It is often thought that any private equity firm could invest in a retail company. Some investors have this mindset because they encounter retail brands every day and the sector is seemingly easier to understand than others, such as tech or energy. However, investments in retail companies that aren’t nurtured properly can have catastrophic results. To be successful, retail companies need strong, flexible capitalization and investors who employ a disciplined approach. To gain insights into the ins and outs of investing in the retail sector, Mergers & Acquisitions convened a special discussion that included two private equity professionals and an investment banker. Here’s what the professionals had to say.
Kevin Nickelberry, Managing Director, Investcorp: The retail environment has changed over the past few years. The competitive intensity has increased for both investors and retailers. Today, consumers are more informed and have more ways to buy products than ever before. The challenge for retailers is to become a destination for customers, wherever they shop, and to develop ways to increase customer engagement and interaction in-store and online. Investors must be prepared to provide additional resources and support management as they navigate this new competitive landscape.