Retail M&A landscape ‘subdued’ in Q2, Grant Thornton finds

The UK has witnessed a “subdued” retail M&A landscape in Q2, with strategic acquisitions by trade buyers continuing to dominate compared to private equity, according to new research from Grant Thornton UK.

The firm’s latest Retail M&A review  found that 14 deals were recorded in the second quarter of 2025, a small increase on Q1’s 11 deals. 

Notably, the report found a “continued reluctance” from private equity firms to invest in retail, citing macroeconomic volatility, inflation, interest rate pressures, and tariff uncertainty. 

It also noted that even more well-established retail businesses are facing margin compression in light of rising costs and limited exit options.

Despite a generally quiet quarter, Grant Thornton said there was still opportunity to be found in “niche” retail segments such as health and wellness, pet care, and beauty, which contrasted with the “more challenging” apparel market. 

The firm said that as the UK retail sector continues to navigate a “complex” macroeconomic environment, it anticipates a gradual rebalancing of M&A dynamics in the coming months.

It comes as the impacts of global tariffs appear to reduce, which will “ultimately provide security for the market”. 

It added that strategic trade buyers are likely to “maintain momentum”, especially in categories with brand loyalty and differentiated offerings.

Nicola Sartori, partner and head of Consumer Industries at Grant Thornton UK, said: “While the retail M&A landscape continues to face headwinds, we’re seeing clear signs of strategic resilience and in lots of areas now active growth. 

“Trade buyers continue to identify long-term value in niche segments like pet care where consumer demand remains robust and brand differentiation is strong. These deals allow investors to future proof portfolios in a landscape of changing customer expectations.”  

She added: “Private equity may be taking a cautious stance for now, but we believe this is a temporary pause rather than a permanent retreat. As inflationary pressures ease and valuation gaps narrow, we expect investor confidence to return, particularly in businesses with strong digital capabilities and scalable models.  

“Retail is a sector that constantly reinvents itself. The fundamentals of innovation, customer loyalty and brand strength remain as relevant as ever, and that’s where the next wave of M&A opportunity lies.”