Change continues to test the agility of the retail and consumer sector as transparent sustainable behaviour becomes a priority for ever powerful consumer and employees, private equity begins to implement the exit strategy and the credit crunch hits M&A transactions.
The 2008 PricewaterhouseCoopers Retail and Consumer Outlook, released today, examines current issues and challenges facing the retail and consumer goods sector and sheds light on the drivers of and reasons for these changes.
Delivering sustainability beyond regulatory compliance
Sustainability has become an increasingly important element in consumer purchasing decisions as it moves beyond simple regulatory compliance to delivering serious competitive advantages.
Poor environmental and social performance is no longer tolerated with reputable global and Australian companies suffering a severe backlash from the media and consumers for not taking corrective action. What’s more the definition of sustainability continues to evolve and companies that aren’t keeping up are experiencing revenue losses and damage to their brands.
It’s not just consumers and the media who are demanding sustainable and responsible behaviour. Employees, shareholders, suppliers and communities have also waded into the debate. Retail and consumer businesses now need to address these issues if they are to attract and retain quality employees and maintain stakeholder satisfaction.
People: Why should I work for you?
15 per cent of the total Australian workforce is currently employed by the retail and consumer sector and the risk areas are Generation Y, which makes up a massive 46 per cent of workers, followed by the soon-to-retire Boomers which represent 22 per cent.
“People want different things at different stages in life, so we’re suggesting that they align remuneration to what employees’ value such as extra superannuation to Boomers or cash to Gen Y,” says Stuart Harker, National Leader PricewaterhouseCoopers Retail and Consumer Goods Sector.
“It is critical in this tight labour market that retail and consumer businesses address their people policies to ensure they are aligning the working experience to the promises they make. Without the right matrix of benefits and value-based remuneration, employees, both existing and prospective, will simply move on or look elsewhere.”
Mergers & Acquisitions: Slowdown set to continue to 2009
With the Australian retail and consumer goods sector experiencing intense levels of merger and acquisition activity in 2007, this year the sector has been hit by a 20 per cent slow down and IPOs have dried up.
“There’s still plenty of equity in the market, with 70 per cent of private equity funds remaining uninvested, however due to the credit crunch, new deals need to be structured with six per cent more equity,” says Greg Keys, Corporate Finance Partner, PricewaterhouseCoopers. “While we’re seeing less of the mega deals, there is a focus on mid-cap deals and as a result, that market has some imperative for growth.”
Private equity players are currently delaying their exits until 2009. “We’re expecting up to 100 private equity exits in the first half of 2009 alone,” says Mr Keys. “This could cause some crowding in the market.”
For more information please contact:
Nina Anderson
PricewaterhouseCoopers
Communications
Ph: 03 8603 3573
M: 0400 033 937
nina.anderson@au.pwc.com
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