Tag Archives: growth

The Strategy Behind Acquisitions

Acquisitions – why do they happen?  As an Industry guy involved in many takeovers (taking over, and taken over), I’ve seen many strategic reasons for an acquisition. Usually, there’s more than 1 reason in play. I’ve created a crude table (below) listing 17  key reasons.

This is another of those blog posts where I’d love it if industry colleagues would chip in some insights. Students eagerly await your wisdom!

Not shown here: a column describing ‘What Research Can Do’ in each scenario, so Acquisition decisions are made (and initial post-acquisition business moves are made) with greater wisdom. To see THAT column, you must be enrolled as a student at Seneca college – or be an industry partner to the college.

Membership – and paying it forward- has its privileges!

Steven

why acquire a company?

 

Ways to Grow

You can’t beat H&M or Zara at calling the trends right & getting right items to market FAST! That’s ‘Fast Fashion’: on-trend ‘durable enough’ apparel, made with ‘adequate’ construction quality. You wear it a few months, then it’s out of style AND worn out. Defacto Disposable clothing.  A trend that’s taking a toll on other fashion retailers:

https://www.thestar.com/business/2017/07/11/abercrombies-failed-deal-sign-of-retail-industry-woes.html

What’s a fashion retailer to do to compete? Well, for one thing, not everyone wants Fast Fashion. And not everyone wants ‘adequate’ durability. There are segments of consumers who are less interested in being ‘leading edge’. There are others who prefer SOME items to be ‘trending’, but others to be more lasting. eg buy a few casual seasonal clothing items in latest styles, textures & colours- but buy WorkWear that will look better, longer.

Some of you will read about A&F and wonder if they can cut staffing, cut promotion spending, possibly reduce their footprint, etc. Cost cutting is an option- one that keeps the ‘chainsaw’ firms & ‘transition Exec’s quite flush.

imo cost cutting is rarely adequate over the long term. Growth is.

the firm I’m with  http://www.spitfireglobal.com  prefers growth over cutting & hacking. Retail brands might do worse than consider their situation, resources & risk tolerance (‘fit factors’) for some ‘classic’ paths to growth via NewUsers &/or NewUses?

1. sell online.

2. umbrella several generation-specific sub-brands eg A&F for GenX; Hollister for GenY.

3. Product expansion (American Eagle into undergarments; Starbucks serving alcoholic beverages in prime ‘night life’ locations);

4. Control Label &/or Brand Exclusives (Caution: this approach is contractually tough & raises Competition Act (legal) risks!);

5. Sign an on-trend Spokesperson (Burberry w Emma Watson);

6. all-out chain-wide repositioning (new targets for J Crew, Old Spice, Harley Davidson and, more recently, McDonald’s and Axe);

7. ‘Place’/ Geographic Expansion (Buick to China, Caplansky’s Deli to food trucks, Lego & Fashion brands to Flash retail).

8 Offer Services -eg Petsmart makes good money and generates more store visits (& loyalty?) by offering pet grooming & boarding (although Sears’ expansion into Home Reno Services ages ago was poorly overseen & less than a stellar success)

9. Rethink the Business Model- retailers who followed the ‘paradigm’ to own costly real estate are reassessing. eg Banks & Department stores are leveraging REIT’s and/or (aghast!) selling off ‘essential’ downtown corners. WestElm & other upscale Retail brands are plying their brand in the CONDO market.

imo the ‘secret sauce’ is savvy objective Situation Assessment that lets a consultant recommend the right option or the right blend of these. eg Lululemon expanded its product line to Women’s ‘day-wear’ items for use outside yoga studios- it worked. They also started to target Men’s apparel- imo the verdict remains out on that.

Can A&F be saved? Despite their past unfortunate management comments & weak PR efforts? The competition is tough. Very tough. Segment leaders Zara and H&M are adept @ acquiring right items @ right time @ right cost ie predict the trends, then getting product to market fast!

One path to growth I’d NOT recommend, is to try to mimic that strategy and hit’em head on. A&F needs to be smarter than that.

SL

 

Hot Hotel market gets less roomy

On March 8, we discussed Restoration Hardware, West Elm & Williams-Sonoma getting into the hotel biz. Now you can add another name- J.C. Penney.

http://www.chainstoreage.com/article/jc-penney-checks-its-newest-business–hospitality

To be fair, they’re not actually opening actual hotels- just trying to supply them. I doubt that Penney’s wares will compete at places that would have bought decor from Restoration Hardware, West Elm or William-Sonoma. But it is a sign that hospitality – be it the part-time cowboy unregulated tax-dodging sector (airbnb) or the full-time, regulated brands – is a hot sector. Perhaps more competitive than ever – and more fragmented- but hot.

This older article from Skift remains imo a terrific little context-setter on that growth:

5 Charts That Show Why the Travel Industry Is the World’s Fastest Growing Sector

People now travel more. They’re savvy about value, location, decor.  And that travel cements new trade relationships & friendships across borders & cultures. imo the more we travel, the more we learn about the world, and the more we lessen our multicultural ignorance as a species.

So let’s be hospitable. And grow together.

SL