail Lead, Global C&R M&A outlook 2022: Sector analysis, View Print friendly version of this article Opens in a new window. The respondents included C-suite and senior executives who were directly responsible or exerted significant influence on major strategic initiatives in their organizations. In Q321, we observed several major trends in C&R deal making: In this quarterly report we unpack the trends across each of the sectors as well as deep dives on key areas, including: Download the full report to uncover what is happening in these dynamic industries, how deals are being done todayand why. Expect to see increased investment in functional, healthy beverages, consolidation of direct-to-consumer platforms. We predict another solid year for food retail M&A, with continued investment in technology to optimize performance across the value chain. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. We find that about 5 percent of consumers are, like, I dont care or Im not doing anything because its too overwhelming to do anything. But 95 percent of consumers are on a spectrum, from people who are highly passionate and really educated to people who are just trying to do better day in and day outand that is across all demographics. Private equity is playing an ever-increasing role in the market. See Terms of Use for more information. The reshaping of food and beverage consumption. Environmental, social and governance (ESG) has become an ever bigger driver, whether it's healthy eating, plant-based ingredients, sustainable supply chains or ethical workforce practices. Steve Noble: When we looked at the question of, Is this disproportionately driven by one or more demographic groups? the answer was generally no. That doesnt mean every one of those products is going to drive incremental growth, but we believe that on average they will. PE firms are expected to stay bullish about consumer sector prospects, focusing on companies that navigated the choppy waters of COVID-19 and emerged in strong Shape. Increasingly, nothing beats a move to just DO SOMETHING! We can walk in your shoes because we have been in your shoes. Sherry Frey: Consumers are being exposed to so many more claims on packaging than ever before. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. As a result of these disruptions, consumers have reprioritized what matters to them, and are seeking shopping experiences and products that cater to their new needs. Marks & Spencer has been accused of "snubbing" elderly customers by forcing them to use touch screens to order in automated cafes. Expect a robust M&A market driven by personalization, environmental sustainability and innovation. The overarching key themes of 2022 are divided into digital and . When it became clear that consumer purchasing was altered by the pandemic, these proactive players with agile delivery models and enhanced digital capabilities thrived. Moving slowly - M&A trends in consumer and retail Q1'23 - KPMG An Article Titled M&A in retail already exists in Saved items. Sometimes theyre not participating in a meaningful way. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. What were the most significant impacts in the consumer and retail deal market in 2021? KPMG International entities provide no services to clients. There was a time when many people thought of a green product as a less effective product. 7 US Census Bureau, E-Commerce Retail Sales as a Percent of Total Sales [ECOMPCTSA], retrieved from FRED, Federal Reserve Bank of St. Louis. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. 8Bureau of Labor Statistics, Establishment Survey, sourced through Haver Analytics, accessed November 2022. He said theyd tracked a series of sustainability attributes on a set of products, and those product cohorts continued to grow quarter over quarter through the financial crisis and that recessionary period, even as the overall business struggled. Subscribe to KPMG Consumer & Retail Insights for perspectives on these challenges, as well as timely research, analysis, and events to help today's dynamic executives track trends and navigate change. Learn more about how an innovative benefits program can help your company simultaneously secure top talent and control costs. Do consumers pay attention to sustainability claims? This means theyre effectively leaving opportunity to drive ESG-led impact on the table. FTC Announces $30 Million of Settlements in Amazon 'Privacy\\ C&R M&A Outlook 2021: China - KPMG Global Hot topics include anticipated spend, social media, metaverse, and apparel. Fullwidth SCC. I think the evidence points to the fact that leaning into sustainability is a great long-term bet for success. Consumer & Retail CEOs take on the challenge of managing the new reality. 8How Leaders Shape the Future by Overcoming Fatal Human Flaws. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. I encourage our listeners to look up the report on McKinsey.com: Consumers care about sustainabilityand back it up with their wallets. There are so many interesting and detailed insights in your report. We know that consumers are saying, I want it on the package; thats where I learn about a brand. While there was a small decline in the number of deals in Q321, deal value grew 10.1 percent Q-o-Q over Q221. This box/component contains JavaScript that is needed on this page. For more detail about our structure please visithttps://kpmg.com/governance. This message will not be visible when page is activated. What are some on-the-ground things that need to happen for companies to benefit from some of the findings in your report? 