As we approach the second quarter of this century, I’ve spent some of the holiday period reflecting on what the year ahead holds.
With relatively new governments in place – or, in the case of Donald Trump’s second presidency, about to take their places – the world-over, 2025 will undoubtedly be another year of change. As new budgets and ambitious political agendas are realised, these new administrations will have far-reaching consequences across multiple territories around the globe – consequences that will extend beyond national borders.
In the last 5 years alone, it is amazing to think of the volume and seriousness of issues our consumer sectors have had to grapple with: Brexit, Covid, wage inflation, wars, anti-woke thinking, increasingly common freak-weather events, significant re- unionisation, political instability and insularity, and talent shortages to name but a few issues.
Against this backdrop of unrelenting recent challenge, surely 2025 will be a less ‘eventful’ year, and might we even find some stability and predictability again by the end of it?
Looking ahead, here are my annual predictions for what will be on the agenda of consumer leaders in 2025:
1. More listed companies will be taken private
With some notable exceptions in technology stocks – particularly those companies with an AI focus – share prices in consumer businesses the world over remain depressed. Despite often solid financial performances, the markets continue to price consumer shares well below their real value. It continues to amaze me that in January 2025 some of the world’s greatest consumer companies still trade at a share price below where they were in the worst moments of Covid – when their very future was unknown and uncertain.
Consequently, for businesses with access to capital, taking listed consumer companies private has become ‘the norm’ – a trend I expect to see continuing in the coming year.
In the UK alone, a number of high-profile consumer businesses have recently delisted. Last year, Britvic was taken over by Danish brewing giant, Carlsberg in a £3.3 billion deal; Biffa was acquired by leading infrastructure investor, ECP, for £2.1 billion in February 2023; The Restaurant Group, which was acquired by Apollo for £506 million in December 2023; and, most recently, Loungers, which was bought by private equity firm, Fortress in a £338 million deal in November 2024.
We expect this movement to continue into 2025 – with further high profile consumer businesses disappearing from our public markets
2. Digital innovators and online marketplaces will continue to break through
Digital innovators continue to change the way consumers, in particularly younger generations, shop. Many of these new challengers are not coming from the traditional heartland of digital innovation in California – but from Asia and Eastern Europe. Brands like Shein, Temu, Vinted and Depop all grew hugely during 2024 – indelibly changing the apparel retail landscape globally.
Shein for example has pledged to invest £211 million over the next five years in its UK and European business. With a potential IPO in the offing, rumoured to value the business at £50 billion – and profits doubling to £1.6 billion – the company is only showing signs of sustained dominance.
Temu, another Chinese-owned e-commerce company, also saw huge growth last year, particularly into Western markets. They became one of the top global apps downloaded last year – and cemented their place as a ‘mega’ consumer brand, purchasing six coveted 30-second advert slots during the Superbowl (each one rumoured to cost $7 million!). Both Shein and Temu partner with thousands of third-party suppliers to manufacture clothes that are then shipped from giant, centralised warehouses. This model is clearly working, and digital innovators like this look set to dominate in 2025.
Online marketplaces also found success last year. Businesses like Vinted and Depop, which do not own or handle physical stock themselves, are becoming more valuable, particularly with a desire for second-hand and C-2-C purchases increasing. Both Vinted and Depop saw their revenues increase substantially in 2024 with Vinted and Depop growing to 120 million and 5.1 registered users respectively.
Expect further marketplace digital models to breakthrough in the year ahead – and, expect to see more Chinese and Eastern-European digital innovation, and increased dominance, in the coming period.
3. Leadership fatigue is a ‘new normal’
Many of the CEOs who led their companies through the pandemic are still in place. For these CEOs, their leadership tenure has been marked with crisis after crisis.
For a leader, driving business as usual is hard enough. However, for today’s CEO, business as usual simply doesn’t exist – rather, they need to be continually innovating, transforming and pushing forward simply to maintain their competitive advantage. This is to say nothing about the increased need to generate and cultivate a public profile as a CEO.
These leadership pressures have been immense – and now many of this generation of ‘battle-hardened’ CEOs are reaching the end of their executive leadership careers.
A new generation of C-Suite leaders is waiting in the wings to succeed them – and will bring new energy, and possibly a new sense of the possible, having been less scarred by the leadership challenges of the last decade.
For these outgoing CEOs who chose to pursue NED careers after executive life, their lived leadership experiences will hugely enhance boardroom discussions the world-over – significantly adding to the wisdom, and resilience, of consumer-sector corporate governance.
4. AI adoption will continue to impact the entire consumer sector – with consumer healthcare being an early adopter, and a trailblazer
Every consumer business will continue to be impacted by AI – and no more so than in the healthcare sector, particularly as a means for clinician support.
We are now starting to see how effectively AI is being used to accurately make diagnoses. For example, The Royal Marsden uses AI to help improve the accuracy of sarcoma diagnosis, while Medica have partnered with Quire.ai to launch a decision support tool which flags potentially urgent examinations from CT head scans. AI is now also being used to give proactive suggestions for wellbeing.
Whilst healthcare has been an early adopter of AI, many consumer businesses remain laggards here – not educating themselves of the potential game-changing benefits that this new technology can bring.
