2026 M&A and Investment Trends in the UK Retail Sector
Lookback at 2025: A renewed focus on selective M&A
2025 saw steady but uneven progress in the UK retail sector. Despite a cautious consumer backdrop and lingering cost pressures, stabilising inflation and modest real income growth underpinned a gradual improvement in volumes through mid‑to‑late 2025, with a renewed focus on selective M&A, portfolio reshaping and investment in omnichannel and retail-media capabilities. Notable completions in 2025 included the acquisition of NK Space by US beauty giant, Ulta Beauty, and the acquisition of The Very Group by US private equity firm, Carlyle. At the same time, operating headwinds persisted, notably higher National Living Wage and NIC contributions and sticky energy and occupancy costs, all squeezing margins and cash generation.
Our international team of retail sector experts were here to support clients through these opportunities and challenges. Two memorable highlights from the year included advising on the £22 million acquisition by AIM-listed, Cake Box Holdings plc, of Asian sweets brand Ambala Foods Limited, and hosting clients and guests from the retail and food & beverage sectors at our ‘Retail Showcase 2025’ and ‘Retail Showcase – Festive Special’. These events served as a fantastic opportunity for retailers of all sizes - from emerging start-ups to more established brands - to showcase their range of products, as well as bringing together clients and guests for a night of fun and interesting discussion. Our retail expertise was further boosted by Mark Dewar joining as a Partner in our Commercial team. Mark’s practice focuses on consumer products, their regulation and risk at all points in the supply chain, including internationally, and he regularly advises on complex and international supply chain contracts for business-to-business and business-to-consumer goods and services.
Lookahead to 2026: Sub-sectors, PE investment and take privates
We expect momentum to carry into 2026, with demand favouring value and discount formats, affordable luxury in beauty and health & wellness, pet care, athleisure and home improvement, together with further growth in private‑label and resale. Retailers that deliver seamless omnichannel journeys and invest in AI‑enabled personalisation and retail-media should see gains as shoppers look for convenience, value and engaging in‑store experiences. We expect the in-store experience to remain a focus, with retailers leaning into experimental formats – pop-ups, immersive tech and in-store activities – to meet this growing consumer demand.
Private equity investment in UK retail was subdued in 2025; however, the outlook for 2026 is more optimistic. We expect PE to target resilient formats such as value, discount and beauty, pursue buy‑and‑build in fragmented sub‑sectors, and lean into carve‑outs where corporates reshape portfolios. Take‑privates may also feature where public market valuations and exit routes remain mixed. We also expect retailers with sufficient scale and market shares to execute partnerships and acquisitions across fulfilment, last‑mile logistics and data‑rich platforms to secure capacity, reduce shrink and enhance economics. Modernising supply chains and inventory planning, expanding click‑and‑collect and returns propositions, and monetising retail-media and marketplace collaborations will remain priorities for transaction and joint‑venture activity.
Outlook: An agile and consumer-centric approach
Despite the headwinds, the retail sector has proved agile and consumer-centric, and we are cautiously optimistic about the 2026 outlook. As shopping continues to blend online and in store and the market evolves, well prepared retailers will use selective acquisitions, partnerships and funding to build scale, secure stock, improve margins and unlock growth. We stand ready to support our retail clients - established and emerging - to deliver their strategic goals in 2026 and beyond.
