Industries – Consumer Goods & Retail

CONSUMER GOODS & RETAIL

The current key issue in the consumer goods and retail sector is the increasing influence of social media and the associated influence on consumer behaviour. Especially when shopping via digital channels, customers have high expectations which must be met with a business model geared to customer needs.

YOUR CONTACT PERSON

Markus Varga
Partner
markus.varga@ifbc.ch

CURRENT TOPICS & CHALLENGES

Online shopping’s continued rise in importance

The volume of products bought online continues to grow at an exceptional rate, with particular focus on purchases from mobile devices. The increased necessity for sufficient cybersecurity has added another layer of sophistication to the platforms.

“Midorexia” and its associated spend

The stock coined phrase ‘mid-life crisis’ has a subdivision for those customers who are acting, and therefore spending, younger than their years might suggest. The phenomenon can be witnessed in the fashion industry, as well as fitness related tech and apparel.

Personalised products

From holidays to hoodies, consumers continue to search for (seemingly) entirely tailorable products. Offering a wide range of services should help retailers build a stronger emotional attachment to their customers. It is now expected that all services possess some element of adaptability.

Social media influencer marketing

The use of Instagram influencers by big brands has grown exponentially, although it is now expecting a crackdown from consumer protection bodies.

Polarised consumer spending

Customers within the food and beverage sector have tended to favour the extremities of the market, as trends such as affordable indulgence and healthier eating have grown alongside staples sold in budget supermarkets such as Aldi and Lidl.

Overseas buyers enticed by devalued pound

The devaluation of sterling meant UK assets were exceptionally good value and international buyers seized the opportunity to invest.

NOTABLE RECENT TRANSACTIONS

Amazon gobbles up Whole Foods

Amazon.com Inc. will acquire Whole Foods Market Inc. for $13.7bn, creating a launchpad for the e-commerce company’s grocery sales. This acquisition follows Amazon’s tie-up with UK supermarket chain Morrison’s in late 2016.

Sycamore Partners acquires Staples

The private equity firm has put together a $6.9bn turnaround plan that includes reducing the retail footprint of the office supplies company.

LVMH takes full control of Christian Dior

French billionaire and LVMH chairman Bernard Arnault moved to consolidate control over Christian Dior for approximately $14.1bn.

M&A TRENDS AND MARKET ANALYSIS

The following data have been compiled by Globalscope for the consumer goods & retail sector. Valuation trends for the past five years were analysed. The following graphs show average half-yearly transaction data, comparisons of individual sub-segments and data from listed companies as of mid-August 2017. The Total Market comprises companies and transactions in excess of USD 5 million. The Lower-Mid Market segment comprises companies and transactions in the range of USD 5 million to USD 150 million.

EV/EBITDA multiples of transactions within the consumer goods & retail sector

All Transactions
Lower-Mid Market

  • In 2017, the median multiple across all companies is significantly higher than that one of Lower-Mid Market transactions (transaction value USD 5 – 150 million). In recent years, the two values have been relatively close together.
  • The median transaction multiple over all companies is currently 13.2x and that of the Lower-Mid Market transactions is 10.8x.

EV/EBITDA multiples of listed companies by region

All Campanies
Lower-Mid Market

  • The highest valuations across all companies are in Asia, USA and Canada with an average multiple above 15.0x.
  • Companies with a market capitalization of up to USD 150 million have lower valuations than the average of all companies of 15.0x. The EV/EBITDA multiples are between 11.0x and 14.0x.

EV/EBITDA multiples of listed companies by sub-sectors

All Campanies
Lower-Mid Market

  • The highest valuation can be observed in the retailing sub-sector with an EV/EBITDA multiple of 17.9x.
  • The valuations of companies with a market capitalization of up to USD 150 million are lower than the average of all companies of 15.0x.