‘Now’s the right time to assess the potential for retail M&A’

At the outset of 2025, there was a sense of cautious optimism in the retail industry. Consumer confidence was on the rise, spending seemed poised for growth, and the M&A landscape was promising.

A pro-business government and relative economic stability further fueled the positive outlook. However, the anticipated surge has yet to fully materialise.

While certain spending patterns have held steady, consumer confidence remains fragile. M&A activity has followed suit, with a handful of high-profile transactions, like the Walgreens Boots Alliance deal, disproportionately driving overall value increases.

Although deal values have climbed by 32% year over year globally, underlying transaction volumes have decreased. This suggests the market is seeing larger individual deals, but fewer in number.

Early gains in retail sales during the first part of the year have since reversed, too, with growth slowing in the second quarter of 2025, highlighting the market’s volatility. Our recently launched PwC global M&A trends in consumer markets revealed a lengthening of deal timelines and a more cautious approach by businesses as they reassess portfolios and strategies. It’s made worse by persistent valuation gaps – what a buyer is willing to pay versus what a seller expects – that create additional hurdles in deal negotiations.

Yet, this environment actually presents a unique opportunity for astute buyers. As an M&A practitioner myself, this is a message that excites me. Although much of the focus has been on distressed M&A, I think there are still opportunities to acquire for growth out there for all manner of retail businesses.

Reduced competition from private equity means it’s a less crowded playing field, offering greater potential for strategic acquisitions – and we’re seeing increasing interest from global corporates looking for growth in established UK brands. Recent acquisitions illustrate this trend, with both start-ups and established players ranging from Space NK to Wild deodorants becoming attractive targets.

“Acquisitions pursued solely for the sake of growth, without a well-defined purpose, are unlikely to yield positive returns”

The acquisition of Space NK, in particular, could be indicative of a broader trend where established companies look to M&A to find new markets, products or consumers. Other interesting deals include Unilever acquiring brands such as Wild, or Muller acquiring Biotiful Gut Health, and show how serious the search for growth in new markets has become.

For retailers, M&A provides a powerful lever for profitable growth. Whether redefining core offerings, integrating innovative business models, securing supply chains or driving synergies, strategic acquisitions offer a considered way to navigate current challenges and capitalise on emerging opportunities. It’s not a particularly new trend – Marks & Spencer and Morrisons, for example, have long looked for growth in strategically securing and optimising supply chains in the past – but it is one we’re following with interest.

Success depends on having a clear strategic rationale. Acquisitions pursued solely for the sake of growth, without a well-defined purpose, are unlikely to yield positive returns. Instead, these types of acquisition must be approached as a critical tool for achieving specific strategic objectives, whether it’s driving growth, mitigating costs like rising business rates and employment costs, improving operational efficiencies, or innovating within the business. The current landscape also presents an opportunity for the right type of merger, allowing businesses to combine strengths and create a more resilient and competitive entity.

In this era of uncertainty, a proactive and strategically driven approach to M&A can be the key differentiator in retail. The message is clear: now is the time to carefully assess the market, identify potential targets aligned with your core strategy, and explore the unique opportunities presented by this not-so-quiet M&A environment. The potential rewards for those who act decisively and strategically could be substantial.