Browsing Retail M&A with PwC’s Mike Ross

ACG’s Q1 Market Pulse Survey found that retail was the sector least likely to see increased M&A activity in the first half of 2026. But a closer look reveals a more nuanced market, says Mike Ross, U.S. consumer markets deal leader at PwC. He joins the podcast to explore the consumer habits creating investment opportunity, why carve-outs have grown in popularity, and more.

Read a transcript of the podcast below.

Middle Market Growth: Welcome to ACG’s Middle Market Growth podcast. I’m your host, Carolyn Vallejo. Consumer sentiment is shaky and recent surveys of middle-market dealmakers consistently reflect low expectations for M&A activity in the retail sector this year, but a closer look at this picture might reveal a more nuanced and promising outlook for the industry. PwC’s Mike Ross joins us to offer some clarity into the retail M&A landscape. Welcome, Mike.

Mike Ross: Hi, Carolyn. Thanks so much for having me.

MMG: Thank you for being here. And of course, we would first love to get to know you a little bit better. So tell us about your role at PwC.

MR: Sure. So I’m a partner at PwC and I lead our consumer markets deals practice. So that includes consumer products, retail, wholesale, hospitality and adjacent areas like travel, transportation, and logistics. I’ve been at PwC for nearly 25 years and have spent a significant amount of time working with both corporate and private equity clients on the sell side and the buy side. Everything’s from smaller tuck-ins to larger global transformative deals. And so I would say here, you know, dealmaking, the consumer space is as challenging as I’ve ever seen it since I’ve been at the firm here. But those, all those challenges are also where opportunity tends to emerge. So we spend a lot of time analyzing consumer behavior because it’s foundational to creating value in today’s environment. And I’m really just glad to be here today to share some of those insights.

MMG: Awesome. Well, we’re so glad you’re here as well. You’re definitely a great person to speak with about this topic. But before we jump in, we like to ask our guests, if you could learn any new skill in 2026, what would it be and why?

MR: Maybe Claude coding, not because it’s trendy but because actually my, my first career in the nineties was actually as an e-commerce developer. Think of those first generation e-commerce sites. So I think it’s, it’s relevant and also it could be a fun way to kind of get back to my roots.

MMG: Well, let’s dive into it—retail M&A. You mentioned this is one of the most challenging times that you have seen and you know, as I mentioned in our introduction, surveys from middle-market dealmakers, including surveys conducted by ACG, have found that retail tends to be ranked as the least likely to see increased M&A activity in 2026. Yet there have been some promising and, and some high-profile deals even already this year. So can you tell me about what you are seeing and what your outlook is for consumer M&A, and retail M&A specifically?

MR: Sure. Well, I’m not surprised by the survey. Retail certainly is tough right now but we’re seeing a steady flow of deal activity, including some of the larger transactions as you mentioned. I think it’s important to recognize that like retail isn’t just one market. It’s really a collection of different markets. So grocery value, apparel, specialty luxury, they’re all operating under very different consumer dynamics. Understanding those differences is critical when you’re evaluating M&A opportunities. Now, you know, what we’re seeing in the consumer behavior space here is a real divergence. You know, even as high income household and holiday spending grew year on year, some of that growth shifted from value retailers towards the value retailers I should say here, rather than the mid-tier players. I mean, that, that reflects, I think, what we’re seeing more broadly in the economy. So while these higher income households account for a growing share of overall spending, the majority of the consumer segments remain price conscious. That means that the value formats are gaining momentum. You know, with volumes growing about 16% year on year while mid-tier food mass drug retailers collectively lost more than 2% of wallet share. Consumers are optimizing the spending on essentials to protect spending on experiences. And in other words, you know, they’re, they’re trading down on basics so that they continue to spend on dining travel and what we often call meaningful moments. And so the result then, you know, is this clear barbell effect in retail value formats and differentiated brands are winning while the middle continues to get squeezed. And so, you know, what does that mean for deal activity? Investors are being very selective. You know, I think we’re going to, we’re likely to see deal activity that’s going to be aligned with those consumer shifts, differentiated brands that are tied to experiences or strong loyalty and formats that are, you know, I would say relentlessly focused on value, the mid-tier retailers. Without that clear value proposition, those are going to be the ones that I, I think are going to see less interest.

