FTI Journal
FTI Journal | Critical Thinking at the Critical Time
 

The Great Retail Gulf Offers Unique Opportunities

The Great Retail Gulf Offers Unique Opportunities

Creative destruction tells us that eventually the new replaces the old. However, sometimes the imperative to change is imposed suddenly and unexpectedly, often at an inopportune moment. When that happens, we enter a world of created destruction. In an ongoing series, the FTI Journal looks at distressed M&A opportunities in various industries arising from the created destruction of COVID-19. This article snapshots the retail and consumer products industry. 

T

he effects of COVID-19 had a catastrophic impact on an already-ailing retail industry. When the government designated "essential" versus "non-essential" businesses, the gulf between the haves and have-nots grew enormously.

Product categories that can anticipate greater demand post-pandemic include those that have seen a surge in spending during the crisis, including household care products and pet supplies. Those not faring as well include luggage and accessories, both suffering significant declines in sales as Americans travel less.

The landscape continues to shift. With unemployment high, consumers are understandably not opening their wallets often (discretionary spending is down by more than 50 percent since the shutdown), with one-third of people reporting they expect to continue to spend less post-shutdown. Retailers are reacting by scaling back on ad purchases (digital ad spends are down 33 percent) while trying to anticipate the transition to the new age of contact-free shopping to support the desire for social distancing.

The economic effects of COVID-19 are rippling through segments of the retail industry within the industrialized world.

On the flip side, the pandemic has created new consumer demands: People want to be “safe” (expect industrial cleaning brands to grow), they want to be pretty (specialty beauty retailers), and they want to DIY (hardware, if those businesses continue to invest in operations and digital innovation).

Ready to ditch the suit and tie? As we increasingly work from home, we’ll be wearing more camera-ready, comfy apparel like activewear.

Clearly, the virus is an inflection point for retail, causing greater disruption to the industry while also accelerating the digital trends already well advanced (such as comparison shopping online before deciding where to purchase).

Understanding new consumer shopping habits and behavior post-pandemic will be key to identifying winners in the retail space.

 

Read the full introduction to the series "Creative Destruction vs. Created Destruction." To learn more about specific distressed M&A opportunities in retail and consumer products, visit our Distressed M&A Outlook Series.

Published May 2020

© Copyright 2020. © Copyright 2020. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

About The Author


Christa Hart
Christa.Hart@fticonsulting.com
Senior Managing Director
Retail and Consumer Products Practice
FTI Consulting

Share This

Related Articles

  • The Great Retail Gulf Offers Unique Opportunities

    COVID-19: Effective Internal Comms in Unprecedented Times
    Forget business as usual. Organizations must ramp up and maintain transparency during this time of crisis to reassure their employees.

  • The Great Retail Gulf Offers Unique Opportunities

    Retailers in Transformation: Are You Ready?
    Operating in the status quo is a death blow for retailers. To survive, companies need to evolve. Here are a few steps they can take to drive a successful transformation.

  • The Great Retail Gulf Offers Unique Opportunities

    Upending the Trend
    In an ongoing series, the FTI Journal looks at opportunities for private equity in distressed M&A given the pandemic-affected economy. Here is a snapshot of the real estate industry.

Latest Articles

Related Articles

  • The Great Retail Gulf Offers Unique Opportunities
    COVID-19: Effective Internal Comms in Unprecedented Times
    Forget business as usual. Organizations must ramp up and maintain transparency during this time of crisis to reassure their employees.
  • The Great Retail Gulf Offers Unique Opportunities
    Retailers in Transformation: Are You Ready?
    Operating in the status quo is a death blow for retailers. To survive, companies need to evolve. Here are a few steps they can take to drive a successful transformation.
  • The Great Retail Gulf Offers Unique Opportunities
    Upending the Trend
    In an ongoing series, the FTI Journal looks at opportunities for private equity in distressed M&A given the pandemic-affected economy. Here is a snapshot of the real estate industry.

Latest Articles

It looks like you're enjoying this article. If you'd like to receive email updates from the FTI Journal, please consider subscribing.
The views expressed in this article(s) are those of the author and not necessarily those of FTI Consulting, Inc., or its professionals.
©Copyright, FTI Consulting, Inc., 2012. All rights reserved.

https://www.ftijournal.com/article/the-great-retail-gulf-offers-unique-opportunities