Merger and acquisition activity is often looked at as one of the many economic indicators of a healthy economy. Unfortunately for us as investors, M&A activity isn't as cut-and-dried as the pundits make it appear. M&A activity is occasionally necessitated not out of strength, but as a response to a decaying business model.

Such is the case right now with two business sectors struggling mightily to split a shrinking pie among far too many mouths. Below, I've outlined two sectors that would likely benefit from consolidation. While this may not mean a win-win for stockholders of these hypothetical scenarios, it could at least mean the survival of the sector as we know it.

Office supplies
Small-business owners simply aren't spending like they were five years ago, and that has sucked the life force directly out of the office supply sector. OfficeMax (NYSE: OMX) and Office Depot (NYSE: ODP), the two weakest links of the sector, have seen declining revenue in each of the past three years as margins tighten and consumers turn to high-tech gadgets and online retailers to make their purchases. Even sector leader Staples (Nasdaq: SPLS) has struggled to adapt, changing an image of "that was easy" into "that was like pulling teeth."

With that being said, it seems logical for OfficeMax and Office Depot -- once bitter rivals -- to consider merging. The cost savings would be the primary benefit. Each company could spend significantly less on advertising and could close underperforming stores, adding a relatively quick boost to an already thin gross margin. While this might not be enough to save these two companies, it seems to me to be the only hope each company has to compete against Staples.

Baby boomer retail
OK, so you won't exactly find baby boomer retail listed as an "official" sector, but there is considerable room for improvement in this unofficial entry -- specifically for retailers catering to baby boomer women.

Things are going from bad to worse for female-focused retailers Talbots (NYSE: TLB) and Coldwater Creek (Nasdaq: CWTR), which have failed on numerous occasions to predict consumer fashion trends. Now both companies find themselves with far too much inventory and no choice but to offer steep discounts in order to get rid of it. Coldwater Creek has turned only one profit in the past five years, while Talbots has squeaked out only two.

The only plausible solution I see is for the two cash-rich rivals in this sector, Chico's (NYSE: CHS) and ANN (NYSE: ANN), to use their pristine balance sheets to purchase these two weak links. Chico's management and ANN's well-known brands would be the guiding force behind a potential sector consolidation. All parties would benefit from decreased business expenses and maybe, just maybe, the consumer will get what she wants.

Foolish roundup
While these hypothetical mergers and acquisitions may never occur, it'd be foolish (with a small "f") to assume that struggling companies like OfficeMax, Office Depot, Coldwater Creek, and Talbots are going to turn things around on their own. Each company has been given ample time to change its image and it simply hasn't taken hold. Whether or not a money-making opportunity exists for shareholders is still up for grabs, but these two sectors definitely bear watching.

What sectors do you feel are ripe for consolidation? State your case below and consider adding these companies to your personalized watchlist to keep up on the latest news from their respective sectors.

Add OfficeMax, Office Depot, Staples, Coldwater Creek, Talbots, Chico's, and ANN to your watchlist.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong  Motley Fool newsletter services have recommended buying shares of Staples, and creating a short position in Office Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that always puts its readers first.