MMG: Yeah. I want to talk a little bit more about which segments or pockets of retail offer that M&A activity. We’ve seen some deals in, for example, the fashion space and, and even the luxury space as of late. Is that indicative of that kind of divergence or barbell effect that you just mentioned?

MR: I mean, like, it, I think it’s true. We’ve seen a number of deals in fashion and luxury over the past year, but many of those involve larger global players, right? We may continue to see activity there, but again, buyers are being extremely selective in this space. You know, where I see the, the potential for more, I call it midmarket action, is in a few different subsegments. So first of all, grocery remains highly fragmented with many regional markets, and scale matters more than ever. You know, whether that’s improving purchasing power, optimizing supply chains, or investing in tech and automation to protect margins. There’s a meaningful population of independent and family-run grocers who may be evaluating their option these days. You know, some may have expanded store footprints over time, but under invested in tech and now they’re at a disadvantage. Others may be approaching retirement without clear succession plans. These things could drive midmarket consolidation to gain scale without triggering the same sort of antitrust scrutiny we might see with larger deals in off price and value formats, consumers across income levels, you know, they’re becoming more value conscious. These retailers are gaining share because they offer those trusted pricing models and disciplined inventory management. Yeah, there was an interesting point that was raised at another consumer conference a couple of weeks ago. And that was at high income consumers are often the most likely to buy on promotion, which I thought was interesting. When you think about it, they have the spending capacity, the storage at home, you know, and they enjoy finding a deal. I think, you know, that shifts how we think about the target demographic, you know, for these off price and value formats, you know, maybe differently than we have in the past. And, you know, and then lastly, there’s what I’ll call specialty experiential and service related. Retail investors tend to favor brands that build deep customer connections. These retailers, they create community and identity around a brand, you know, through unique products, education events or immersive in-store experiences. This drives stronger loyalty and often a more predictable purchasing behavior. You know, these experiential formats. They also tend to drive repeat visits. So when you’re evaluating a deal, investors are looking for in-store activation and engagement, whether that’s, you know, beauty consultations, fitness assessments, wellness treatments or community events. These turn stores into destinations rather than simple transaction points. This increases the traffic cross-selling and revenue visibility. Consumers feel like they’re part of the brand’s DNA, you know, in these environments and that dynamic is particularly relevant for Gen Z. So, you know, while we may continue to see activity in fashion and luxury, you know, we’re watching grocery value and specialty formats very closely

MMG: And in terms of deal structures, what are we seeing here? And I’m curious how maybe these deal structures are reflective of what’s kind of happening on the broader macroeconomic level amid these shifting consumer habits and shifting generational habits as well?

MR: Well, broadly across sectors, we’re seeing an uptick in deal value, even though overall the volume has remained, I would say, relatively flat, you know, and this is consistent with what we’re you we’re seeing in consumer markets, by the way, too. We’re seeing larger transactions, which often happens at the beginning of an M&A cycle, as dealmakers pursue first mover advantages now, well that translate into a pickup in mid-market activity. You know, it’s probably still a bit too early to tell in terms of transaction types, though. Some of the largest deals in 2025 have been take privates, take private and turnaround situations, continue to drive larger retail deals, you know, as private equity looks to restructure businesses outside the pressure of public markets. In fact, we actually looked at a few, I’ll call them, creative situations last year. They were pretty compelling, but ultimately a bit too challenging to execute in, in the environment today. I think we can also see more carve outs. You know, these would, these would be resulting from portfolio reviews, particularly in fashion and apparel but also in CPG, where many of the global players are looking to sell non-core assets. You know, and, and by the way, I know we’re mainly talking about retail today, but CPG you know, is where I think M&A is going to get interesting in the next couple years. That whole sector is really going through a generational reckoning that it, you know, it too. Just going through that reckoning can have some pretty interesting knock on effects to the whole dynamic between, you know, CPGs and retailers, you know, but getting back to retail and mid-market though, I think there’s still a pretty healthy skepticism around retail because the trends are shifting so quickly. Like you said, you know, when you look at shareholder returns in this sector over the past year, you see pretty meaningful volatility. In other words, companies flipping from positive to negative and back again, the leaders are the ones though, who continue to deliver the strong returns. You know, really reinforcing the point that investors continue to reward scale, resilient demand, and strong execution. And so as a result, you know, dealmakers are focused on identifying businesses with those durable trends, controllable, profit, levelers, you know, and differentiated brands that can really protect pricing. You know, even subscription models. I think this is interesting. These, these were once viewed as, you know, by investors as inherently pretty resilient. Even those are being scrutinized more closely as consumers, you know, have accumulated so many over the years and are now starting to reevaluate those recurring commitments. You know, from a diligent standpoint, what we see here too, I mean, processes are running longer. Buyers and sellers are deploying increasingly sophisticated data stacks you know, to test value creation hypothesis and, you know, identify behavioral trends that can create an edge. The last thing I think that’s interesting here is, you know, IPOs, you know, there’s still a backlog of PE owned portfolio companies looking for exits. You know, a few months ago, I probably would’ve expected a more active IPO market this year, but so far the broader global market of volatility, you know, I would say has really introduced some hesitation. You know, not just a consumer. So I think, you know, we’re likely to continue to see dual track processes that preserve that flexibility between a sale and a public offering.

MMG: I did want to ask one question about valuations. I know you mentioned that we are seeing, you know, some larger transactions. It’s too early to tell right now whether that will kind of trickle down to more deal volume in the middle market. One thing I’m curious about though is that there has been this kind of buyer seller price gap that’s been a challenge across sectors, quite frankly, for the last few years. And I’m wondering if you’ve seen whether dealmakers are finding themselves on the same page within the retail sector for the deals that are getting done in the middle market, or is it too early to tell?

MR: I don’t know that, I wouldn’t say it’s too early to tell. I think we’re continuing to see, you know, a lot of the skepticism I talked about and how that plays out in practice here is, you know, often longer processes. You know, a lot of times when I’m, I’m talking to clients here on the sell side and you know, and, and they’re maybe going through a divestiture. We spend a lot of time talking about like what the value creation story, you know, can be, and I would say it goes, you know, beyond, you know, maybe what I would call like traditional banker equity stories, right? It really gets into what are the levers, what’s the underlying data that, so that supports you know, this value creation story for the next donor. I think, you know, that process, you know, tends to be what elongates you know, the timeline, but it’s often, you know, the most important part in helping, you know, bridge this valuation gap, you know, that you see between sellers and buyers.

MMG: PwC released a report recently on the consumer and retail space, and in that report it was noted that there is this convergence with retail and tech among other verticals. And I think you’ve kind of made the point in our conversation today that retail does not exist in a vacuum. It is a collection of different markets. You mentioned CPG food and beverage, like, like the grocery space, for example. But I’m really interested in this convergence between retail and tech that the report noted. Can you tell me a little bit about that, what that looks like and how that might influence M&A opportunity in the space?

MR: Yeah, that’s a great question and it’s absolutely true. You know, the lines are blurring more than ever across, you know, not just retail and tech, but you know, pharma from a consumer wellness perspective and even financial services, you know, retail and tech. You know, I think you, you can’t look at them any longer as separate sectors. You know, tech is increasingly becoming, you know, what I’ll say, the operating model of retail on the front end of it, AI is shaping discovery, personalization, purchasing decisions on the back end. It improves you know, planning, supply chain optimization, procurement and customer service. What’s different now is that it’s, no, I wouldn’t say tech is just an add-on, like maybe you’ve thought about it in the past. It’s, it’s embedded in the operating model. You know, it’s interesting, you know, during this past holiday season what our research told us was a generative AI referral, traffic to major retailers increased roughly 700% year over year.

