There is no sugarcoating that 2023 was a tough year for UK retailers, as inflation and interest rate rises attacked household budgets, causing ONS annual retail sales volumes to fall for the second consecutive year.

This was reflected in a quiet period for M&A, as private equity remained cautious about consumer-facing investments and trade buyers hunkered down.

To add further challenges, at the tail end of the year, the sector also faced disruption to it supply chains with the disruption in the Red Sea. Next warned in January, this may result in stock delays, with apparel, household staples and white goods to be most impacted and therefore retailers may need to raise prices.

Despite this landscape, several noteworthy transactions crossed the line in 2023. Some brand builders remained active, and retailers showed that opportunistic deals are still possible.  Niche brands of scale with a genuine point of difference also successfully secured rare Private Equity investment.

Deal volume

UK retail M&A volume/value


The ten deals that crossed the line in the final quarter of 2023 stuck a pin in a subdued year for retail M&A. They contributed to a total of 38 transactions in 2023, the lowest number since our records began in 2010.

Total deals value

The total value of 2023 retail deals – for which financials were public – was £3.48 billion.
This is an 82% increase on 2022 due to Asda’s £2.27 billion acquisition of the UK and Ireland operations of EG Group in May.

Key deals in Q4

Poltronesofà buys ScS for £122.7 million

In October 2023, Italian furniture group Poltronesofà made an offer for UK-listed sofa and flooring chain ScS. The ScS board welcomed the deal that gave the 100-store chain an equity value of £99.4 million.

The acquisition gives Poltronesofà entry into the UK market. It currently has over 167 stores in Italy, over 106 in France, and 27 across Europe.

Separately, UK-listed retailer musicMagpie was subject to two approaches in Q4, one of which was from private equity house Aurelius Group.

Mars buys Hotel Chocolat for £534 million

In November 2023, US food giant Mars undertook a £534 million takeover of the AIM-listed UK retail chain Hotel Chocolat.

The offer was 170 per cent higher than Hotel Chocolat’s closing price before the deal announcement, reportedly making it the largest takeover premium paid on the London stock market in 25 years. However, it was still short of the retailer’s peak valuation of more than £700m in late 2021.

Mars said it would use its international presence to expand the Hotel Chocolat brand, though manufacturing would remain in the UK.

Next buys FatFace for £119 million

In October 2023, Next continued its acquisition spree of UK fashion brands with the addition of FatFace. Next will pay FatFace’s owners, a consortium of financial institutions, including Lloyds Banking Group and Alcentra, a combination of cash and new Next shares.

The retailer will add FatFace to its Total Platform infrastructure, which supports third-party brands with website management and customer service.

The Raine Group, Hanaco Ventures and Felix Capital invest £145 million in Castore

In November 2023, a consortium led by The Raine Group invested £145 million in Castore, a  premium performance sportswear brand that supplies and sells kit for high-profile sports teams. Its team partners include McLaren F1, Glasgow Rangers, and Bayer Leverkusen.

The funding will enable Castore to invest in team relationships, its sportswear brand and omni-channel retail operations.

Rescue and Restructuring (R&R)

Deals with explicit R&R involvement


In October 2023, owner AHK Designs acquired Victoria Plum in a pre-pack deal. Rising global freight costs and pressure on consumer spending have hit the furniture sector. This was the only Q4 deal involving explicit R&R, taking the total for the year to nine (24%).


The trends that powered retail M&A in 2023

Brand building

Q4 deal activity reflected a busy year for brand builders. As mentioned previously, Next added FatFace to its Total Platform collection; Iconix Brand Group acquired streetwear brand Hoodrich, and Frasers Group, continued its advance on the premium fashion market with the buyout of fashion chain Zee & Co and premium independent retailer John Anthony.

The deals reveal opportunities for large retailers with both the finance and ‘plug-and-play’ infrastructure to expand through acquisition.

Unique challengers

Castore’s £145 million fundraising (see above) is one of 2023’s big success stories, showing that, no matter the consumer environment, investors will back retailers with a demonstrable point of difference and growth path.

Founded in Liverpool in 2015 by brothers Tom and Phil Beahon, Castore is taking on sportswear giants like Nike and Addidas. It supplies its partners with a full range of high-quality merchandise while providing them with the data and tools to deepen engagement with their fans. Data from Companies House shows that Castore’s turnover more than doubled from £49 million in the year to January 31 2022 to £115 million in the year to January 31 2023. Over the same period, EBITDA increased from £8.2 million to £17.1 million.

Premium ESG

Investors sought targets with a strong ESG focus in 2023. These included Growth Partner’s minority stake in eco-outdoor clothing company Passenger, ABN AMRO’S investment in sustainable brand house Think Better Group, and Bridgepoint Development Capital’s strategic investment in sustainable jewellery brand Monica Vinader.


Despite a challenging 18 months or so, the tide may be slowly turning in consumers’ favour with the worst of the cost of living crisis behind us. Despite an unexpected rise in December, Consumer Price Inflation (CPI) slowed significantly throughout 2023 and it is hoped interest rates, which have been held at 5.25% since August 2023, should start to drop later this year. As spending patterns regularise and there is increased clarity for retailers, we expect a more normalised 2024.  If the tide is starting to turn, this should give investors back more confidence and as the year progresses, we’d hope to start seeing renewed interest in the sector.

For more insight and guidance, get in touch with Nicola Sartori.tracking