What Do Major Mergers and Acquisitions Mean for Small Retailers?
It seems as though every other day, the headlines announce a new acquisition among major retailers. The giants in the industry are diversifying their products, sucking up more stock, and building mighty kingdoms that boutique and small business owners can’t even throw stones at. How can these smaller businesses possibly compete? First, take a look at what’s happening…
It was recently announced that Michael Kors would acquire the Jimmy Choo brand for $1.17 billion. The luxury brand also said it has plans to close at least 100 of its full-price stores throughout the next two years. “Michael Kors and many other upscale luxury brands such have faced plummeting sales and minimal profits as consumers spurn these retailers for less expensive, more accessible options,” says Glenn Taylor, a journalist for Retail Touch Points.
Jimmy Choo shoes and accessories certainly aren’t in the off-price realm, nor would they be considered as a brand which is a ‘more accessible option.’ Taylor suspects that even Michael Kors is feeling the pressure to expand during this turbulent time in retail, especially with Coach acquiring Kate Spade earlier in the year.
With Amazon’s major acquisition of Whole Foods Market for a whopping $13.7 billion, the steady expansion of Walmart has mainly gone under the radar. Within the last year, Walmart has consolidated companies that manage to skim at least a fraction of the major competitor’s sales away.
Walmart’s purchase of Jet.com and the following acquisitions of Shoebuy, Moosejaw and ModCloth, demonstrate a path to cater to a wider audience, yet offer a more personalised experience through unique brands.
Some have still questioned the reasoning behind Wal-mart’s mergers selections, feeling that the connotation of shopping at Walmart will hurt the brand equity of the once independent retailers.
However, Wal-Mart’s Senior Director of public relations, Ravi Jariwala believes that the deal still makes perfect business sense: “Through the acquisition by leveraging cost of goods, by leveraging some of our transportation efficiencies and our shipping rates, we can apply those toward these newly acquired businesses and help them continue to grow, and at the same time we bring in their expertise,” says Jariwala.
In early July, Liberty Interactive Corporation, owner of QVC, announced it would acquire the remaining stakes of HSN. The deal resulted in a major conglomerate and a near complete takeover of retail television as we know it.
What to do about it
Mergers are only going to continue in the retail sector, but they won’t spell the end of small retailers. “It means it’s time to step up in a big way,” says Townsquare Interactive. “Retailers like Amazon aren’t going to wait for small business owners to decide they are ready to change with the times, rather they will force you to.”
However, changing with the times doesn’t necessarily mean buying out another retailer. If your business is experiencing a lull in sales, don’t be afraid to adjust your business strategy. As you discover what resonates best with your customers, you will then be able to implement stronger in-store experiences successfully.
If you operate a small business, you’re not going to meet or exceed the business of the majors, however you can provide an exemplary customer experience to keep you and your business a priority with consumers. A website that is easy to navigate and find in a search engine, targeted ads that drive traffic back to your website, and regular, engaging activity on social media will help you become a convenient place to shop for products/services.
For more information about selling your business, contact our expert team at Benchmark International.