As the pandemic tightens its grip on high streets, dozens of distressed retailers are seeking buyers to save themselves. Prominent amongst these are” TM Lewin and footwear chain Office and Monsoon/Accessorize, reveals Drapers. Retailers like Cath Kidston, and Oasis and Warehouse Group had also appointed advisers to initiate sale before both businesses collapsed earlier this month.

In future, many more retailers are likely to put their businesses up for sale as the pandemic is pushing them to the brink. Left with little cash, these retailers are being left with no choice but to pursue a potential sale.

Dwindling businesses fuelling sales

One major reason retailers are selling is due to the dwindling value of their businesses. As Matt Truman, Co-founder of retail and consumer innovation investment firm True reveals the pandemic has lowered the value of these businesses to a fraction of what it was five weeks ago. There are two types of businesses that are selling, those who were struggling anyway, and those that probably do not deserve to go under but will be in trouble because of prevailing conditions.

Hesitation amongst buyers

An important challenge that arises before these sellers is of finding appropriate buyers. Some players previously known for hovering on high streets, chiefly Sports Direct’s Mike Ashley, and Edinburgh Woollen Mill’s Philip Day, could have had their appetites for acquisition dulled. Others, that that already have in-store partnerships with third-party fashion brands, might look at the market.

Even acquisitions agreed before the outbreak and subsequent lockdown are not being considered safe to be executed. For example, Moss Bros’ suitor Brigadier Acquisition Company, owner of Crew Clothing, is trying to retract its £22.6milion deal to buy the tailoring chain, a mere month after originally making the offer in early March.

Stability and innovation to succeed

A consultant at a large investment firm with stakes in high street retailers further warns many more retailers are likely to abandon their acquisition plans a result of the pandemic. However, players who specialize in supporting businesses with some kind of problem will still look.

Truman opines two types of retail businesses will emerge winners from the pandemic: those who provide staple products and those who are focused on innovative proposition – which includes product.

Growth potential and control to drive sales

David Kaplan, Partner and solicitor at law firm Nelsons, agrees retail businesses with large store estates are unlikely to appeal to buyers who will now look for growth potential and control over overheads. He believes, one option that could emerge is buyers cherry picking what they want from distressed retailers – such as just the brand name and key stores – rather than the entire bricks-and-mortar estate.

Retail and acquisitions expert Paul Cuatracasas, founder of investment banking firm Aquaa Partners views retailers who have failed to adapt to changing times will struggle. They would have little choice but to put the business up for sale and see what they can get for it.

Agrees Moss Bros suitor Brigadier Acquisition Company, the owner of Crew Clothing, who is trying to retract its £22.6million deal to buy the tailoring chain According to him, strong ecommerce retailers might see it as a good time to acquire businesses with a physical presence relatively cheaply and explore bricks-and-mortar. Buyers might also be interested if the business up for sale has retained some brand name value and still means something to consumers.

Though far from ideal, the coronavirus pandemic has left retailers with no choice than to conduct a sale and find an appropriate buyer.