COVER
Australian designers
Simone ( left ) and Nicky Zimmermann sold a majority stake in their luxury apparel brand for a reported
$ 1.15 billion .
“ Omnichannel solutions , such as pop-up AR and VR that connect to your digital identity , have played a big part in ensuring the brand journey is consistent across offline and online . For instance , the SKP mall in Beijing blurs the boundary between a museum and a mall . Nestled among brand exhibits are imaginative interactive displays such as a futuristic farm with robot sheep that look like live sheep , hundreds of penguins that mimic the walking of passersby and a bakery with organshaped pastries [ like noses and ears ] and impractical utensils .
“ These are unique and memorable experiences that not only draw consumers back to brick-and-mortar but also augment brand equity for increased customer loyalty and stickiness .”
Stateside , Coach understands that the way Gen Z interacts with retail spaces is critical to getting traffic into its stores . To launch its ‘ Tabby bag ’, the brand created an AI interactive display outside of its SoHo location in the spring of 2023 . As shoppers walked by the window , they could see their reflection with the bag on their shoulder or in their hand , thanks to a video-layered mirror .
Zero 10 , the AI company that created the display for Coach , said in an interview with Fast Company , that the number of shoppers paying attention to the brand ’ s window display rose by 93.5 percent and in-store traffic was up 50 percent within the first week of the mirror ’ s installation .
“ People are just building a better mousetrap ,” Roseman said . “ There is so much access to customer data and it is so granular , brands can now synthesize it to give them an accurate snapshot of what their customers truly want . When you see a store that has significant online sales and then moves to brick-and-mortar in a specific area , that ’ s not by accident .
“ Gone are the days when retailers are making moves because their competitors are in space . Commercial spaces are deliberate , interactive and meant to keep shoppers purchasing . The 3000-year-old retail model where there are displays , wide aisles and a person at the cash register is finally changing .”
What ’ s really driving M & A activity ? While it ’ s true that changing customer shopping preferences and the ‘ need for speed ’ have driven up demand and , in turn , revenues for some retailers , M & A activity in the past year has ultimately been driven by macroeconomic forces .
One specific factor affecting companies ’ acquisition activity is the rising Federal Reserve rate . In the past year , higher interest rates have made debt more expensive , yet they have also created a favorable five-year outlook for companies looking to make big moves because the due diligence is so extensive . Companies engaging in M & A activity want to ensure their targets are worthwhile . Further , the Federal
These are unique and memorable experiences that draw consumers back to brick-and-mortar .
Reserve has implied that interest rates will start to come down in 2024 into 2025 , which would fuel the M & A market considerably .
“ M & A is a game of confidence and that evaporated for a bit when the Federal Reserve started raising the interest rates last year ,” Richard Kestenbaum , partner at Triangle Capital , a private investment banking firm and M & A advisory based in New York City , told Inside Retail . “ Firms looking to acquire have a five-year plan in place and look at things like timing , value and whether this would be a high-growth move . Everyone wants to look smart when it comes to profitability , instead of taking a company off a cliff .”
Kestenbaum also noted that recent M & A activity in retail isn ’ t necessarily part of a long , steady trend . Peaks and valleys , specifically with big transactions , are always tied to market conditions and the economic outlook .
Prior to the pandemic , in 2019 , consumer and retail M & A activity comprised 5,349 deals , KPMG research shows . With the onset of Covid and global
18 www . insideretail . us September 2023