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M&A Deal Trends in Retail

Contributors: Madison Wolfe

Between the easing of lockdown restrictions and heightened inflation, the past 12 months have shaken businesses across the globe. Retail companies have had to adapt to sudden and radical changes in the environment, from significantly higher costs to disrupted supply chains. To stay competitive and adapt to new trends, companies are adjusting their M&A strategies accordingly. The retail industry has continued to be challenged over the last year with inflation on the rise and lockdown restrictions easing. With all this change, retailers have continued to evolve their M&A strategies to stay competitive. Overall, we have seen M&A activity drop around 30% over the last year due to the rising cost of capital and rapid change in the current environment. This means that retailers are being more strategic than ever when looking at M&A opportunities to grow and expand outside of their current operations. Reflecting on major deals over the past year, we have highlighted key 2022 M&A trends in retail that are shaping the industry:

  • eCommerce Continues to Win with Consumers
  • Health & Wellness is at the Forefront for Consumers
  • Retailers Continue to Seek Deals to Expand Operations and Improve Technology

M&A Trends in Retail

eCommerce Continues to Win with Consumers 

eCommerce has continued to grow as many consumers, who had only started purchasing goods online during the pandemic, continued with this habit. Even as lockdown restrictions ended, consumers continued to shop online, realizing its convenience. Recent M&A activity has seen historically brick-and-mortar retailers go after DTC and online businesses to continue to push eCommerce while gaining access to a wider consumer range.  

  • March 2022: Vestiaire Collective (a major secondhand fashion retailer) announced its acquisition of Tradesy (an online resale marketplace for women’s fashion), allowing both brands to increase their customer base. 
  • August 2022: Signet (Kay Jewelers parent company) acquired Blue Nile for $360M. Blue Nile is a leader in DTC within the fine jewelry market. This acquisition will help to give Signet a leg up in the growing eCommerce market. 
  • October 2022: Naver (a South Korean search engine) acquired Poshmark for $1.2B (all cash deal; 15% premium on current stock price). Naver is known for its ad-serving and payments infrastructure 
  • November 2022: Victoria’s Secret acquired Adore Me for $400 million. This acquisition will help VS push its DTC business to new areas with its home try-on service, technology, monthly subscription options, and more. Adore Me is also a B Corp, so it will help VS move forward in a more sustainable way.  

Health & Wellness is at the Forefront for Consumers

With increasing awareness toward health post-pandemic, there was a surge in acquisitions within the healthcare and wellness industries. We are seeing some of the largest retailers buy in to healthcare-specific tech to improve the accessibility of healthcare to their consumers. We have also seen wellness products be acquired as a way to continue to round out retailers’ portfolios.  

  • June 2022: Walmart acquired AR Optical Tech firm Memomi. Memomi specializes in augmented reality technology to make optical care more efficient. Its technology was already being used in over 2,800 Walmart and Sam’s club locations. The acquisition is expected to help Walmart continue to improve its health offerings. 
  • July 2022: Amazon announced it would acquire One Medical (a chain of primary care clinics around the US) for an estimated $3.9B. Amazon sees the combination of the two companies’ technology as an opportunity to transform and improve healthcare for consumers everywhere. 
  • September 2022: Women’s hygiene and underwear brand Knix was acquired for $320M by Essity – an international health and hygiene brand. The funds from this acquisition will be used to help grow the Knix retail presence and develop new products.  
  • December 2022: DSW parent company, Designer Brands Inc., announced its acquisition of Topo Athletic, an outdoor footwear and performance athletic company. DSW has been expanding its private label brands and sees this acquisition as a way to stay on top of consumer demand for athletic and wellness gear.  

Retailers Continue to Seek Deals to Expand Operations and Improve Technology 

Retail companies are constantly using M&A as a way to expand operations and stay ahead of the competition. In 2022, there was an emphasis on tech services acquisitions, as companies looked for more ways to optimize their existing businesses. We also saw a trend toward mergers that helped retailers gain additional buying power in a very competitive marketplace.  

  • February 2022: Fanatics (a licensed merchandise manufacturer) acquired Mitchell & Ness (an apparel and lifestyle brand), which would allow it to inherit the partnerships that Mitchell & Ness has with professional and collegiate sports teams. The deal was valued at $250MM.  
  • March 2022: Authentic Brands Group (a brand development, marketing, and entertainment company) acquired Reebok for $2.5B. The deal will expand and add value to the globally recognized brand. 
  • March 2022:  Lanvin Group merged with Primavera Capital Acquisition Corp. (PCAC) (blank check company) in a deal worth $1.5B. The merger reflects how luxury brands are bouncing back to pre-pandemic levels, offering significant growth opportunities for investors looking for global reach. 
  • May 2022: David’s bridal acquired custom wedding dress startup Anomalie for an undisclosed amount. David’s Bridal is planning to close Anomalie’s operations and instead utilize their assets, team, and tech to grow its current digital offerings. 
  • June 2022: Fleet Feet (an American shoe and accessory retailer) announced the acquisition of Marathon Sports (a sporting goods retailer) in a move to reach a wider audience. 
  • August 2022: Amazon has moved to acquire iRobot for $1.7B. The deal is currently being reviewed by the FTC. This deal will help Amazon continue to expand its home device segment (which already includes acquired brands Blink and Ring on top of their own Alexa line).  
  • August 2022: Walmart acquired Volt Systems, a software company focused on vendor management and product tracking. This investment is said to affirm Walmart’s continued investment in technology and innovation. 
  • October 2022: Kroger and Albertsons announced a merger. This deal is still undergoing review by U.S. Lawmakers. The $25B deal is said to help give the two grocers a better competitive advantage over Walmart and Costco. 
  • October 2022: Walmart acquired e-grocery automation firm Alert Innovation. With this move, Walmart hopes to scale the technology to assist with order pickup and delivery. 

Looking Ahead to 2023

Even with the reduction in M&A activity that was seen in 2022, these M&A trends reveal that M&A continues to be a driver toward corporate performance in retail. With the environment having changed drastically since the start of the pandemic, competition among retailers has increased significantly, with each trying to gain market share, be it through entering eCommerce, healthcare, or simply through acquisitions of similar-natured companies.

In 2023, we will continue to see retailers take part in M&A activity, especially as the economic environment changes with inflation and other post-pandemic factors. If your company is considering a deal, conducting due diligence is extremely important. Our M&A consulting team continues to have a pulse on the latest trends, insights, and capabilities required by due diligence teams and executives alike when progressing through the deal process. To better understand how these M&A retail trends impact your business, reach out to us. 

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Tags: Mergers and Acquisitions, Retail Trends