COVID Altered Shopping Habits, Post Pandemic Eased Restrictions Effect Spending
With fewer COVID-19 cases and easing restrictions, many people are returning to in-person shopping and leisure services, a shift from the previous year’s heavy e-commerce. In May, spending in casinos increased almost 17%, while indoor entertainment venues and theme park spending jumped 9%. New consumer habits have emerged as more money continues to be spent on e-commerce. However, with more brick-and-mortar stores opening back up, retailers will look to capitalize on changes this summer with increased sales.1
Financial Technology Company Tink Has Sold to Visa For $2 Billion
Visa announced a $2 billion acquisition of Tink, a financial technology company that provides digital connection services to over 3,000 banks and financial institutions in Europe. This acquisition establishes a precedent for potential consumers to purchase goods and services through online applications like Tink and new alternative payment channels outside of regular debit and credit cards. Consumer retailers and e-commerce companies can benefit significantly from a new payment channel, increasing accessibility and the potential for future sales. 2
Once Bankrupt Retailer Neiman Marcus Poised for Major Comeback
Neiman Marcus Group Inc., which sells signature apparel and other consumer goods, went bankrupt this past year, along with many other retailers due to failing business models, decreased consumer spending, compounded by the Pandemic. However, the company is emerging from bankruptcy with backing from PIMCO, Sixth Street Partners LLC, and Davidson Kempner Capital Management LP. Like many other companies, pent-up demand is now present more than ever, and the need to establish a strong e-commerce presence has become essential. Companies that follow this trend and cater to consumers who purchase merchandise online could enjoy the same success that Neiman Marcus has since implementing new changes.3
Rising Prices for Retailers and Restaurants Come at the Consumer’s Expense
As restaurants and retailers start to see more customers, supply chain shortages, and the current transitory inflationary period have caused prices to increase across the board. Restaurants like Cracker Barrel and Chipotle have had to increase their prices by 3% or more. Meanwhile, retailers like Dollar General and products seen in grocery stores have risen about 5% in May compared to a year ago. Consumers now have to spend more money dining out and are becoming more conscious of their spending habits, with cheaper alternatives becoming the preferred option. 4
Americans Are Keeping Their Automobiles Longer Than Ever
Vehicle owners have now owned their cars for an average of 12.1 years, setting a new record for the length of time they have owned them. This data is implied by the decrease in car purchases over the last year as well as the increasing price of used vehicles due to supply bottlenecking. To put in perspective, auction company Manheim, Inc. reports, average used-vehicle prices increased 48% in May compared to a year earlier. Models released last year may be cheaper once newer models are rolled out.5
Labor Shortages Threaten Hotels’ Recovery
Many hotels and resorts across the nation are grappling with a significant labor shortage, making it increasingly difficult for these establishments to meet the demand that is returning with the easing of pandemic restrictions. The labor shortage is occurring because of enhanced unemployment benefits, employees moving to other jobs in other industries, and disagreements with staffing individuals, all of which has made it difficult to maintain properties at normal levels. For many hotels, vacancies will hurt their business, and customers may suffer from understaffed lodges that are unable to provide premium experiences.6
Largest Transactions Closed
- Speedway LLC
- 7-Eleven, Inc.
- Grubhub Inc.
- Just Eat Takeaway.com N.V.
- The Michaels Companies, Inc.
- Apollo Global Management, Inc.
- Extended Stay America, Inc.
- The Blackstone Group Inc.
- Cooper Tire & Rubber Company
- The Goodyear Tire & Rubber Company
- Club Car, LLC
- Platinum Equity, LLC
- Four Seasons Resort Orlando at Walt Disney World® Resort
- Host Hotels & Resorts, Inc.
- Welk Hospitality Group, Inc.
- Marriott Vacations Worldwide Corporation
- 10 hospitality real estate assets located in four states in the United States
- Monarch Alternative Capital LP
- Leaf Group Ltd.
- Graham Holdings Company
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes