Further consolidation is likely in the clothing and footwear sectors next year, according to a report from the corporate finance team at PricewaterhouseCooper (PwC).
According to Retail and Branded Goods Insights 2003, the two markets will generate most retail deals in 2004.
PwC retail sector partner Stuart McKee believes deals are likely because many clothing businesses are still owned by their founders, 'who are in need of new management and further capital'.
McKee said that on the back of the Competition Commission report on the battle for Safeway, consolidation in the grocery sector is now more likely to involve second-tier players such as Kwik Save and Iceland.
Deal activity in the home shopping market is also on the cards. McKee said: 'People are waiting to see what happens in the Argos and Littlewoods merger, but that could trigger plays by other big-book catalogue groups like Otto Versand and PPR-owned Redcats.'
McKee added that while speculation about retail sector deals had been rife in 2003, 'many deals have yet to complete, and M&A volume figures are likely to be well down on the full-year figure of 2002'.
PwC also believes that new chief executives of store groups might look to deals as a way of stamping their mark on their businesses.
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