Kearney has released its annual consumer and retail M&A report, “Time to Reset, Reposition, and Win,” which explores the current and future deal landscape for consumer product and retail companies identifying omnichannel as a key retail acquisition need.
When looking at how the business of mergers and acquisitions will change in this new, post-pandemic landscape, Kearney found that 70% of retail and supplier executives surveyed believe this is a good time to invest, with retailers thinking about online and omnichannel operations.
Indeed, without appropriate investment, the market research firm warned, retailers that haven’t adopted effective omnichannel models and a differentiated consumer experience could find themselves racing consolidation or flat-out failure without investment.
Companies making M&A investment in a downturn returned 52% more total shareholder returns, and the private equity cash situation reached a peak of $1.45 trillion, pre-COVID-19. Kearney noted that 2020 should be a big year for investment.
“Despite the likelihood of economic softening, we fully expect to continue to see an active M&A market,” said Bahige El-Rayes, Kearney partner in the consumer practice, and co-author of the report. “But the old rules no longer apply. 2020 will be a buyer’s market that provides an unprecedented opportunity to acquire quality consumer and retail assets at corrected valuation. While 2019 was all about strategically filling in gaps in portfolios, COVID-19 is turning the landscape on its head. Acquisition targets are likely to be abundant, valuations measured and those doing the acquiring must not only factor changed consumer behaviors into their due diligence, but also need to consider how this shift will affect post-pandemic demand.”