There is light at the end of the tunnel, as demonstrated by the market’s response and rapid recovery following the recent COVID-19 vaccine announcement. The pandemic has stayed longer than many expected, but we expect the markets to come to a new normal in 2021.
2020 saw several trends accelerate steeply during the pandemic. The move to online shopping increased dramatically with online retailers seeing five years’ worth of growth in just three months. Companies were able to resist the temptation to offer product-price promotion despite shrinking consumer wallets and increased price sensitivity, and thereby protecting falling margins. By the end of September, only 26 percent of US grocery items featured a price promotion,1 compared with the average of 31-percent.
The Consumer & Retail M&A market also felt the pandemic’s disruption, as deal volume fell five percent year-over-year (YoY). The impact was particularly acute in Q2 where deal volume contracted 21 percent compared with 2019. However, the deals market started to turnaround in Q3 as deal volume was up 26 percent (vs Q2) and only off three percent YoY2 and Q4 was increased 6% YoY. Another bright spot was total deal value in 2020: up 17 percent to USD 287 billion. The second half of 2020 also accounted for eight out of the 10 largest deals of the year.