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BGL Consumer Products & Retail Insider: Resiliency, Innovation Attract in Consumer Markets

August 25 2016

Consumer spending is gaining in spite of wavering confidence.  Sentiment inched higher in early August 2016 ending three consecutive months of declines as economic and political uncertainty weighed on consumer confidence. Growing personal wealth and low interest rates are expected to support continued growth in consumption and bolster retail sales. 

The BGL report examines developing trends in the Pet and Facility Management industries, sectors that are exhibiting above market growth due to their countercyclical demand and use of disruptive technology.

Pet Industry Highlights Include:

  • The ongoing humanization/premiumization movement is feeding a thriving $77 billion pet industry in the U.S., with increased consumer spending on premium products and services expected to propel revenue to nearly $100 billion by 2020. Companies are cashing in on the ever-growing human-animal bond as pet health and well-being take center stage. Investors have exhibited an almost insatiable appetite for the sector evidenced by accelerating transaction activity across the value chain: in Retail, PETCO (CVC Capital Partners and CPPIB) and Pet Supermarket/Pet Valu merger (Roark Capital); in Pet Food, BrightPet Nutrition Group (Graham Partners); and in Pet Supplies, Hyper Pet (Guardian Capital Partners).

Facility Management Industry Highlights Include:

  • Increased outsourcing, a continued shift toward service integration, and the advancement of technology-enabled platforms are driving growth in facility management, a $780 billion global market that is projected to reach $945 billion by 2025. Fragmentation will force consolidation as participants look to acquire technology and service capabilities to build scale and enhance their customer value proposition. Recent investment activity exemplifies the move toward technology integration, including SMS Assist, which raised $150 million in Series D funding from Goldman Sachs Investment Partners in June, and Vixxo, backed by Wind River Holdings, formed through the merger of First Service Networks and FM Facility Maintenance in March.  

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Related pages: Alexander N. Teeter, John R. Tilson

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