5 trends driving retail M&A deals
The ongoing challenges in the sector continue to force some retailers to close, including the June liquidation of Toys R Us, backed by Bain Capital and KKR & Co. Inc. (NYSE: KKR). Technology is driving many of the transactions. Best Buy Co. (NYSE: BBY) recently agreed to spend $800 million to buy GreatCall, a provider of emergency response services for seniors, from Chicago private equity firm GTCR. Meanwhile, GreatCall announced a partnership on-demand transportation provider Lyft to make it easier for seniors to get car service.
“Many of the challenges that retailers are currently facing are due more to a lack of innovation and investment in technology, and that they are not able to compete with Amazon,” said Alex Monahan, a consumer products senior analyst at tax and consulting firm RSM US LLP. “Investors want to see that retailers are adjusting to consumer’s changing preferences and striving to provide seamless multi-channel experiences, while also investing in technology to address the tight labor markets.”
Also at play in retail M&A is the acknowledgment that consumers are choosing retailers that match their values. For example, Canadian retail giant Empire Company Ltd. (TSE: EMP.A) recently agreed to buy fast-growing farm-to-table grocer Farm Boy for $800 million from Boston private equity firm Berkshire Partners LLC.
Here's a look at 5 trends driving retail M&A.