Decoding the New Rules of Retail Mergers, From Integration to Innovation
Mergers are popping up all over the place right now, and the retail category is no exception. From Forever 21 and JCPenney joining forces to create something called "Catalyst Brands" to a whole raft of retail announcements post-election, it’s all about consolidation. With Harvard Business Review reporting that 70 percent to 90 percent of mergers and acquisitions fail, the stakes are high. Yet in retail, where customer experience is currency and brand loyalty harder than ever to retain, success requires more than a well-executed integration. More important is a truly thoughtful progression from conception to execution, that connects business to brand to experience seamlessly.
In an ideal world, mergers shouldn’t be about survival, but rather an opportunity for creating new forms of relevance for customers who definitely aren’t thinking about your “operational synergies.” So, how do you think about a merger in a way that moves past pragmatism and creates new value?
Does the Partnership Work on Paper?
Before everyone gets excited about new logos and store concepts, consider what really drives successful retail mergers: deep commercial understanding. Gone are the days of cheap capital, and the flood of new deals we’ll see in 2025 won’t necessarily be cheap at the price. New shareholders will want profit and the commercials need to stack up.
Understand your equities. What are the strengths of the existing brands, and how are they fortified by bringing them together? What are their weaknesses, and how will this merger mitigate them? Is this partnership a thoughtful, strategic move, or just a desperate attempt to remain relevant? The goal is to complement each other so that the final output is greater than the sum of its parts.
Beyond the Logo: Setting a Strategic Foundation
Mergers fail when brands focus on structure before substance. A new identity should be more than a shiny new name and a logo change — we’ll get there. It’s a pivotal strategic foundation. The most successful retail mergers go beyond an integration of two brands and reimagine what the new entity stands for and who it serves. They lay the groundwork for new associations and meaning.
A merger is a rare chance to reset market perception, to send a signal of intent. How a brand shows up post-merger shapes expectations for customers, employees and investors alike. If your merger strategy isn’t grounded in real customer needs, then you’re gambling. Smart brands treat a merger like a listening exercise — as an opportunity to learn more and meet customers more adeptly — adapting to signals from customers and employees alike. Voice-of-the-customer work, co-creating with employees are not only valuable sources of insight, but also an opportunity to enlist your stakeholders along the way.
When it comes to identity, trying to keep everyone happy is a trap. Some mergers try to retain everything, fearing alienation of existing customers. However, this approach leads to confusion when more than anything you want clarity.
An oldie, but a good example: When Macy’s acquired May Department Stores in 2005, it initially struggled with identity because it tried to keep multiple department store brands under one roof. The solution? Going all in on Macy’s, phasing out regional names, and leaning into a national department store model. It wasn’t universally popular, but it created a singular, unified identity that made it easier to scale.
Can You Ease Stakeholders’ Jitters?
Even the most promising mergers begin with a sense of unease. Internal and external audiences will worry about the changes and their impact. A successful new brand that marries strategy and identity, and is grounded in insight, reality and customer needs, goes a long way in addressing these concerns.
A great way to calm trepidation is to organize behind a growth narrative. By launching with a smart, logical narrative that explains the rationale behind the merger, its objectives, and the road map, you can give a unified sense of direction with employees and customers.
Take Saks Global, the entity formed in 2024 by merging Saks Fifth Avenue and Neiman Marcus. The vision wasn’t just about cost savings; it was about rethinking the role of the luxury department store. By combining Neiman Marcus’ high-touch personal shopping model with Saks’ stronger digital commerce capabilities, the merger positioned Saks Global as a modern hybrid luxury retailer. Now, of course, the test will be whether employees and customers will embrace the shift — and whether it will truly deliver on the promise of redefining retail or ends up being more about the efficiency play.
Always have an eye to culture. A merger is a huge cultural shift for the companies in play, and the internal rollout is more vital and crucial to success than the external. Employees are the front line of execution, and if they don’t understand or believe in the new vision, neither will your customers. The best mergers invest in aligning teams, defining shared purpose, and making sure the integration feels like an opportunity where everyone has an understanding of the role they play in its success.
Are You Ready to Embrace Uncertainty?
After brands merge, it takes time to settle in and determine how to make a difference in the marketplace. It's like moving in with a partner — no matter how much you prepare, you can't predict the final dynamics. Businesses that embrace this uncertainty and trust the process often uncover unexpected opportunities, such as a cross-pollination that opens up a new line of business. This is the "wow" factor — the unexpected but welcome discovery, and the door opener to innovation.
At the end of the day, retail mergers, or any merger for that matter, are much more than a simple combining of assets or operations. They're opportunities to create new forms of value for customers who are getting harder to impress by the day. Those that succeed will be those that view their merger not as a “new wrapper” or a fait accompli, but as a starting point for expanding relevance, inspiring innovation, and creating new value.
Katie Hankinson, MD, is the U.S. lead at Yonder, a consultancy that blends insight, strategy, and imagination to drive growth.
