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Private equity investment into global retail sector tops £32 billion within the last two years

Research from Savills has found that internet retailing, namely those concepts focused on e-commerce, has accounted for over half of total funding at 53%, with some of the biggest recent deals including the £2.13 billion raised by Chinese e-commerce platform, Pinduoduo, in early 2018 and £682.3m raised by US food delivery business, Instacart, later that year.

The leisure or ‘experience’ sector, which includes the food and beverage market, has also been a key target for investment in the last two years. Accounting for 27% of total funding since 2018, the industry has experienced the fastest growth, having expanded at 34% per annum over the last two years. 

Whilst the majority of funding into the leisure sector has been targeted at more traditional elements of the market, Savills notes that investment into concepts centred on wellness and eSports has gained significant traction in recent years.

Leisure concepts focused on health and wellbeing have attracted £342 million in funding globally across 10 deals since January 2018, including New York based Rumble Fitness which raised £15.25 million in a deal led by Equinox Fitness, backers of SoulCycle. Furthermore, eSports, which Savills states was not even identified as a sphere within the leisure space until 2017, has generated £69 million in funding in two years, growing by an average of 23% year on year.

With regards to future funding trends, Savills has noted that investment into sustainable fashion is growing at pace, with the number of deals for the year to date up 52% year on year. Additionally, smart jewellery, essentially wearable technology designed to monitor the wearer’s vital signs but looks similar to traditional jewellery, has attracted a total of £432.6m to date with cannabis beverage companies, including Canadian manufacturer BevCanna, raising £231.5m across 77 deals.

Marie Hickey, commercial research director at Savills, explains:

“Private equity and venture capital funds are often at the forefront of backing emerging concepts, and by following the money it can help identify the new, trend-led concepts that can often transform the retail experience. An injection of equity is often the first stage of expansion for many brands, with the funds raised enabling brands to accelerate their physical growth through permanent or pop-up spaces. Whilst raising equity is a crucial element of expansion, brands fundamentally rely on consumer awareness and despite the challenges facing the retail sector, the opening of a physical space is ultimately still one of the best way to do this.” 

james.wallace@realassetmedia.com