A Stabilizing Landscape Sets the Stage for 2026
As we begin a new year, the consumer and retail sector is on materially stronger footing than it was last spring. While tariff uncertainty and signs of weakening US consumer health remain pressure points, the overall operating environment is more stable. Against this backdrop, we expect meaningful opportunities for growth, innovation, and dealmaking in the year ahead.
Explore our Consumer Retail team’s outlook highlighting the most influential trends shaping consumer behavior, retailer performance, and strategic decision making in 2026.
Consumer and Retail M&A Trends to Watch
1. Scale Matters More Than Ever
- Scale provides a critical buffer during periods of stress.
- In 2025, the combined revenue of the top 100 public retailers by revenue declined for the first time in more than 20 years (by approximately 1%), yet the top three retailers—Walmart, Amazon and Costco—grew by roughly 6%.
- Larger retailers continued to turn to acquisitions to expand portfolios, enhance capabilities and derive synergies.
- As major retailers grow, scale advantages compound—further distancing them from smaller competitors.
2. Consumers Continue to Prioritize Value
- Consumers across income levels are increasingly focused on maximizing value for their spending.
- Middle‑ and upper‑income shoppers are “trading down” to lower‑priced alternatives, prioritizing product utility and quality over brand loyalty.
- Discount shopping is now a deliberate choice for many affluent consumers, not just a response to financial pressure.
- Private‑label and “masstige” brands continue to gain share as consumers seek high‑quality products at more accessible prices.
3. Brand and Retailer Success Are Increasingly Codependent
- Securing distribution with scaled retailers can rapidly transform emerging brands by unlocking access to thousands of stores and millions of households.
- For retailers, differentiated brand and category assortments are key drivers of traffic, relevance, and competitive momentum.
- Brands that show up where consumers shop, and retailers that curate assortments aligned with evolving preferences, achieve stronger performance.
4. Business Line Portfolio Optimization Accelerates
- Large retail and consumer companies are re‑evaluating portfolios, divesting slower‑growth or non‑core assets to sharpen strategic focus.
- In food, capital is shifting toward modern, on‑trend brands that resonate with Millennials and Gen Z—especially better‑for‑you, functional, and protein‑led categories.
- Targeted acquisitions are being used to fill gaps in advantaged categories while companies shed brands that lack clear long‑term potential.
- Companies that streamline portfolios and concentrate investment in high‑growth segments are better positioned for sustained value creation.
