US Retailers Becoming More Relevant Through Acquisitions: Mass Merchandisers vs. Amazon

Executive Summary

Merger and acquisition (M&A) activity in the US retail sector has risen over the past 10 years, in terms of deal value and number of deals, and deals within the mass-merchandiser sector have increased, dominated by several blockbuster deals.

• North American retail M&A activity has been steady during 2007–2018, with 148 deals valued at than $10.2 billion in 2018.
• Motivations for mass-merchandiser M&A include: entering adjacent markets, acquiring key technology and increasing scale, and establishing a presence in fast-growing markets such as China and India.
• Target has historically made small acquisitions for technology or products; however its most recent purchase – of Shipt for $550 million – has also been its largest, enabling faster delivery times.
• Walmart completed the transformative acquisition of Jet.com in September 2016, which led to a series of product-related acquisitions. The company acted on the high-growth opportunity in India and acquired a majority stake in its leading marketplace, Flipkart, in August 2018.
• Gaps in product assortments and the appeal of unique, private-label products has also been a driver behind many acquisitions.
• The environment for continued M&A remains favorable due to healthy stock valuations, relatively low interest rates, increasing competitiveness and volatility in the retail sector.