Although three of the four megadeals announced this quarter belong to Consumer, companies continue to make smaller investments focused on smaller niche brands that have been slowly taking market share from large global brands. Through predictive analytics we believe that companies within the Consumer sector are more likely to make divestitures over the next three quarters than the other categories in Consumer Markets as they aim to dispose of unprofitable business units.
Retail deal value grew from 9% of total deal value in Q1 2017 to 21% in the current quarter. Today’s tech savvy consumers have challenged retailers to invest and scale up on new technology at a rapid pace, including Artificial Intelligence, consumer analytics and mobile platforms. Companies that fail to embrace digital technology have been quick to go out-of-business, with toy and game chain Toys R Us being one of the latest examples.
Hospitality and Leisure
Hospitality and Leisure deal value increased from 6% of total deal value in Q1 2017 to 16% in Q1 2018. Inorganic growth through brand acquisition continues to be an attractive option in the fragmented hotels industry, as companies look to expand into new geographic markets to scale up and grow in market share. In turn, hotels seek to remain competitive against alternative lodging companies like Airbnb.