How many consumer Boards truly understand the impact that AI can have on their business? How many are providing real leadership and direction to their organisation – ensuring that this emergent technology is being (safely) maximised in their businesses? How many businesses are willing to self-disrupt their businesses or operational model to maximise the benefits AI can bring to the table? AI remains an ‘unknown’ to too many consumer leaders and inaction here is no longer an option.
5. The consumer physical landscape will continue to evolve
In September, PwC reported that 38 stores were closing across Great Britain each day – with footfall across high streets, shopping centres and retail parks declining to 15-20% beneath pre-pandemic levels.
Likewise, 412 pubs were either demolished or converted to other uses during 2024 – taking their total number in England and Wales below 39,000 for the first time.
Some of these retail and hospitality sites have simply reached the end of their useful life – and conversion to other uses will undoubtedly be of benefit to their local community.
However, for many consumer businesses, their property estate has simply seen chronic underinvestment in recent decades. The most forward thinking of businesses will be planning to invest in their stores – creating true destinations, with experiential retail becoming a real footfall driver.
It’s vital that planners and legislators are part of the solution to find ways to support consumer businesses in making these investments – along the lines of M&S’s forthcoming development of their Marble Arch Store. Otherwise, the decline of physical sites will further accelerate.
6. ESG will remain important for businesses
Driven dually by a sense of mission and purpose – combined with consumer and shareholder pressure – companies will continue to prioritise ESG during 2025, despite difficult trading conditions. For example, now more than 8,000 companies (The MBS Group included) have become B-Corp Certified.
Last year the UN released its Pact for the Future which included an action to ‘encourage the private sector’s contribution to addressing global challenges’ – and increased responsibility among businesses to work towards not only solving societal challenges but also creating social opportunities.
The political climate on ESG is, however, rapidly changing – and, potentially, there will be significant external pressure to move away from core elements of the ESG agenda – particularly on Environmental and DE&I issues. Consumer leaders will need to stay true to their personal convictions and moral compass – continuing to ‘do the right thing’ despite shorter-term external pressures.
7. Beyond London, New York and Paris
Historically, many of the most innovative global consumer businesses pivoted around key English-speaking geographies – such as the USA and the UK – and fashion hubs like Paris and Milan.
In the last few years, however, we have seen a number of new key geographic hubs arise – boasting innovative tech-driven consumer businesses, and forward-thinking, skilled, labour.
For example, Lisbon has continued to grow as a centre for tech thanks to its strategic location at the crossroads between European and international markets, and investment in its tech workforce from the Portuguese government (including their innovative ‘digital nomad’ visa). Likewise, cities like Bucharest – which had a start-up ecosystem that was valued at $37 billion last year – are rapidly emerging.
Meanwhile, some of the most vibrant retail scenes – particularly shopping malls and department stores – can now be found in South Korea and China, where an effective combination of physical environments, digital and social are proving attractive to younger generations of consumers.
The more traditional ‘heartland’ consumer cities – London, New York and Paris – should take note of these more agile competitor cities. Otherwise, expect to see more companies relocate their geographic hubs to these cities – taking advantage of their talent, creativity and energy.
8. There will be an increased mobility of the talent pool in C-Suite roles
After nearly a decade of low geographic mobility amongst senior leaders, partly stalled by Covid, we expect to see increased movement once again in the coming period.
In the UK for instance, two of the most senior consumer leaders recently appointed relocated for their new role. In July last year, Joshua Schulman was announced as CEO of Burberry, leaving his role as CEO of Michael Kors which meant relocating from New York to London and Rami Baitiéh, who spent 17 years at French supermarket chain, Carrefour, took the position of CEO of Morrisons.
Expect many more international appointments in the coming year – and increased cross-fertilisation of new ideas, concepts and norms as a result.
9. Appetite for consumer transactions will increase
Appetite for PE firms to invest in the consumer sectors is there – but this enthusiasm is fragile and there is a sense from those investing in generalist PE funds, that there are other sectors they would prioritise. Putative deals are being scrutinised by Investment Committees in greater detail than ever and there are fewer, and smaller, ‘consumer’ partners, specialists and teams within generalist PE funds.
But, where there are solid investment propositions, transactions will take place. We closed 2024 with the master franchisee for Wingstop in the UK announcing investment from Sixth Street to support future growth – and expect to see more deal activity in the consumer sectors in the coming year.
10. Political change will impact business
Last year, more than 70 countries held national elections. With roughly two billion eligible voters and around half the world’s population being impacted, 2024 was the largest election year in history.
These new leaders have new and often far-reaching mandates – which are we are already seeing disproportionately effect consumer industries through the introduction of new tariffs, ESG policies and payroll taxes.
Public affairs will become an increasingly important focus in the year ahead. Consumer industries who fail to influence the government policy will suffer – so engagement with these new governments will become a priority.
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Overall, 2025 will undoubtedly call for further demonstrations of herculean resilience from the consumer sectors and its leaders. However, as consumer confidence slowly returns, I am as ever convinced of the enduring strength and creativity of the consumer sectors and its leaders, and am hugely excited to see what that will look like in the year ahead.
