New research from leading business and financial adviser Grant Thornton UK has unveiled a subdued retail M&A landscape, with strategic acquisitions by trade buyers continuing to dominate compared to private equity.
The firm’s latest Retail M&A review finds that 14 deals were recorded in the second quarter of 2025, a small increase on Q1’s 11 deals.
Most 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 well-established retail businesses are facing margin compression due to rising costs and limited exit options, creating a “Catch 22” for potential investors.
Despite a generally quiet quarter, the review highlights pockets of opportunity in niche retail segments such as health and wellness, pet care, and beauty.
These areas have shown resilience and strategic value, contrasting with the more challenging apparel market. Two notable deals from Q2 include:
• Sale of Karrimor, the outdoor equipment brand, to Adastria and ITOCHU. In March 2025, Japanese business ITOCHU and fashion retailer Adastria jointly acquired Karrimor. The deal aims to position Karrimor as a broader lifestyle brand rather than technical outdoor equipment brand. Together the Japanese businesses aim to scale the brand in Japan's competitive casual lifestyle consumer market using ITOCHU’s brand strategy expertise and Adastria’s local market retail operations.
• Dunelm plc’s acquisition of Designers Guild. In April 2025 Dunelm, Britain's leading homeware retailer acquired the Designers Guild Brand and design archive. The deal involves Dunelm licensing back the brand to Designers Guild to allow it to continue operating its own business and stores. Founder Tricia Guild remains creative director and the existing management team continues to run the business.
As the UK retail sector continues to navigate a complex macroeconomic environment, the report anticipates a gradual rebalancing of M&A dynamics in the months ahead. While private equity remains cautious, the impacts of global tariffs appear to reduce, which will ultimately provide security for the market.
Strategic trade buyers are likely to maintain momentum, especially in categories where brand loyalty and differentiated offerings provide a competitive edge.
Nicola Sartori, Partner and Head of Consumer Industries at Grant Thornton UK, commented:
"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.
“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."
Press Release
New report finds strategic trade deals outpace private equity in retail M&A
11 Sep 2025
New research from leading business and financial adviser Grant Thornton UK has unveiled a subdued retail M&A landscape, with strategic acquisitions by trade buyers continuing to dominate compared to private equity.
The firm’s latest Retail M&A review finds that 14 deals were recorded in the second quarter of 2025, a small increase on Q1’s 11 deals.
Most 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 well-established retail businesses are facing margin compression due to rising costs and limited exit options, creating a “Catch 22” for potential investors.
Despite a generally quiet quarter, the review highlights pockets of opportunity in niche retail segments such as health and wellness, pet care, and beauty.
These areas have shown resilience and strategic value, contrasting with the more challenging apparel market. Two notable deals from Q2 include:
• Sale of Karrimor, the outdoor equipment brand, to Adastria and ITOCHU. In March 2025, Japanese business ITOCHU and fashion retailer Adastria jointly acquired Karrimor. The deal aims to position Karrimor as a broader lifestyle brand rather than technical outdoor equipment brand. Together the Japanese businesses aim to scale the brand in Japan's competitive casual lifestyle consumer market using ITOCHU’s brand strategy expertise and Adastria’s local market retail operations.
• Dunelm plc’s acquisition of Designers Guild. In April 2025 Dunelm, Britain's leading homeware retailer acquired the Designers Guild Brand and design archive. The deal involves Dunelm licensing back the brand to Designers Guild to allow it to continue operating its own business and stores. Founder Tricia Guild remains creative director and the existing management team continues to run the business.
As the UK retail sector continues to navigate a complex macroeconomic environment, the report anticipates a gradual rebalancing of M&A dynamics in the months ahead. While private equity remains cautious, the impacts of global tariffs appear to reduce, which will ultimately provide security for the market.
Strategic trade buyers are likely to maintain momentum, especially in categories where brand loyalty and differentiated offerings provide a competitive edge.
Nicola Sartori, Partner and Head of Consumer Industries at Grant Thornton UK, commented:
"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.
“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."