What Factors are Fueling Retail M&A Activity in 2025?

In the current landscape of retail mergers and acquisitions (M&A) in 2025, several driving factors are at play, including technology, evolving consumer demands, and the pursuit of scale. Following a period of subdued activity, the global M&A scene is experiencing a resurgence. Retailers are seizing this momentum to enhance their digital capabilities and broaden their market presence. Navigating regulatory scrutiny, leveraging artificial intelligence-driven efficiencies, and embracing strategic adaptation are vital components for achieving success in this dynamic environment.

Amidst a rebounding M&A market, deal activity is on the rise after a period of stagnation. In 2024, global deal activity reported a 12 percent increase on Datasite, with North America seeing an 11 percent year-over-year (YoY) rise. Consumer and retail M&A played a significant role in driving these gains. The launch of consumer deals in the Americas surged by 15 percent in 2024 compared to the previous year, propelled by factors such as evolving shopping behaviors, AI-driven innovations, and lower inflation. This trend has continued into 2025, with consumer deal launches on Datasite escalating by 20 percent in the first two months of the year compared to the same period in the previous year.

Scale has become more crucial than ever for consumer and retail companies utilizing M&A as a means to swiftly and effectively achieve it. In an industry characterized by narrow profit margins and shifting consumer loyalties, scale facilitates cost efficiencies and operational versatility. Companies that can streamline operations and seamlessly integrate acquisitions will gain a competitive advantage. Alongside this, firms in the consumer and retail sector are evaluating their portfolios and divesting non-core assets, product lines, and subsidiaries that do not align with their long-term strategic objectives. For instance, an oil and gas company divested its convenience stores to better align with its commercial clientele rather than focusing on retail customers.

Another noticeable trend in consumer M&A is the persistent emphasis on add-on acquisitions. This approach serves as an efficient method for organizations to bridge geographical, channel, or product-specific gaps. For instance, a major beverage manufacturer recently agreed to acquire a specialty drinks company to tap into the trend towards fitness and lifestyle products, addressing unmet consumer demands.

Competition for desirable assets is intensifying, prompting companies and dealmakers to seek ways to streamline the M&A process. Artificial intelligence (AI) is playing a transformative role in M&A activities by enhancing speed, accuracy, and decision-making capabilities. AI-powered tools can expedite due diligence, automate repetitive tasks, and identify potential deal targets more efficiently than traditional methods.

Despite uncertainties in some industries stemming from shifting trade policies and tariffs, the retail sector remains resilient. Businesses are adjusting to evolving regulations rather than stalling transactions. The key to successful navigation in this landscape lies in preparation by anticipating extended review processes, maintaining transparency, and leveraging technology to accelerate approvals.

Looking ahead, it is evident that M&A has transitioned from being an optional growth strategy to a mandatory one. Private equity firms need to garner returns on aging investments, while corporations must evolve and acquisitions offer a direct pathway to transformation. The question no longer revolves around whether M&A will occur, but rather when it will transpire.

In the fast-paced world of 2025, retailers must prioritize deal readiness to thrive. Resilience and reinvention define the realm of retail M&A this year, with companies that embrace change, invest in technology, and execute deals with precision poised to emerge as industry frontrunners. Mark Williams, the Chief Revenue Officer for the Americas at Datasite, a leading SaaS platform utilized by enterprises globally for executing complex strategic projects, highlights the critical role that technology and strategic planning play in achieving success in the M&A landscape.