Opinion: Tom Hurley

News this week of the biggest fall in customers visiting the high street since the blizzards this time last year. The BRC announced that spending is 4.7% down on the back of rising household bills and fraying consumer confidence as a result of the eurozone debt crisis.

High street woes have been well documented before - empty shop vacancies remaining at around 11% shopping centres and out of town retail parks have dropped 2.2% with 1.6% fewer visitors. However it seems Christmas may come just at the right time for struggling retailers with speculation that a warm start to the winter and consumers keeping their powder dry waiting for the start of the Christmas shopping season could result in a bumper Christmas especially for those with a multi channel presence.

Today (November 28th) marks the beginning of an online shopping bonanza known as ‘Mega Monday’, and with Amazon and Comet launching five day sales online, shopping spend is expected to reach £424 million at the rate of £300,000 a minute. Britons are expected to spend £7.75 billion online during December with mobile spend (or Mcommerce) accounting for £1.6 billion. This "Mega Monday" is forecast to be the biggest online shopping day of the year with more than 3,000 orders expected every minute.

Multichannel retail remains an area which I follow closely, with so many high street retailers now seeing the importance of developing technology platforms as a key way to offset the erosion of margins in their high street stores. I will be following the performance of the high street closely in the coming weeks up until Christmas.

There is much informed (and uninformed) comment on what the retail sector of the future will look like.

In recent months, there has been much coverage of those retail businesses under pressure as consumer spending becomes increasingly stretched. Not all of it is bad news either, with Amazon for example announcing that they will open an eighth mega depot in Hemel Hempstead and create 4,000 new jobs, proving that retail growth is still possible providing the strategy is right.

However, I do think that the old model of out of town retailing is fast becoming obsolete as ecommerce and multi channel retailing increasingly dominate the retail landscape. News stories like the one that recently saw Capital Shopping Centres (owners of the Trafford Centre and the MetroCentre) are struggling to sign new leases for its retail units highlight the trend that will see 31% fewer stores in these locations by 2020. Indeed, our own research and contacts suggest that whilst a store roll-out 'in the old days' would have been 400 stores or more before saturation was reached, that number is no more than 150 today, if that.

Retailers are targeting growth in international markets initially with a uniform offer and increasingly with tailored websites, foreign language capability and transactional capability (local currency). We expect this strategy of ‘road testing’ attractive markets before committing to physical retail space to be the next step in the development of 'clicks and mortar.'

The combination of international reach and companies taking advantage of falling valuations to consolidate the market and acquire complimentary retail brands will continue to see M&A in those sectors which have been hardest hit by the channel shift.

I read an interesting article this week about how student athletes at Stanford University are to wear high-tech mouthguards equipped with pressure sensors to record impact data on the field of play. Apparently this data will be transmitted wirelessly from device to computers on the sidelines and video will subsequently be used to correlate specific events on the field, such as a tackles, with sensor readings. (They've obviously not been watching the Samoans tackle during the current world cup - I'm not sure how any sensor could be strong enough to record those impacts!)

However, it got me thinking about the data-centric age we live in and the increasing need for data and data interpretation. As I see it, the key piece here is not just capturing this data with the latest technology, it is how you actually interpret and utilise the data to create meaning and insight. You only need to think about the application of data monitoring services in a seismic context to realise the world will keep demanding more data and more analysis.

This will be further driven by advances in the technology we all use everyday, for example wireless technology and cloud computing will enhance the ability to remotely monitor data. Cloud computing may turn into one of the most overused 'buzzwords' of recent times, indeed the phrase may soon be lost as a mainstream IT solution. However in this data-centric age I see great potential for data service providers and consultants as they exploit the advantages of data monitoring and delivery to end-users via the likes of wireless technology and cloud solutions. Businesses may already be wasting too much money and too many opportunities by using old, long-standing solutions which are costly to run and have poor functionality.

Overall therefore I expect to see the emergence of many successful data monitoring consultants. There will be great scope for consolidation in what is a relatively fledgling sector. Keep an eye on the larger support services players who will ultimately look for a greater share of this market as it grows.

