Industry Trends
US Consumer Confidence Falls Due to High Inflation
In November, consumer confidence dropped to a 9-month low, due to concerns about the rising cost of living, high inflation, and the possibility of more lockdowns due to the COVID-19 Omicron variant. The surveys revealed that consumers are less enthusiastic about buying expensive items like houses, major household appliances, and cars, likely caused by increased prices driven by the many shortages occurring over the pandemic. The consumer confidence index was at 109.5 this November, down from 111.6 this October. However, data indicates that the economy is accelerating with a growth of real consumer spending of 6.5% this quarter, with the Omicron variant having only a moderate negative impact on growth.1
Supply Chain Issues and Labor Shortages Cause Many High Demand Items to Become Scarce
This holiday season, forecasts of shortage concerns for several high-demand items dominated the news , especially as manufactures and producers struggled to find workers due to a nationwide labor shortage and microchip producers struggled to meet demand adequately because of the ongoing shortage that started during the pandemic. Tech items like laptops and game consoles were especially impacted, as well as luxury items, expensive toys, and even turkeys and Christmas tree producers in some areas were unable to meet demand throughout the holiday season. Scarce parts and infrequent restocks have caused many high-ticket items to be nearly impossible to find, with resellers on eBay and other secondhand sites marking up these items by over 100%. 2
Cyber Monday Sales Fall For The First Time, Dropping 1.4%, But Record-Breaking E-Commerce Activity Anticipated
According to Adobe Analytics, consumers spent $10.7 billion this Cyber Monday, resulting in a 1.4% drop from the prior year. This drop is the first time there was a slowdown in spending over major shopping days, but Adobe still forecasted the 2021 holiday season to see record-breaking e-commerce activity as consumers spread their shopping out over multiple days. Consumers purchased $109.8 billion online from November 1st to November 29th (Cyber Monday), which is an increase of 11.9% over last year. Adobe anticipates digital sales for November and December combined to be over $207 billion, resulting in record gains of 10%.3
US Malls See Increased Foot Traffic This Black Friday But Are Still Under Pre-Pandemic Levels
Mall traffic has increased significantly, with year-over-year indoor mall traffic increasing 67.4% for Nov. 26th to Nov. 28th. Traffic was still below pre-pandemic levels, with the 2021 weekend’s indoor mall traffic 4.9% under 2019, indicating that recovery is slow. The extended holiday season, the decision of many retailers to remain closed on Thanksgiving, and the slight decline in Black Friday’s retail pull all contributed to foot traffic remaining below 2019 levels.4
Chat Commerce Predicted to Have a Nearly Unlimited Market Opportunity
The Communications Platform as a Service (CPaaS), Contact Center as a Service (CCaaS), and Digital Commerce industries predict that the three sectors will soon consolidate into a single new sector called chat commerce. Chat commerce is described as the third wave of digital commerce after e-commerce and app commerce, and it is the utilization of various chat apps to conduct business with consumers. The market opportunity for this emerging sector is said to be nearly unlimited, and it increases customer engagement and personalization, resulting in more purchases.5
Retailers Hiring Spree Indicates That Automation Cannot Replace Many Human Tasks
The pandemic prompted a move to automation, causing many retailers to rethink business processes and retool many of their critical jobs. Companies are instituting enhanced benefits to try to attract and retain employees, but the transition to a partially automated supply chain requires increased communication, worker accommodations, and retraining opportunities. The labor market is tight right now, with thousands of employees quitting retail jobs in search of new opportunities. September 2021 saw 10.4 million job openings up from 7.1 million in September 2019. Automation rollout is not forecasted to slow anytime soon, with many e-commerce retailers adopting automated processes for low value-add tasks.6
Inflation Soars to a Four-Decade High in November
This November, the Consumer Price Index saw a 6.8% year-over-year increase beating economist predictions of 6.7%. This is the highest inflation has been in over forty years since Reagan's presidency in 1982, and there was a jump of 0.8% after the extremely high 0.9% surge in October. The slowing pace suggests inflation may have peaked in the fall. Potential contributors to the high inflation include the supply chain crisis and high demand through the holiday season, Biden's Build Back Better massive spending package, the Omicron variant, and high gas prices. The high inflation has caused multiple Republican politicians to speak out against Biden’s $1.7 trillion social and climate spending bill.7
Musk and Bezos Sell Over $20 Billion of Their Companies’ Stock This Year, Insider Sales Soar to Record Highs
Insider sales have soared to a record $69 billion this year, with Elon Musk and Jeff Bezos each selling around $10 billion of their shares in the electric-vehicle maker Tesla and e-commerce giant Amazon. Executives profit from the incredibly high prices but must pay taxes on their gains. According to Verity, sales increased almost one-third from last year and are almost 80% higher than the 10-year average. Other notable sales include Walmart's founders disposing of $6.2 billion in stock, two Google founders selling off roughly $1.5 billion each of Alphabet, and Mark Zuckerberg selling $4.5 billion of Meta (Facebook's parent company) stock.8
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Stamps.com Inc.
- Thoma Bravo, L.P.
- $6,717.18
- DexKo Global Inc.
- Brookfield Business Partners L.P.
- $3,400.00
- Apple Leisure Group
- Zurich Hotel Investments B.V.
- $2,769.00
- Consumer Club, Inc.
- priceline.com LLC
- $1,200.00
- Firehouse Restaurant Group, Inc.
- Restaurant Brands International Inc.
- $1,000.00
- Substantially All Assets of edX Inc.
- 2U, Inc.
- $800.00
- EverFi, Inc.
- Blackbaud, Inc.
- $750.00
- RRR Palms LLC
- San Manuel Gaming and Hospitality Authority
- $650.00
- W.S. Badcock Corporation
- Franchise Group, Inc.
- $581.40
- Five Luxury and Upper Upscale Hotels
- Lone Star Americas Acquisitions, Inc.
- $551.00
Other Financial Buyer Transactions Closed
- Target
- Buyer
- Value($mm)
- Live Auctioneers LLC
- ATG Media US, Inc.
- $525.00
- Diamonds Direct USA Inc.
- Sterling Jewelers Inc.
- $490.00
- Twin Peaks Buyer, LLC
- FAT Brands Inc.
- $297.68
- 40 Pilot Convenience Stores of Pilot Corporation
- CGS Stores, LLC
- $220.00
- Ocean Resort Casino
- Ilitch Holdings, Inc.
- $175.00
Other Strategic Buyer Transactions Closed
- Target
- Buyer
- Value($mm)
- Select Interior Concepts, Inc.
- Sun Capital Partners, Inc.
- $413.40
- Entire Hotel Portfolio of Condor Hospitality Trust, Inc.
- Blackstone Real Estate Advisors
- $305.00
- Canoo Inc.
- AFV Partners LLC
- $230.33
- W Hollywood Hotel
- Oaktree Capital Management, L.P.; Trinity Fund Advisors LLC
- $197.00
- Four Seasons Resort and Residences Napa Valley
- Sunstone Hotel Investors, Inc.
- $170.50
Source S&P Capital IQ as of 1/11/2022 and PCE Proprietary Data
PCE Transactions
Served as advisor to Steinhafels Holding Company, Inc. as they became 100% ESOP owned
Served as advisor to OOBE Holdings, Inc. on their sale to OOBE Holdings ESOP Trust
Contacts
Contacts
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Data Assumptions 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. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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