Across both AF&L and food, drug, and mass-merchandise (FD&M) players, the shift in consumer spending to online will pose a question about the future—and purpose—of their brick-and-mortar locations. But, despite the difficult economic outlook, we expect retail M&A activity to accelerate as the crisis stabilizes, creating opportunities for financially sound players to acquire or partner with less advantaged players. FD&M players may double down on the acquisition of digital capabilities, platforms, and other value-adding bolt-ons (archetype 4) to enhance and transform existing operations quickly, given the relatively strong performance and persistent demonstration of touchless use cases. For example, one of North America’s leading retailers is actively deploying inventory across the network to regions with the biggest product-availability deficits. According to McKinsey & Company—which has been surveying 1,000-plus U.S. consumers ages 18 and up on a weekly, ongoing basis since March 16—while discretionary spending categories including travel, out-of-home entertainment, apparel and footwear, and home furnishings are down, shelter-in-place directives and social distancing have caused American buyers to spend more in a … Companies that reconfigure their engagement strategy and operating model can excel during the pandemic and in the next normal. The contents of this site, including any statements, articles, graphics, charts, checklists, and other materials (“Content”) are for informational purposes only. An analysis of retail traffic in major US metropolitan areas between February 19th and March 20th showed increases in traffic at grocery stores and warehouse chains, while movie theaters, restaurants, and malls remained closed. Global strategy consulting firm McKinsey & Company polled over 1,000 UK consumers to find out more about the shifting landscape – seven charts from the firm’s study outlining the main findings. The crisis wrought by the COVID-19 pandemic is first and foremost a human tragedy. “US consumer sentiment during the coronavirus crisis,” March 2020; “Spanish consumer sentiment during the coronavirus crisis,” March 2020; “Italian consumer sentiment during the coronavirus crisis,” March 2020; “UK consumer sentiment during the coronavirus crisis,” March 2020. McKinsey: 75% of Americans have changed brands during the pandemic. By Harris Atmar, Steven Begley, Jane Fuerst, The next normal: Retail M&A and partnerships after COVID-19. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. COVID-19 stellt neben dem deutschen Gesundheitssystem auch die deutsche Wirtschaft vor große Herausforderungen. People create and sustain change. In the new COVID-19 context not all retailers will be equipped to pursue M&A. This may create opportunities for the largest retailers to expand their geographic reach and generate backend synergies. Analysis of more than 900 global retail M&A deals over the last ten years suggested the following archetypes (Exhibit 1): Historically, archetype 1 (in which the retailer or brand buys a like business, usually to gain scale or share) drove most of the deal value. The other archetypes saw lower value creation, potentially reflecting questions about the wide variance in P&L economics of the e-commerce channel and new business models. McKinsey Global Institute Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. solidation, leaner retail formats, direct customer access, and alternative sales models. By Reuters Staff. Taking learnings from the last recession, retailers that can continue to make organic and inorganic investments through a down cycle typically outperform competitors over the long term. Consolidation of smaller players, acquisition of new business models, and capability tuck-ins (such as archetypes 1, 3, and 4) are likely to increase as financially sound retailers and industry stakeholders uncover opportunities. Retail is one of the sectors most affected by COVID-19, in both positive and negative ways. McKinsey Global Institute. The longer the crisis lasts, the greater the likelihood that online and omnichannel purchasing will become the next normal. Dans cet article, nous tirons cinq conclusions d’une enquête réalisée par McKinsey. The new reality will depend largely on how core consumer segments, including behaviors and spending habits, have been impacted by COVID-19. To conserve cash, these retailers can remove incentives for on-time deliveries, suspend credit extensions, and do more business with suppliers that have relatively healthy cash reserves. Build conviction through identification of key areas of exploration within the M&A and partnership market and think through value creation up front. Now is the time for retailers to think about M&A postcrisis. Players without the cash and financial health to pursue acquisitions should identify potential assets to liquidate or potential partnerships to shore up the balance sheet until the crisis passes. In addition, we are seeing retailers take money previously earmarked for in-store marketing activities and use it to build the operational flexibility they need to improve on-shelf availability for essential items. We’ve seen some companies reassign current employees to have more capacity in nondiscretionary categories where goods are selling fastest. One is simplifying their SKU profiles to reduce variety and boost quantities, which helps suppliers to accelerate the processing of orders. The economic impact of the crisis is far reaching and profound, and presents challenges to the financial services industry and its institutions at levels reminiscent of the worst crises of the last 100 years. For example, a leading grocer’s category teams are reallocating shelf space for canned goods and working closely with suppliers to focus on availability and replenishment speed rather than promotions. Please click "Accept" to help us improve its usefulness with additional cookies. Other downstream opportunities in food service may materialize as some players face financial pressures. 1
It is also redirecting its resources, including capital and staff, from nonessential to essential categories. Governments have taken drastic action to control the virus in these regions, massively disrupting retail operations. It could drive new models of collaboration between retailers and their stakeholders to address scarce capabilities and enable the labor pool to move more fluidly in order to meet demand across priority activities. hereLearn more about cookies, Opens in new