I'm convinced there are significant opportunities for operators providing outsourced donation processing and fulfilment services to the UK not-for-profit market.

Public sector funding for the charity sector in particular is under massive pressure right now (an understatement!), whilst the major charities are increasingly looking to be more efficient in private sector fundraising - witness the spate of funding boards, endowment campaigns, etc being set up by most at present.

There is therefore a growing need to outsource central services to reduce costs and increase the amount of donations that actually reach the ultimate recipient.

As Everyclick.com's recent fundraising, and own our work with Valldata show, the stronger players will now seek to consolidate the sector through organic growth and (presumably) selective acquisitions. This will be further boosted by larger players such as Capita on the acquisition trail in the wider BPO sector.

It seems an age of public sector cut backs will trigger M&A within the private sector striving to pick up the pieces.

In keeping with previous updates I see that oil and gas engineering continues to shine globally. Recent reports have indicated that the total value of global deals for 2010 exceeded $270 billion.

I still see much strength in the UK mid-market and look towards the niche providers in oilfield services for M&A opportunities in 2011.

The sector continues to benefit from strong growth drivers coupled to rebounding oil prices and the increasing difficulty to find and exploit oil field reserves.

With an ageing workforce there will be particular opportunities for those players that serve the outsourced training, health and safety and HR markets. 2010 certainly brought about a sea change (!!) in this respect and there will be increased emphasis on checks, more checks and regulations, particularly in light of the highly publicised failures in 2010.

I therefore expect deal activity to remain strong in this segment as the year develops.

Oil and gas deal activity remains at its highest point on record through July 2010, with some data suggesting global year to date transactions now exceeding $120 billion.

The sector is of vital importance to global M&A and willing buyers, including private equity investors, continue to show strong interest. Indeed oil and gas deals account for some 15 percent of the total global M&A volume. Deals should continue to stay strong amidst BP's Gulf of Mexico oil spill, as the aftermath of the disaster shifts the regulatory landscape and could make onshore assets more attractive.

Furthermore the spill could also force smaller operators in the Gulf to consolidate or sell assets, as the new regulatory landscape shifts favour towards larger firms as higher regulatory costs and legal risks make operating there too expensive.

More stringent rules are therefore likely to increase costs and slow the pace of drilling. Companies may also face higher liability caps and requirements to cover some clean-up costs in advance. The result may be that drilling in the Gulf of Mexico is only feasible for the world’s largest energy companies such as Exxon, Total and Statoil.

This in turn will have a knock-on effect for the UK industry. We are actively engaged now with contacts in the industry who must now get to grips with the implications of the spill - who will want to exit and who will want to become consolidators? Only time will tell.

Global M&A activity in the oil and gas sector has so far this year exceeded $38 billion, the highest year-to-date level since records began.

Despite extreme volatility in the price of crude oil and gas prevailing throughout 2008 and 2009, activity in the sector is now being spurred by relative stability. Oil prices have also risen to a level that will encourage spending and are likely to be sustained throughout the year.

I believe global M&A indicators will remain strong, due mainly to:

• strong growth driven by increasing global energy demand
• high oil prices for the foreseeable future
• economic growth in Asia where energy demand is growing by 4% to 8% per annum
• reserves concentrated in the Middle East and Russia, benefiting those who can successfully exploit these areas
• the industry is fragmenting as established producing areas such as the North Sea, Gulf of Mexico and Southeast Asia mature

What does this mean for the UK players? The upstream sector is key to the success of the UK oil and gas industry and plays a key role in the development of reserves in the UK and also overseas. Innovative processes to access unconventional reserves will therefore boost M&A as oil majors look to pick up businesses with exposure to the likes of shale gas and the technology to access it.

Expect to see further opportunities in unconventional reserves which require special treatment and complex projects as these projects continue to move ahead. This will increase demand for sophisticated equipment and services and will benefit UK companies with pioneering IP in this space.