34 / 90
31
CONTINUED CONSOLIDATION CAN BE EXPECTED
A possible response to rising consumer expectations,
and the increased investment required to support
them, could be retailer consolidation. In fact, given
the recent weakness in the world’s economy and the
number of underperforming retailers, consolidation
might already have been expected to happen.
In reality, deal numbers and volumes in the industry
have grown slowly, at only two per cent CAGR from
2003 to 2013
14
(see Fig. 16).
The recent transaction announced between Zale
Corporation and Signet Jewelers in the US may signal
a change in the US jewellery retail space. The new
combined Signet/Zale entity could have as much as
10 per cent of total diamond jewellery sales in the US.
The US$100 million of annual savings estimated to
be achieved by fiscal year-end 2018
15
, which the new
entity hopes to generate through store rationalisation
and increasing buying power, are meant to support its
profitability and allow it to invest in responding to the
changing consumer landscape.
F I G . 1 6 :
JEWELLERY MARKET M&A VOLUMES AND NUMBERS OVER T IME
Source: Dealogic
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
# DEALS
SUM OF DEAL VALUE
USD million
Includes US$5.2 million
LVMH/Bulgari deal