Consumer Markets – Retail

Q3 2022: Mergers and Acquisitions Trend Report

Industry Overview

• Outlook for the U.S. Retail Industry is positive and consumer spending has increased. Services grew by 0.8%, led by housing and utilities, transportation, and healthcare. Goods spending fell by 0.5%, primarily due to overall rising interest rates slowing the consumer demand for all home goods.
• Key players within the Retail industry are Walmart, Amazon, Costco, Schwarz Group, and Kroger.
• In 2022, employment is expected to reach 19.7 million workers.

Key Industry Trends

• COVID-19 disruptions caused retailers to change supply chain strategies. Firms have been searching for ways to boost economic resilience by consolidating industrial
  activities closer to home, expanding current networks of suppliers, utilizing the Internet of Things to track container movements, and hiring their own cargo ships.
• COVID-19 disruptions caused retailers to change supply chain strategies. Firms have been searching for ways to boost economic resilience by consolidating industrial
  activities closer to home, expanding current networks of suppliers, utilizing the Internet of Things to track container movements, and hiring their own cargo ships.
• The industry has observed growth in private-label brands due to customers demanding better quality products at an affordable price.
• Consumers value brands that demonstrate sustainability, resulting in a change in buying habits.

Recent M&A Transactions

Historical Performance

• Over the five years to 2022, growth in both per capita disposable income and consumer spending has contributed significantly to the sector’s growth.
• Per capita disposable income is expected to increase at an annualized rate of 1.7% and profit margins are expected to increase from 2.8% of the industry revenue in 2017 to an estimated 3.2% in 2022

Future Industry Growth

• Retail operators are expected to continue investing in automated technologies such as self-checkout lanes in order to reduce wage costs and improve efficiency.
• Large retail companies with well-established eCommerce operations are expected to direct their focus more towards those online operations, while smaller retails will invest in website development.