M&A: key retail opportunities in 2025

Headwinds will drive further market consolidation in 2025

John Stevens, investment director at Endless

As a private equity investor, we expect that the retail and wider consumer sectors will continue to provide challenging deal-making environments in the early part of 2025.

Readers will be well versed in the various headwinds the sector has faced. This list has been increased in recent months by the challenge of maintaining profitability following the impact of the October Budget.

Many companies will likely be unable to pass on the impact of higher staff costs in a period of low consumer spending, while facing increased inflationary pressure from a supply chain which faces the same challenges.

This will drive further market consolidation in 2025 as larger players take advantage of cut-price acquisition opportunities. Despite these headwinds, we have a strong appetite to invest into the sector and our focus remains on those businesses that have a strong reason to exist in their market, a brand proposition that customers value, headroom for growth and management teams that are agile.

Challenger brands are attracting M&A attention and premium values

Sajjad Hassam, special situations M&A director at PwC

Agile challenger brands that scale at pace are attracting M&A attention and premium values – they are often capturing and defining a trend, unfettered by the need to rewire complex operating models or deal with legacy store estates.

[In November 2024, British streetwear brand Represent sold a minority stake to investment firm True to accelerate its growth and global expansion.]

We are increasingly seeing established fashion retailers explore transactions that capitalise on the equity in their brands. Executed correctly, this can deliver greater deal values through M&A or creative licensing and partnership deals that unlock funding.

Those that have pulled levers to weather the challenges in the last few years – consumer confidence, inflation, supply chain disruption – may find 2025 is the year they ultimately want to, or need to, transact.

We are witnessing some early signs of a revival of investor commitment

Marco Piacquadio, director of FTS Recovery

A proliferation of smaller scale transactions meant that while there has been a rise in M&A activities, their cumulative value was considerably below the anticipated levels. There is every reason to believe this trend will continue.

We are witnessing some early signs of a revival of investor commitment to the old bricks-and-mortar retail environment, though we remain sceptical of its long-term prospects.

Last year saw a resurgence of investor interest in rescue deals for established retail brands such as Roksanda and Wiggle. Laura Ashley’s recent acquisition by Marquee Brands is a promising early indicator that this trend will continue, with Frasers Group likely remaining one of the most active in the space.

We expect a significant spike in M&A activity in the second half of 2025

Neil Sumner, managing director and head of M&A at Interpath

Over the last year, companies have continued to assess their brand portfolios, actively pursue non-core disposals, and complete strategic and sometimes opportunistic acquisitions.

Volatile trading conditions have resulted in protracted sale processes spanning multiple key trading periods and a movement towards pre-emptive offers. We expect these trends to continue throughout 2025.

Investors will continue to be creative with transaction structures to enable them to meet vendor expectations while also have an element of downside protection, such as using a blend of equity and debt and put or call options.

With a backlog of private equity exits, we expect a significant spike in M&A activity in the second half of 2025, particularly as a result of clearer trading patterns for some retailers. As for listed companies, we expect more de-listings, as share prices remain depressed relative to other sectors.