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Analysis

Consumer products M&A update: Q4 2019

With an increased frequency of consumers turning to online retailers, consumer connections with businesses have become crucial, forcing marketing and strategy experts to shift their focus to appeal to this new generation of consumers to foster customer loyalty and create recurring revenue streams. This consumer products M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the consumer products industry.

Consumer products trends

  • Revisiting simplicity:1 Modern consumers routinely face choice overload when it comes to the shopping experience, often leading to decision paralysis. Many direct-to-consumer businesses are simplifying their product mix in an attempt to assuage consumer sentiments. A growing number of companies have begun to develop all-encompassing products that minimize the time and effort consumers dedicate to shopping. Companies across a diverse spectrum of subsectors ranging from home appliances to health and beauty have begun to execute this somewhat counterintuitive strategy with great success.
  • The rise of subscription:2 Subscription-based platforms have proven their merit with the likes of Microsoft and Netflix, which both pioneered the strategy that enables businesses to foster customer loyalty and create recurring revenue streams. Acting in conjunction with the rise of e-commerce, more and more consumer goods⁠—focused companies have begun to implement this business model. Shoppers are now presented with the option to purchase everyday items on a recurring basis at an attractive discount.
  • Social media and mobile shopping:3 In the past year, online retail has been witness to explosive growth, forcing marketing and strategy experts to shift their focus to appeal to a new generation of consumers. Experts estimate that 12 percent of Gen Z and 25 percent of Baby Boomers actively shop through Facebook, whereas Millennials prefer the likes of Snapchat and Instagram. Retail trends continue to skew towards the preferences of younger demographics, as new trends are largely influenced by social media celebrities, causing consumer business to offer trendier options.
  • Brand connectivity:4 With an increased prevalence of consumers turning to online retailers, consumer connections with businesses have become crucial and increasingly challenging to develop. No longer are consumers only concerned with the surface level details of the product, but they are also searching for the background, mission, and values of the company behind the product. This has led companies to allocate additional resources to the development and the branding of their story.

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References

1 “We Analyzed 14 Of The Biggest Direct-to-Consumer Success Stories To Figure Out The Secrets To Their Growth — Here’s What We Learned,” CB Insights, September 19, 2020.
https://www.cbinsights.com/research/direct-to-consumer-retail-strategies, accessed January 12, 2020.

2 “Why Subscription Boxes Are Here to Stay,” Forbes, April 12, 2019. https://www.forbes.com/sites/gregpetro/2019/04/12/why-subscription-boxes-are-here-to-stay/#5386a3537037, accessed January 12, 2020.

3 “5 Trends That Will Redefine Retail in 2019,” https://www.forbes.com/sites/jiawertz/2018/11/28/5-trends-that-will-redefine-retail-in-2019/#59511d556526,” Forbes, November 28, 2019. 
accessed January 17, 2020.

4 “Millennials Driving Brands to Practice Socially Responsible Marketing,” Forbes, March 17, 2017. https://www.forbes.com/sites/sarahlandrum/2017/03/17/millennials-driving-brands-to-practice-socially-responsible-marketing/#1fb3de7c4990, accessed January 12, 2020.