Restructuring in the retail sector
How will this impact the future of the sector?
With the economic impact of the pandemic on the retail sector, there may be further consolidation in a drive for scale, as retailers look for cost effective routes to improve their digital offering. For retailers looking to overhaul outdated websites and e-commerce platforms, the cost of doing so independently can be high, but there is the option of linking up with larger, more experienced e-commerce providers to manage fulfilment needs, so we’ll likely see more market consolidation on this front. Supply chain consolidation has been happening for some time, as customers push for lead time reductions and cost savings. This activity will likely gather pace, as profitable businesses look to take advantage of the discounted valuations of struggling companies. This in turn will allow them to increase their capabilities, customer base and technologies, meaning they emerge in a stronger position, with a more diversified and valuable proposition as growth returns. We’re seeing paradigm shifts in how and where customers are shopping, which has the potential to turn the retail property market upside down. One of the main factors driving this is consumer cautiousness around travelling, particularly on public transport, resulting in an increase in consumers shopping in their own local town centres and convenience shops. We’re also seeing shifts in consumer habits due to the impact of the pandemic on their spending power. Millennials and Generation Z experiencing employment challenges are typically trading down, while high earners are trading up and opting for high-end brands, resulting on a squeeze for mid-range retail. It’s not yet clear what the impact of these changes will be on the industry - whether mid-range retail will thrive online and reduce their pricing, or whether cheaper brands will struggle with delivery costs.
With the economic impact of the pandemic on the retail sector, there may be further consolidation in a drive for scale, as retailers look for cost effective routes to improve their digital offering. Alastair Massey Restructuring Advisory
There are a number of specific challenges when dealing with the sector, which can make them more complex to successfully restructure.
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