Potential for an upswing: Q1’24 M&A trends in consumer & retail

In the face of considerable challenges such as funding issues, valuation disparities, and general market unpredictability, the consumer and retail (C&R) sector is hinting at a potential upswing in Q1'24. Despite a volatile start to the year, the C&R sector is resiliently navigating the shifting global market, opening avenues for lucrative acquisitions and promising growth. Notable deals from the last quarter have sparked renewed market interest, marking an optimistic outlook as we venture deeper into the year.

Here are some key trends and insights from the first quarter:

The beauty and wellness category emerged as a high-growth driver in the C&R M&A market, as brands realign their strategies towards health and wellness. There has been an uptick in private transactions in the C&R sector, indicating strategic shifts for greater market share.

•  The beauty market is experiencing a surge in premium purchases with North American luxury beauty sales growing by 15 percent in 2023. Also, the wellness trend is adding an extra $45.8 billion to the US beauty market value of $148.2 billion.
• Q1'24 saw a nine percent drop in deal volume, marking a challenging start for C&R M&A activity. However, the sector demonstrated resilience with notable transactions such as The Home Depot's $18.3 billion acquisition of SRS Distribution and Walmart's procurement of Vizio Holdings for $2.3 billion. 
• Despite the tightening financing and widening valuation gaps, about 65 percent of executives surveyed anticipate a rise of 0-10 percent in deal volume compared to last year, indicating a positive growth outlook. However, PE activity contracted in Q1'24, with retail PE deal value dropping 63 percent to $1.1 billion while consumer PE deals fell by 48 percent to 70 deals. 

As we move forward, we anticipate a more dynamic and robust market in the C&R sector, characterized by strategic partnerships, emerging market trends, and increasing consumer engagement. Download our paper to gain more insights on M&A trends in the C&R sector.