2021 marked another tumultuous year for the retail industry, but some bright sparks grew - and have been rewarded with the investment to grow further. Retail Week explores the companies that received the most investment in the UK in 2021.
Investment in retail companies in 2021 amounted to £968.29m, according to the latest data from Pitchbook.
While this was slightly down on 2020, the companies singled out for investment were clearly identified as the winners of the year, and the ones to watch in future years.
Identifying key trends and similarities from the list of companies that were invested in gives a clue as to what investors will be looking for over the next few years.
High on the list are beauty companies, healthy food companies and those with a more sustainable or value-led proposition.
Highest on the list is refurbished goods marketplace, Back Market, which completed a Series D funding round in May, raising £239m.
Post-deal, Back Market’s valuation was up 3.25x from 2020, indicating a consumer interest in purchasing more sustainable, second-hand goods.
The company just hit $5.7bn valuation (£4.18bn), saying in a statement “The… funding cements Back Market’s position as a leading refurbished electronics marketplace, with more than six million customers worldwide.”
Back Market said the funds would be used to help its bid to establish the circular economy in the mainstream.
Another similar business is The Handbag Clinic, which works to buy, sell and restore designer handbags, which raised £97.55m.
Two flower delivery services were in the top 15 most invested in companies of 2021. Bloom & Wild, whose business has tripled throughout the pandemic, received £125m from investors such as General Catalyst, Burda Principal and Latitude Ventures, while Freddie’s Flowers also received £42.33m.
With many unable to see loved ones during lockdown and the impacts of the pandemic limiting social interactions going forward, these businesses are a good bet for investors in 2022.
Beauty companies also thrived during the lockdown period as consumers focused on skincare and wellness products, which in turn led to an explosion of investment in this sector. Beauty Pie, Glossier, The Nue Co. and Beautonomy all received investments, ranging from £1.61m to £99.98m.
Following its funding round, Glossier’s more than tripled its valuation to $1.2bn, while Beauty Pie has grown 12.86x since its 2020 fundraising round - both DTC beauty brands are known for their high-quality products for more affordable prices.
Retail Week Prospect data analyst Eleanor Smith highlights Beauty Pie in particular as one brand that has grown hugely during the pandemic.
“Beauty Pie has turned profitable for the first time, following 100% member growth and revenues soaring by over that, which is hard to ignore when it halted ad spend during the year to mitigate issues within its own supply chain,” she says.
“Founder Marcia Kilgore claims that its customer retention rates outstrip Spotify’s and Netflix’s, and 20x higher than other D2C beauty companies, partly a result of the buyers’ club model.”
Customer demand for personalisation has also been a growing trend during the pandemic, and one that potential investors have watched carefully.
The Nue Co. and Beautonomy are two such brands that offer more personalised health and wellness propositions, with the former offering tailored subscription plans for vitamins and other probiotics, with the latter allowing shoppers to create custom makeup palettes.
Personalisation can also be seen in the fashion retailers that received investment during 2021 such as Lyst and Lookiero, which offer curated shopping experiences.
The two businesses received a collective £83.85m in investments - Lookiero received funding twice in the year, the first smaller deal for £2.19m was made in June and a second £21.59m deal was made in July as investors bet big on the business.
The effect of the fashion engine
Retail Week Prospect’s Smith says: “Lyst was perfectly positioned to take advantage of the Covid-19 pandemic, offering those ditching the dress and acquiring athleisure to shop across its partner websites whilst having none of its own woes from stressed supply chains. The fashion search engine revealed GMV [gross merchandise volume] of ‘over $500m’ during 2020, with this likely to grow as online demand remains steadfast.”
In the grocery sector, the investment figures indicate a flight to convenience - AllPlants and Weezy have both secured funding from venture capitalists.
AllPlants, a vegan recipe box service, also feeds into the growing health trend in retail. It received a total of £40.26m across three different investment rounds in 2021.
In what became an increasingly saturated international market in 2021, London-based on-demand grocery service Weezy received £14.7m in investment during the period. With rolling lockdowns around the world continuing, international investors have bet billions of pounds on the continued growth and success of international players such as Gorillas and Getir.
The Turkish giant, valued at more than $7.6bn at its latest fundraising round in September 2021, snapped up Weezy in November in a bid to supercharge its ongoing expansion in the UK.
That followed a slew of deals in this space in 2021, from American startup goPuff’s acquisition of Fancy and Dija in the UK, through to Delivery Hero’s purchase of a minority stake in Gorillas. With many of the world’s largest grocers also looking to muscle into this space with their own on-demand offerings, rapid grocery delivery is likely to continue to be an area of keen investment in 2022.
It’s clear that the strong pandemic trends translated into the world of investments, placing their bets that consumers will continue these new behaviours into 2022 and beyond.