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Parent company of Lane Bryant buying Ann Taylor, Loft owner ANN Inc. for more than $2.1 billion

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NEW YORK (CNNMoney) — Consumers may not be spending all that much so far this year. But some of your favorite retailers might be ready to go on a buying binge … for their rivals.

Ascena Retail Group, the parent company of Lane Bryant, announced Monday it was buying Ann Taylor and Loft owner ANN Inc. for more than $2.1 billion.

ANN’s stock rose 21% on the news and Ascena’s shares were up 6% as well. The deal creates a women’s apparel giant with nearly 5,000 stores and expected combined revenue of $7.4 billion this year.

Ascena also owns dressbarn and maurice’s as well as tween girl clothing store Justice.

Competition is fierce throughout retail. But the merger is also a sign of how tough it is in the retail business right now.

Both Ascena and ANN have reported sluggish sales growth lately. Getting bigger could help the two companies combat Amazon online as well as larger general merchandise retail chains like Wal-Mart and Target. Then there are the trendier chains like Forever 21 and Zara.

There have been several other notable mergers in retail recently. Staples agreed to buy Office Depot earlier this year. Family Dollar is acquiring Dollar Tree.

Expect the buyout trend to continue, especially if consumer spending remains as sluggish as it was in the first quarter.

Macy’s and Kohl’s both reported disappointing sales last week.

Several other notable retailers, including Wal-Mart, Target, Home Depot, Lowe’s, Best Buy, TJX and L Brands, will release their latest quarterly sales and earnings this week.

More retailers on the shopping block? So who could be next in a retail sector shakeout? Some other women’s clothing chains could wind up in someone’s shopping cart.

Both Chico’s and Express have been cited as possible takeover targets in reports during the past few months. Each is said to be in talks with private equity firm Sycamore Partners but discussions have since ended.

There was even speculation that ANN would go private. That’s because one of ANN’s shareholders is buyout firm Golden Gate Capital, which bought Red Lobster from Olive Garden owner Darden last year.

Rahul Sharma, a retail sector analyst and founder of investing firm Neev Capital, said it’s possible that Japan’s Fast Retailing, which owns UNIQLO, could make an offer for a U.S. apparel retailer.

Sharma, who goes by @retail_guru on Twitter and StockTwits, said that Gap or Abercrombie & Fitch could be intriguing possibilities for UNIQLO — although he conceded that the “stale brand” at Aberrcombie could be an issue.

Outside of apparel, Sharma said investors should keep an eye on Bed Bath & Beyond now that activist private equity firm Leonard Green & Partners just disclosed a stake in the home furnishings company.

Sharma said Bed Bath & Beyond competitor Pier 1 could be ripe for a takeover as well.

Finally, Sharma thinks that the still fragmented grocery market is due for a round of mergers.

European supermarket giants Delhaize and Ahold confirmed last week that they are in deal talks. Those two companies already have a big presence in the U.S. — Ahold owns Stop & Shop and Giant while Delhaize owns Food Lion.

So don’t be surprised if one of the stores you shop at frequently for clothing, appliances or food soon has a new owner. Merger mania is alive and well in the land of retail.

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