Despite a decrease in M&A deal volumes and IPO activity in the face of economic uncertainty, Australia’s retail sector remains appealing to investors.
Technology-driven advancements in retail, such as AI and robotics, are reshaping the industry and attracting acquisition interest. Despite lower deal volumes, sectors like pharmacy, beauty and apparel stood out with high transaction values, driven by notable acquisitions. Australia's global appeal was evident, with a significant portion of buyers originating from the Asia Pacific region and North America.
Through our analysis of Australian retail M&A and equity markets in the 18 months to 31 December 2023, we saw the retail sector face a mix of challenges and opportunities, reflecting significant shifts in the economy. Despite inflation, rising interest rates, and cost-of-living concerns, consumer discretionary spending showed unexpected growth in certain sectors.
Key insights
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Deal volumes decreased by 32% in this reporting period, compared to the previous 18 months, due to reduced customer demand and increased competition. |
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The Pharmacy and Beauty sector had the highest deal value of $6.5 billion, followed by the Apparel sector with $2.1 billion. The largest retail deal was L’Oréal’s acquisition of Aesop for $3.7 billion. |
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Sales growth was below trend in 2023, with mixed outcomes across sub-sectors, and is expected to remain subdued in 2024. |
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Profitability was challenged by rising costs, especially labour and rental costs, and required cost optimisation strategies. |
Staying competitive in the dynamic retail sector demands a focus on product innovation, pricing strategies, customer experience, people management, strategic location, and technology integration.
To navigate this evolution, our Retail Dealtracker report provides comprehensive insights into Australian retail M&A and equity markets.
As your strategic partners, our teams can provide tailored support at every stage of your retail journey – from strategies, negotiations, to business transactions and more.
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