5 Charlsy Panzino and Chris Hudgins, Retail market: Surprise sales jump in August; 4 new bankruptcies, S&P Global Market Intelligence, September 20, 2021. The Consumer & Retail market is changing faster and in far greater ways than ever before; KPMG Elevate can help. KPMG International provides no client services. Buyers are focusing on health, sustainability and e-commerce, while leisure and hospitality are recovering, and pet care is a rising star. Steve Noble: Thank you, Monica. When youre customer-driven and technology-enabled, good things happen. Those conversations have been quite interesting. Dollar General's typical consumer "is under greater pressure than we have seen in quite some time," CEO Jeffrey Owen said on the company's first-quarter earnings call on Thursday. We help consumer and retail companies, from small start-ups to large multinational operations, navigate the changing marketplace and improve top- and bottom-line results. Stifel Institutional | Consumer & Retail Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. 1 Larry Hitchcock, Steve Maddox, and Adam Whiting, A new formula for retail recovery and growth: The five paths to profitability, Deloitte, 2020. Explore key, emerging themes around consumer behaviors, purchasing patterns and overall consumer sentiment. We expect brand owners to seek acquisitions that enhance technology platforms, appeal to younger customers, offer direct-to-consumer channels, and make portfolios more sustainable. 7 A relatively healthy labor market will, however, continue to boost sales. 3Shelley E. Kohan, Happy Returns locations expand to over 5,000 with Ulta Beauty return bars, Forbes, March 28, 2022. Shashi is a principal in Deloitte Consulting LLP's M&A and Restructuring practice and also leads Deloitte's Consumer Business M&A Consultative Services practice. Massive demand fluctuations during the pandemic forced retailers to rethink archaic systems in favor of more pliable operations. Change can be good, but constant change can be daunting. Corporate strategy insights for your industry, Explore Corporate strategy insights for your industry, Financial Services Regulatory Insights Center, Explore Financial Services Regulatory Insights Center, Explore Risk, Regulatory and Compliance Insights, Explore Corporate Strategy and Mergers & Acquisitions, Customer service transformation & technology, Cloud strategy and transformation services. How does this play out in a recession? The data doesnt cover a recessionary period, but there are a couple of anecdotes that have been interesting for me. as digital capabilities and consumer centricity. Meanwhile, total consumer debt has hit a record $17 trillion in the first quarter this year, the New York Federal Reserve reported . Consumer & retail: Digital disruptors - KPMG It shouldnt be in a cone of silence. Australia inflation picks up to 6.8% in April, above forecasts The majority of transactions completed by our Consumer team are for privately-owned businesses accessing long . All rights reserved. In response to supply chain disruption, companies are protecting the core business and spinning-off/carving-out non-core assets and niche brands offering opportunities for acquirers. Capstone Partners' Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer industry. Vinit Doshi: Thank you so much, Monica. Learn how your organization can help drive future profitability by ensuring the consumer experience is at the heart of investments. 4 Ben Unglesbee, Retail defaults to declinebut will still be high: Moodys, Retail Dive, April 8, 2021. After an outstanding 2020, home care M&A returned to normal levels in 2021, with a decline of 19 percent in deal volume. We see some companies in which sustainability is built into just 1 or 2 percent of their products. 6All data is from United States government agencies. Through our deep experience in the industry, we have witnessed first-hand the overwhelming disruptions and challenges facing consumer and retail companies today. Consumer goods companies that understand how risks interconnect will have greater resilience, drive value and increase stakeholder trust. Get the latest KPMG thought leadership directly to your individual personalized dashboard, Partner, Global Deal Advisory Consumer & Retail Lead, Global Consumer and Retail M&A outlook 2022, Download a PDF version of this article Opens in a new window, View Print friendly version of this article Opens in a new window. Buyers are focusing on health, sustainability and e-commerce, while leisure and hospitality are recovering, and pet care is a rising star. To maximize value, CEOs can borrow from the activists playbook. It polled a sample of 50 retail industry executives, of which 70% were from companies with annual revenues of $10 billion or more. An uncertain economic environment, lingering geopolitical risks, and new regulatory demands are poised to challenge consumer and retail (C&R) boards in their oversight and governance. An individual with total assets that do not exceed $10 million, or $5 million if the individual is entering into an agreement, contract, or transaction to manage risk, would be considered a retail customer. High supply chain costs make co-manufacturers more vulnerable to acquisition. Direct-to-consumer has grown exponentially but should return to normalcy in 2022. We found that inflationary impacts arent affecting sustainability the way theyre affecting some of the other wellness-related characteristics. M&A in C&R fell dramatically in the second half of 2022, as inflation, interest hikes, and concern about the contours of a recession weighed on the industry. Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose 6.8% in the year to April, compared with 6.3% in the previous month and market . Technology is a driving force for M&A, with buyers seeking e-commerce and new business models. In 2021, food and beverage (both brand owners and retailers) saw high M&A activity, on the back of the health & wellness boom. The rise of e-commerce calls for new digital demand-planning techniques in consumer and retail. Our hypothesis would be that outperformance in a reasonably strong economy will likely hold up in a recessionary environment. Leading discretionary retailers were already investing significantly in innovation before COVID-19. Retail is one of the sectors most affected by COVID-19, in both positive and negative ways. The United States, the UK and China have been the largest drivers of deal volumes this past year, with most deals happening in the retail subsector. Monica, you mentioned what a massive undertaking this [report] was. A&M Consumer and Retail Group | About the Firm - Management Consulted It varies quite a lot by category, as you would have seen in the research. Sherry Frey: Its been fascinating as weve taken this research out to clients and talked to different sustainability officers and asked, Where do you sit within the organization? Were finding every kind of answer: some sit under innovation, some report directly to the C-suite. Chamberlain Coffee raises $7m to launches into retail with RTD options A&M Consumer and Retail Group Updated November 15, 2021 The A&M CRG - what the heck is it? Principal, Deal Advisory and Strategy, KPMG LLP. Exceptional organizations are led by a purpose. Welcome to the podcast. The retailers proved that they could move with speed and conviction to activate digital investments and put their downside scenario plans into action, ultimately positioning them to weather the storm., On the other hand, lagging retailers who were surviving quarter to quarteror who did not have the margin profile to invest proactively in innovation adequatelyfailed to rapidly address the accelerated change in consumer demands, leading to immediate diminishing profitability.1. Monica Toriello: Sherry Frey describes herself as a passionate wellness thought leader. She is vice president of total wellness at NielsenIQand, Sherry, a little later youll have to tell us exactly what that title means. The M&A Environment: Where Is It Headed? | BMO Capital Markets Find out what KPMG can do for your business. Monica Toriello: Steve Noble is a senior partner based in McKinseys Minneapolis office. We call it total wellness because weve found that the consumer is merging how theyre thinking about their personal health and wellness, the health of the planet, and social responsibility, or the health of others. How your Consumer and Retail organization can strike the right balance between pricing strategies and profit margins. 1 Meeting customers where they are, with what they want and how they want it. and have nots. This distribution channel can be divided into direct selling and distance selling. Being able to point to factual evidence, beyond consumer sentiment surveys, will be important. Small and mid-markets may experience store closures as brands retreat from offline. Consumer & Retail M&A Transactions | Capstone Partners KPMG helps clients deliver top and bottom line growth in a time of disruption. Businesses in the grocery sector have a finite amount of time to acquire consumers and revenue streams from competitors, and then retain them. If you believe in sustainability, youve got to build it into enough of your product portfolio that it shows up and resonates with consumers. When weve looked at participation rates across categories, we dont always see that every major manufacturer is necessarily leading or participating in a meaningful way. Overall, M&A is set to remain an integral part of home care players' expansion strategies in 2022. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. I dont know whats right or wrong, but I think youre absolutely right, Steve, that sustainability needs to be integrated into decision making. Were drilling into that. 2023. Spending shifts due to COVID-19 have widened the divide between digital haves It could be simpler than thatpulling together whats possible on the packaging, the product, and the claim certification and bringing it to market more quickly. The study demonstrated that, in many categories, theres a clear and substantive correlation between consumer spending and sustainability-related claims on product packaging. Market consolidation is also anticipated, with companies merging to create value in highly competitive markets. What are some steps that they should be taking immediately now that this data is out there? That said, Gen Z does skew a bit higher than the others, but make no mistake, its not solely a Gen Z phenomenonits quite broad-based. Last-mile capabilitiesSeven in 10 leaders say they are very confident that they will be able to deliver a seamless experience to consumers across channels, compared with only two of 10 laggards. We spoke with Patricia Hong and Steff Paletta from Alvarez & Marsal's Consumer and Retail Group. Certain services may not be available to attest clients under the rules and regulations of public accounting. Engage in discussion about what this means and how we can collectively continue to advance the good were doing in sustainability and ESG. In-person returns satisfy customers' desire for immediate credit while reducing expenses for mailed return delivery. Key trends are the acquisition of large groups for consolidation efficiencies, and disposal of ancillary brands to focus on core competencies. Explore 2021 regional deal volume and values and anticipated ESG and chain impacts expected in 2022. An established crawl-walk-run approach to digital demand planning will improve forecasts, transparency, and efficiency. In the first eight months of 2021, the global consumer and retail industry saw more than 4,000 announced deals hitting the highest record in the past 10 years - second only to 2017 1. Connect with us via webcast, podcast or in person/virtual at industry conferences. Monica Toriello: Thats a great segue into the report, which, again, used five years of sales data, from 2017 to mid-2022. Monica Toriello is an editorial director in McKinseys New York office. In a pair of lawsuits aimed at alleged consumer privacy violations by Amazon, the FTC has announced that the retail and tech giant will pay more than $30 million in settlements while overhauling . Its not simply a marketing vehicle. