Online Sellers Could Rouse Retailers From Their M&A Nap

NEW YORK (The Deal) -- The need for revenue growth may awaken retail M&A after a two-year slumber, and up-and-coming online players such as ripped jeans-and-stilettos purveyor Nasty Gal Inc. and eyewear seller Warby Parker could be in the sights of more traditional players.

M&A levels have been relatively flat in the retail sphere after hitting the peak in 2012, according to Alan Mustacchi, managing director at investment bank Dresner Partners.

"Retailers are not getting much growth in general on the top line," Mustacchi said, adding that they are looking "for anything that can help grow that top line."

He explained that while many industry players are contracting, they are simultaneously searching for growth opportunities. And they often find themselves at a crossroads when it comes to choosing between building an online platform themselves and acquiring one.

"A lot of brick-and-mortar retailers have found that they're great merchants [and] they're great retailers," Mustacchi said. "But e-commerce is a different story."

Witness Nordstrom (JWN) which announced on July 31 that it will scoop up men's fashion retailer Trunk Club, marking the Seattle-based company's first major deal since 2011, which is when it added flash sale website HauteLook.

Other major retailers, too, have gone the acquisition route to add more online sales. Target (TGT) bought online beauty site DermStore Beauty Group in August 2013, while TJX Cos. (TJX) acquired Internet retailer Sierra Trading Post in late 2012.

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