ROD Investment Group believes in the notion of “when excellence is an art”. They continuously follow it with all the services provided by them. Their international activities are a huge part of Investment Banking in two main divisions. Rodschinson provides a range of great services across five continents. They have a varied client base that includes small and medium-sized businesses, large corporations, family offices as well as investment funds, and high-income individuals.
The specialists say that it's time we tend to go native. They are advising to speculate regionally. The three very important divisions of ROD, hailing in today’s scenario are F&B, Industrial, and Retail sectors. Experts are recommending investment in the above divisions, due to numerous reasons, which we’ll explore in this article.
Sectors like transport and logistics (T&L), food and beverages, as well as retail are currently undergoing huge changes, and like any transformation, both risks and opportunities are present. New upgraded technologies, advanced business models, and changing consumer demands. There are numerous ways in which these sectors can establish themselves to face new challenges coming their way.
Some facts about these divisions are as followed: -
The food and beverage industry is a hundred-billion-dollar industry. Approximately, 388 organizations of private equity have invested in the food and beverage sector. Also, more than 40% of the largest restaurant franchisees are private equity-owned. A large market is moving towards high value-added products. This came as an interest of investors in the F&B space. This led private equity activity to flourish in the F&B sector. There is a rising demand for better, healthier, and easy affordable products. This has resulted in making the way for entrepreneurs to invest and build upcoming generation brands.
Figure 1-Food and beverage revenue growth graph over year
In the year 2020, the logistic industries' growth graph was climbing. Though after the pandemic hit, it was hampered in the first half of the year itself. Still, the startups were bouncing back with a shorter lead time. The at-door experience was improved than before and the safety was increased. In the year 2021, the logistic industry ensured that the global flow of goods, particularly the essential items were undisturbed. They did not let, lack of transport and disruptions in the supply chain affect the flow of goods. It is safe to say that once the logistic industry was just a supporting service but now it has transformed and emerged as an essential and mainline sector.
Figure 2- effects of pandemic on Logistics and supply chain
2020 was a tricky year for the retail sector. This year we glance forward to a far better year. The second wave of the covid-19 virus this year has pushed back the hope of a consumer lead recovery to half of the year. The creation of the smaller businesses will continue in 2021, as smaller businesses will group and strengthen their roots in the market. The place of modification has been associated with excessive quantity for some involved and that we have seen several high-profile corporations sinking administrations in record numbers of store closures and job losses. Within the year 2020 specialist retailers and malls took a tough hit because consumers shifted to online rather than physical shopping. A survey shows that one in ten consumers across Europe is shopping online for food that is close to 30% in the UK.
As per Euromonitor, the retail business is ready to regain its track in 2021 and can reach the amount that was before the pandemic. The pattern of consumers has changed as more calories are consumed in the home and growth in spending on furniture garden products and home gym equipment. There has been a broader focus on health and wellness too. We observed the growth of flexitarian diet particularly in vegan foods.
The best part is that consumers are preferring to shop locally and support local businesses and producers, instead of traveling. They feel safer with local shopping.
Positive changes and opportunity to invest
Due to pandemic restaurants, the retail sector is struggling to predict upcoming consumer flow, the requirement of staff, and the cost of new health protocols, which will ensure the safety of staff and customers. Restaurants are positively growing by retaining staff, avoiding physical contact, and maintaining the required level of supplies of sanitizers and other hygiene-related products within their premises.
It's a great opportunity to invest as even in the current scenario, as the F&B industry is constantly adapting and growing. They are using tactics to remove hurdles and stay in business. Restaurants have come up with a menu of pre-packaged meals, grab-and-go meals, and home deliveries as their main food service now. Restaurants bars and lounges are open but with limited capacity to ensure social distancing. Covid-19 has affected the market adversely but, F&B is responding with innovations and rethinking every option of F&B operations from floor layouts to menus. They are also taking environmental conditions and the corporate culture into account while making new decisions.
The year 2020 was the first time when investment volumes retail business was overtaken by the logistics market. As a result, retail and office sectors are now in sync with industrials yields. Logistics and industrial properties have emerged over during that hardest criticism and pandemic. They established themselves as the third-largest asset class on commercial investment markets. This makes the logistics sector a topic of interest by few categories of investors. The growth background of this sector is also convincing in Europe.
Figure 3- Growth of logistics sector in coming years
The pandemic and vaccine rollout are undoubtedly shaping the 2021 economic landscape. Retail executives seem to agree that an economic recovery to pre-pandemic path levels will take time. With 6 out of 10 expecting a recovery in the next one to two years. On other hand, a quarter of retailers see a longer timeline of two to five years.
The retail industry was in a depleted position in the year 2020. Consumers shifted online instead of offline. This resulted in heavy debt burdens, increasing SG&A, slow asset turnover, compressed margins, and an increase in competition. This year, retailers are now aware of the changes, caused by COVID-19. They now must make provisions as to where to put their resources to ensure profitability. This will be a good start in reshaping the old retail model and make it adaptable to the new one. Retailers are looking for new revenue models like subscriptions and membership. They are also focusing on forming new partnerships and alliances for profitable and digital experiences. A Future increase in e-commerce purchases is expected of about 160%. They will be from new or low-frequency users.
Figure 4- Future of retail sector
You can see in the graphs above; these sectors are thriving with new improvements. Implementation of health and safety facilities along with adopting new technologies and business models, these sectors are willing to grow more and provide their investors with great benefits in the coming years.