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Consumer products M&A was up by 5 percent year-on-year, thanks to a growing interest in pet care. Monica Toriello: To what do you attribute this continued spending on sustainability? Consumer reservations temper a bullish outlook. Recent data suggests that retailers participating in return bars save over 20% in processing costs.3. It polled a sample of 50 retail industry executives, of which 70% were from companies with annual revenues of $10 billion or more. Consumer and retail companies have often been caught trying to play "catch- up" in digital technology. When we closed the study and re-ran the data, tracking a core set of attributes around wellness, we were surprised because weve seen some trading down and lower penetration in attributes like organic, but we havent seen that in the sustainability attributes as a whole. Steve Noble: First and foremost is connecting the dots across the organization. Consumer optimism is strong with travel and experienced-based spend up double digits. It's been a fascinating year for the consumer & retail (C&R) market, with many geographies experiencing a strong rebound as lockdowns ease and consumer confidence bounces back. Or is something else going on? Our analysis outlines four primary considerations organizations should consider when assessing whether to buy, sell, or expand margins to optimize their portfolio. Brands are eager to diversify, to deliver innovative solutions to fast-changing consumer tastes, while new players are entering the market via acquisitions. What were the most significant impacts in the consumer and retail deal market in 2021? The respondents included C-suite and senior executives who were directly responsible or exerted significant influence on major strategic initiatives in their organizations. The results provide a unique outlook on how today's market, future expectations, and changing consumer needs inform strategies for the year aheadand beyond. Investment focused on products, services, and capabilities (e.g., enhanced digital presence), while also reevaluating existing assets (e.g., footprint rationalization). Outbound M&A activity should grow in 2022, as investors shift from Europe to South East Asia, Africa and South America. The tale of two retailers COVID-19 created a tale of two types of apparel and discretionary retailersleading retailers, poised to weather the storm, capitalize on technology investments, and take market shareand lagging retailers, whose fixed asset base and debt would ultimately prove detrimental. Online retail A superfast market with its foot on the gas Internet and catalog retailing stayed top of consumer & retail M&A rankings in most markets, with a 22 percent increase fueled by both corporate and PE activity. This survey was commissioned by Deloitte and conducted online by an independent research company from October 21 to 31, 2022. 4Deloitte, Holiday retail trends show spending is alive and well, accessed November 25, 2022. There is growing use of active portfolio managementdivesting assets that are non-essential and have below-average returns and replacing them with faster growers (see. By Peter Horsley, Allison Snider, and Charlotte Apps February 08, 2022 10 min read Report At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Wheres our opportunity? In this episode of the McKinsey on Consumer and Retail podcast, three authors of the report discuss highlights from their research. Like most things in this research, it varied a lot by category. Find out what KPMG can do for your business. That was the key takeaway at the State of the M&A Market session presented by Amit Melwani, Managing Director in the BMO Capital Markets Mergers & Acquisitions Group with a special focus on Food, Consumer & Retail, at our 18th annual Farm to Market Conference in New York. But the retail outlook is not all gloom and doom; retailers have learned much about resiliency in the past few years. Optimistic consumers plan for happier holidays. To stay logged in, change your functional cookie settings. The Consumer & Retail Group offers its domestic and international clients advice and execution on public offerings, private capital, leveraged finance, mergers & acquisitions, restructurings, and other financial advisory services, including fairness opinions. Weve found that the pandemic accelerated the convergence of these three elements. Explore the benefits of an integrated system that combines warehouse management and warehouse control. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Vinit Doshi: Where the product teams, merchandising teams, and category managers engage even more deeply is when it gets to the level of specific claims. The rising number of transactions has been fueled by high growth in the US, UK and China, who together make up 40 percent of all deals worldwide. To stay logged in, change your functional cookie settings. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Certain services may not be available to attest clients under the rules and regulations of public accounting. In fact, our recent NielsenIQ 2022 Consumer Outlook online survey reveals that 74% of global respondents believe that their priorities, and resulting shopping habits, have been . They also share new insights theyve generated since the report was published. U.S. consumers take frugal turn as inflation persists And with the growing popularity of return barsstores that pack and ship returns for partnering retailersthere is an opportunity to drive additional store traffic and expand the footprint of their client base, an ideal situation during inflationary times.