Growth in the retail, consumer and leisure sector used to be easier to find. The traditional tools to drive gains in this space have been challenged by fundamental changes in how the sector operates. We have identified two key shifts altering the retail landscape: the impact of the challenging economic environment and a changing consumer demographic.
In the US and Europe, high unemployment, the cost of living outpacing wage growth, high fuel costs, and uncertainty in fiscal policy have all contributed to heightened consumer wariness, causing consumers to be more protective of personal savings and debt levels and to reduce household spending. Depressed consumer confidence has contributed to the rise of the value-conscious model. Consumers are more discerning as they spend more time planning and researching pre-purchase, and retailers and consumer products companies that capitalize on preferences for value, convenience and variety are winning share. Meanwhile, low-income consumers in the emerging markets will benefit from the global focus on value-conscious business models, as these regions hold the best opportunity for future retail growth.
At the same time, consumer demographics are shifting as younger professionals move into the middle class across emerging markets, baby boomers across the globe age, and more women everywhere gain disposable income. The result is a highly differentiated set of consumers, requiring finely-calibrated products and messages to win their loyalty. Retailers and consumer products companies are also now confronted with a jumble of channel issues and operating formats, needing to drive growth through physical stores,e-commerce and other interfaces to improve the buying experience for a more diverse and technologically savvy younger customer.
We continue to work closely with our operating partners and management teams to drive value creation as these critical shifts play out, focusing on specialty retail, discount and value retail, travel/leisure and controlled brands, among others. Characteristics we look for in an Advent retail, consumer and leisure deal include retail store growth, unique unit economics, high consumer affinity, defensible customer accounts, and multichannel and online growth opportunities. Two examples of investments that exhibit these criteria are Charlotte Russe and Stokomani.