Venture capitalists are looking to capitalise on the growing demand for online retailing, especially in the Asia-Pacific (APAC) region, which can be attributed to the increasing use of smartphones coupled with growing internet penetration, according to data and analytics company GlobalData.   

According to GlobalData’s latest report, ‘Smart Money Investing in the Retail Industry in Q4 2017,’ despite a 4 per cent drop in the share of VC funding deals from 49 per cent in the third quarter of 2017, the APAC region still accounted for $420.9 million of the total investments ($937.3m) across the globe during the reporting period.  

“Venture capitalists are leveraging the growing demand for online retailing, especially in the APAC region,” said Vijay Varma, retail market analyst at GlobalData. “The funding is being utilised by online retailers to broaden their reach and introduce new product categories along with expanding their reach into other countries.”

GlobalData’s analysis on sector-wise investments also reveals that in APAC, the majority of VC funding is focused on the food and grocery (F&G) sector, in line with growing consumer preference for packaged foods along with increasing demand for organic/natural products.

GlobalData’s report also showed the M&A activity took a dip in Q4 2017 compared to Q3 2017. The Americas region dominated the M&A deals accounting for 78.5 per cent of the total M&A value in Q4 2017, while the APAC region accounted for less than 1 per cent of the total value.  

Geographic and product portfolio expansion were the key motives behind M&A activity for retailers. Several retailers such as Supervalu aim to make use of the distribution network of the acquired firms to reduce operational and investment costs. Within APAC, the key M&A activity centred around home and lifestyle firms.

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