MMG: Wow.

MR: Yeah, I mean, younger consumers, I mean, they’re, they’re the ones that are accelerating this shift, right? So if you think about, you know, Gen Z spends, I, I find this, this stat staggering here, close to hundred percent of their free time online, and their behavior is, is the behavior that increasingly feeds the algorithms that influence what others see next. And Gen Alpha is going to push that even further, right? I mean, they’re the first generation here that’s basically growing up, you know, where the same device is both entertainment and entertainment platform and a storefront, you know, in this convergence then creates different aspects to M&A opportunities around capabilities. Think personalization engines, retail media, data infrastructure, digital engagement. You know, it’s not just about brands or store footprints anymore. You know, from a data perspective, you know, again, something interesting, I, I had heard recently, you know, we’re seeing companies here CPG companies in fact here, that are collaborating on what, what’s called clean rooms to share data, you know, in a compliant way with retailers to better understand chopper behavior and trade efficiency. You know, in the mid-market, a key question is whether, you know, the companies have that data infrastructure and that analytical capability to really anticipate demand and optimize, you know, their assortments and their pricing. AI may lower certain barriers, you know, in the mid-market here, but high quality data remains a competitive advantage. I mentioned financial services. This is, this is pretty interesting. We had our financial services leader on our consumer markets hot, hot topics webcast recently. You know, and what we talked about here was, as agents are increasingly influencing discovery and purchasing the payment often you know, now becomes embedded earlier in the journey. You know, this could fundamentally reshape, you know, what a lot of financial institutions think about the top of wallet payment decisions, you know, are increasingly, you know, they can be increasingly optimized by these algorithms, right? So based on price, approval, likelihood, rewards, speed, or sustainability, rather than just pure brand loyalty, you know, that can create a new, I think, new competitive dynamics and partnership models. And so, you know, as commerce becomes more agent enabled, you know, brands and retailers, you know, may look to own or partner around payments, lending, loyalty and data to remain relevant throughout the purchase journey. And so I think the, the boundaries between consumer, retail, tech, you know, financial services are, are clearly burning.

MMG: Absolutely. And it seems like some value-added opportunities here for dealmakers as well to integrate a lot of these new capabilities, new tech, new functions into existing platforms too. So that’s quite interesting. All right, Mike, well, you’ve just shared so much analysis insight into the retail sector. There’s a lot changing here, and it sounds like there is going to be at least, or there is already quite some opportunity for middle-market dealmakers, both strategic and private equity. But maybe you can give us a final takeaway. What is your overall sentiment, your overall outlook for retail M&A through the rest of the year?

MR: So if I had to boil this down to maybe three things that are in influencing the retail M&A, I’d say this. So number one, the consumer environment is more complex than ever. We talked about that, you know, with consumer splitting between premium and value, focusing on benefits and, and outcomes rather than traditional categories. The biggest mistake that could be made right now is to underwrite a deal based on the average consumer. I’m using quotes here because I’m, I’m not even sure what that looks like. Modern analytics are essential to generating underwrite insights today. Number two, scale still matters. I hit this point a few times. I think, you know, this suggests potential consolidation opportunities, particularly in fragmented sub-segments, you know, and then, you know, last thing number three here, retail isn’t just retail anymore. Dealmakers need to be fluent in how tech, life sciences, you know, financial services, they’re all converging to reshape the consumer landscape. And that convergence has significant implications for M&A strategy.

MMG: All right. Well, Mike Ross from PwC, thank you so much for joining the podcast. We really appreciate it.

MR: Thanks for having me.

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

The Middle Market Growth Conversations podcast is produced by the Association for Corporate Growth. To hear more interviews with middle-market influencers, subscribe to the Middle Market Growth Conversations podcast on Apple Podcasts, Spotify and Soundcloud.[/vc_column_text][/vc_column][/vc_row]