Retail M&A activity due to pick up after slow Q2
New York – Despite a slowdown in U.S. retail and consumer merger & acquisition (M&A) activity in second quarter 2013, consumer sentiment and retail sales trends remain positive, along with strong corporate balance sheets and availability of private equity "dry powder," which should help trigger M&A activity during the second half of 2013, according to PwC’s U.S. retail and consumer deals insights second quarter 2013 report.
In second quarter 2013, there were a total of 21 deals worth $50 million or more in the retail and consumer sector, accounting for $5.4 billion in deal value, a 49% decrease in volume and 90% decrease in value from the 41 deals worth $40.5 billion during second quarter 2012.
The decrease in deal activity is primarily a result of the lack of large deals in second quarter 2013 compared to the prior year, during which time there were several large deals. There was only one mega deal (worth more than $1 billion) in the second quarter, as opposed to a trend of four successive quarters with five or more mega deals. Sequentially, deal activity in the retail and consumer sector declined, with the middle market also seeing declines, partially due to the lingering effect of the abnormally higher deal volume during fourth quarter 2012 due to the impending fiscal cliff, along
with the several mega deals seen in the first quarter of 2013, according to PwC.
"Coming off the heels of one of the largest retail and consumer deals in history in the first quarter of 2013, the declines we saw in the second quarter will likely be temporary as the pipeline for deals resets from the flurry of activity we’ve seen in the last few quarters," said Leanne Sardiga, partner and PwC’s US retail & consumer deals leader. "The second half of 2013 looks promising for M&A activity in the industry given the recent pick up in businesses starting to come to market for sale, although price expectations and seller timelines continue to be a challenge."
Also seen as driving increased M&A activity later this year is the trend toward omni-channel retailing, which PwC data indicates is continuing to contribute to deal activity in the sector as retailers look at opportunities to transform their business and capabilities, focusing on innovation. Key activity in the omni-channel space in the second quarter included several acquisitions of ecommerce retail service companies. PwC expects to see increased activity in this area as investors see opportunity to gain a competitive advantage through technology for data analytics.
More union trouble ahead for Walmart
Walmart has fended off the best efforts of organized labor for decades, but it appears likely the company will need to elevate its game after several major unions joined forces this week.
The United Food and Commercial Workers (UFCW), long a thorn in Walmart’s side, has rejoined the AFL-CIO, the organizations announced this week. The move comes eight years after UFCW and six other unions left the AFL-CIO, a move which weakened organized labor just as unions were becoming less relevant in many sectors of the economy. The seven unions created a new organization called Change to Win.
‘‘It is about joining forces to build a more united labor movement that can fight back against the corporate and political onslaught facing our members each and every day,’’ UFCW president Joe Hansen said of the decision to rejoine the AFL-CIO.
The 1.3-million-member UFCW represents workers in the retail, meat packing and food processing industries, which is why the group frequently butted heads with Walmart. This was especially true once Walmart began opening supercenters and creating competitive challenges for conventional supermarket chains, many of whom fared poorly against Walmart because their heavily unionized and more highly compensated labor forces meant they couldn’t rival Walmart’s expense structure and consequently its prices. Walmart consumed market share in a fragmented food retailing industry throughout the 1990s and 2000s as it built a network of 3,000 U.S. supercenters.
Despite Walmart’s best efforts, it could never quite deliver a knockout blow to the UFCW and with the union now part of a larger group the pressure Walmart feels from organized labor is poised to intensify.
Meijer growth accelerates, hiring push begins
GRAND RAPIDS, Mich. — Meijer is preparing to bring in more than 9,000 new hires in response to the company’s move to expand with several store openings and ahead of the fall and holiday selling seasons.
Since its founding in the early sixties, Meijer has grown at a relatively slow pace compared to retailers like Walmart, Target and Kmart, which were opening their first discount stores at around the same time — the Midwest retailer has 203 stores. But things are picking up, and fast.
"Meijer has already opened five of the six new stores planned for this year, with another nine opening next year," said Janet Emerson, EVP of operations for the Grand Rapids, Mich.-based retailer. "Our continued growth, along with the upcoming holiday selling season, make it imperative that we increase our staffing properly to operate our stores and deliver on the Meijer promise of providing exceptional customer service."
Meijer stores are open 24 hours, and only close on Christmas Day. While staffing needs vary from store to store, all Meijer stores have positions available. The retailer is planning to hire 4,400 people in Michigan, 1,600 people in Ohio, 1,800 people in Indiana, 900 people in Illinois and 500 people in Kentucky.
The company has a dedicated landing page on its site where interested candidates can complete an online application and indicate their store preference. Candidates may also complete an online application at the employment kiosks located at the front of most Meijer stores. Local store management will then follow up with qualified candidates.
"While many of these opportunities are part-time, these jobs can provide a gateway to a full-time career at Meijer," said Kevin Wiederhold, VP of human resources for retail operations. "As we continue to grow, we are frequently looking to fill our on-going part-time and full-time needs. These positions provide a great opportunity to get your foot in the door and demonstrate success within a growing company."
Most new Meijer stores require 200-250 team members. While traditional retail positions, such as stockers and cashiers are needed, there are also opportunities in more specialized roles such as meat cutters and cake decorators, which often lead to future leadership opportunities.