Ch. 11, M&A activity light: more exit bankruptcy than enter it - Annual Industry Report Top 150 - retail industry - Industry Overview

DSN Retailing Today, July 7, 2003 by Debbie Howell

Other international deals included Office Depot's buy of European contract stationer Guilbert and Blockbuster's acquisition of Gamestation, a British chain.

More deals of note were Staples' purchase of Medical Arts Press, which sells office supplies to medical professionals, Sears' purchase in mid-2002 of cataloger Lands' End to improve its apparel offerings and eBay's bid for online payment system PayPal. Early in 2002, Save-A-Lot acquired dollar-store chain Deal$ and Bed, Bath & Beyond purchased Harmon Discount in March of last year and more recently acquired 23-unit Christmas Tree Shops.

With so much retail consolidation over the past decade, a few players now dominate each segment, leading to fewer opportunities for mergers of size. As a result, smaller chains will continue to be at a disadvantage as the nationals grow in power and scope, with future bankruptcies and liquidations likely.

Significant fallout may continue in certain sectors, including the highly fragmented supermarket industry that has been affected by supercenter growth, as well as among struggling mall-based retailers such as Sears that are suffering from changing shopping patterns in favor of discount chains.