For players with limited cash availability or challenging financial health, partnerships with other players to pool financial resources while addressing strategic priorities could be considered (for example, sourcing collaborations). 2. A retailer, for example, has been offering day-care benefits and one-time cash incentives and is staggering shifts to improve retention and reduce turnover during this critical period. Consumer intent, of course, varies by individual economic situation and outlook. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. At the beginning of 2020, the global private-equity industry had an estimated $1.5 trillion in dry powder,
One fashion retailer’s response to the outbreak reflects all these moves. McKinsey Global Institute ... stable, growing by around 4 percent over the previous five years. This article examines trends that are likely to create M&A and partnership opportunities that may enable retailers, brands, and investors to shape the next normal postcrisis. Between shifts, retailers can suspend operations at their distribution centers so that cleaning crews can sanitize equipment. In discretionary-goods categories, retailers are trying various delivery-related promotions to boost sales. As supply chains for nondiscretionary goods have ramped up activity, companies have had to balance the surge in demand while also prioritizing the protection of their employees’ health and well-being across the supply chain. Use minimal essential
We focus in this article on the five actions retailers are taking to resolve the immediate challenges that COVID-19 presents to supply-chain workers, business partners, and operations. The retailers with the highest degree of touchless automation, both in stores and in warehouses, may enjoy a clear competitive advantage, as they face lower risk to consumers, employees, and their overall operations. Our flagship business publication has been defining and informing the senior-management agenda since 1964. As a global pandemic, COVID-19 poses mind-boggling health and humanitarian challenges, and the economic impact on lives and livelihoods of the efforts to contain the virus is the strongest in a century. Reinvent your business. Gli esperti di McKinsey hanno analizzato l'evolversi del Covid-19 nel mondo incrociando i dati economici con quelli scientifici più accreditati sulle caratteristiche della malattia. A leading apparel retailer based in North America, for example, is working closely with its vendor base to review 40 percent of its buys for the upcoming fall season while simultaneously pruning its assortment for spring 2021. Healthy, safe, and local. Please try again later. To move inventory around quickly, retailers might have to bypass or override their inventory-replenishment and inventory-allocation algorithms. There are several examples of cooperation across industries to get products on shelves, especially in high-density urban areas. The Covid-19 crisis is significantly changing consumption patterns, purchasing behaviours and brand mindsets of Britons. Supply-chain leaders are creating transparency and building rapid-response capabilities to mitigate the short-term fallout from the crisis. Before COVID-19, we observed four primary deal archetypes, though this sector did not see as much deal activity as other sectors. How the COVID-19 crisis may affect electronic payments in Africa. Shift to online and digital purchasing. Companies that outperformed during the last recession participated in 10 percent more deals and in larger deals (approximately 1.8 times higher median) than companies that did not outperform.
22.03.2020 - McKinsey & Company | Per molti dirigenti, la pandemia di coronavirus non è paragonabile a nessun’altra crisi recente. Yet I knowRead more They can also dial down purchasing plans for the near term. We just look back to the 11.11 shopping festival, which has reached an all-time high. Most transformations fail. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. McKinsey predicts a floor-space reduction of more than 10% between now and 2024. Where are consumers spending money—which categories and/or channels? A survey of consumers in China, India, and Indonesia shows how the COVID-19 outbreak has affected their plans for discretionary spending--and which shifts could be part of the next normal. Attractive options may include delivery services to capitalize on the anticipated stickiness of e-commerce and omnichannel buying and vertical integration of suppliers to guarantee availability and control over strategic categories. One of the biggest challenges facing retailers is the need to protect customers and employees from contracting or spreading COVID-19. Please click "Accept" to help us improve its usefulness with additional cookies. Press enter to select and open the results on a new page. And all staff, whether long-term or temporary hires, should undergo training in proper health procedures and be given the right protective equipment. A McKinsey car-buyer survey conducted from July 15 to 17, 2020, indicates that With most retailers now in the second phase of their coronavirus response, we’ve updated our guidance for leadership teams. Understanding what targets (and what size targets) are feasible to acquire now versus later should inform how areas of exploration are prioritized. Retailers are now taking extraordinary measures to keep goods moving to store shelves and consumers’ doorsteps. Given changes in consumer spending across channels as well as persistent concerns about health and safety, and despite the weaker economic outlook, we expect retail M&A activity to accelerate as the crisis stabilizes. The implications of COVID-19 are just as high for potential sellers as they are for potential acquirers. L’épidémie de coronavirus a engendré des changements radicaux dans notre comportement d’achat : les consommateurs réévaluent leurs habitudes et décisions en matière de consommation. Retailers can also raise cash by working with their distribution partners to sell off excess inventory. If you would like information about this content we will be happy to work with you. “US consumer sentiment during the coronavirus crisis,” March 2020; “Spanish consumer sentiment during the coronavirus crisis,” March 2020; “Italian consumer sentiment during the coronavirus crisis,” March 2020; “UK consumer sentiment during the coronavirus crisis,” March 2020. Please click "Accept" to help us improve its usefulness with additional cookies. Learn more about cookies, Opens in new