Brands Briefing: Bifurcation defined the year for brands in 2025

But, by and large, consumers still turned out, especially for the biggest shopping events. It was another record Amazon Prime Day, and another record Black Friday and Cyber Monday. 

But that’s not to say there weren’t challenges. Companies like Dollar General and Walmart spent the year warning that their lower-end customers were being squeezed by inflation, even as their sales continued to grow because they were winning over more sales from higher-income customers.

In turn, it was the year of bifurcation. “When did everything become K-shaped?” The New York Times recently wondered.  For some companies, 2025 was a year of record customer acquisition or the year that they finally sold for an eye-popping number. For others, 2025 was the year of endless pivots, as brands scrambled to adjust their supply chains, ward off price increases and adjust to this new K-shaped economy.

Bifurcation in consumer spending

It’s been a year of contradictions when it comes to consumer spending. Institutions like the University of Michigan have found that consumer sentiment levels have hovered near record lows all year. Yet, retail spending continues to grow, albeit more slowly than maybe some in the industry had hoped. In September, for example, retail sales grew 0.2%. 

Higher-income consumers, in particular, continued to spend, driven by stock market gains. A widely discussed study from early this year found that the top 10% of earners now drive nearly 50% of consumer spending in the U.S.

In turn, higher-end brands continued to see sales gains. But, so did brands that offered consumers the best perceived bang for their buck, which doesn’t always neatly correlate with price. A recent Placer.ai study captured how this bifurcation is playing out in apparel, for example. In October 2025, visits to thrift stores were up 15.6% compared to the same period in 2024, visits to luxury retailers were up 1.9%, and visits to traditional apparel stores were down 0.3%. 

As Modern Retail reported this year, more shoppers have turned to thrift shopping, especially in the lead-up to the holidays, in order to buy items from high-quality brands that they may not otherwise be able to afford. 

Earlier this year, the consultancy The Consumer Collective put out a study looking at how low- to middle-income shoppers were planning their holiday spending. The  Consumer Collective surveyed 1,000 U.S. adults in households earning up to $75,000. The report found that, while people were still spending, 63% of respondents had tapped into savings to afford essentials, and 51% had taken on new debt recently to finance purchases.  

“A new form of debt is being accrued that is only going to further the pressure on consumers next year,”  said Jessica Ramirez, co-founder of The Consumer Collective. Ramirez, like many in the industry, said there have been a lot of “mixed signals” this year regarding consumer spending. 

“I don’t think I’ve ever watched food as closely as I have this year,” Ramirez said. There were endless headlines about how increased sales of different foods — like frozen pizza or Hamburger Helper — were signs of “recession indicators.” 

Ramirez expects “the tale of two cities to be even more defined next year” as the labor market remains tight, and inflation doesn’t show many signs of slowing down. 

Bifurcation in exits 

Speaking of food, it was a banner year of M&A for brands in the so-called “better-for-you” space. At the beginning of the year, PepsiCo acquired Poppi, a modern soda brand that contains high levels of fiber, in a $1.95 billion deal. Hershey’s acquired organic snack brand LesserEvil in a $750 million deal. Celsius acquired fellow energy drink brand Alani Nu in a $1.8 billion deal. And Flower Foods, a leading baking brand, acquired natural snack brand Simple Mills in a $795 million deal. 

Kiva Dickinson is the co-founder of Selva Partners, a firm that, according to its website, invests in healthier living. Some of the companies it has backed include Grüns, Mid-Day Squares and Arrae.

For an investor like Dickinson, who is focused on health and wellness across a number of categories, it was a great year. “There were a handful of really high-profile deals. And it felt like, after a few years of large CPG cleaning up their portfolios and balance sheets, coming off of a challenging reset in 2022 and 2023, they finally got back into the acquisition game.”

Despite all the talk this year of a challenging macroeconomic environment, Dickinson argued that it’s been a challenging macroeconomic environment since 2022, as consumers and CPG brands alike have been battered by inflation the past few years. 

He’s bullish on 2026 as, from his perspective, changes in retail aisles continue to prove that customers are willing to spend more on better-for-you products. “We are continuing to see the shelves at Walmart, Costco and Target change with the new presence of high-quality brands,” he said. 

He expects more vitamin and supplement brands, in particular, to get acquired next year. 

There was promising M&A in other sectors, too, most notably with E.l.f. Beauty’s $1 billion acquisition of Rhode. 

But the one area in which there wasn’t as much activity as people had hoped at the beginning of the year was IPOs. While the number of total IPOs hit levels not seen since 2021, not many of them were retail brands. What’s more, the backdrop of tariffs and other economic challenges made it more difficult for brands to go public in 2025. 

Klarna was one of the most notable consumer IPOs of 2025, but the company had to delay its IPO due to tariffs. Klarna first planned to go public in April, but pushed the date back because of tariff announcements and finally went public in September. Once Upon a Farm, which initially planned to go public in October 2025, pushed its IPO date back to 2026 due to the government shutdown in the fall. 

What’s more, other fast-growing companies that some had hoped to see public this year, like Skims and Vuori, seem to remain firmly content on the private markets, for now, with Skims closing a new funding round this year. 

Overall, what 2025 proved is that the retail industry continues to remain resilient, and no matter what challenges are thrown at the industry — whether it is a pandemic, inflation or tariffs — there are always still pockets of growth to be found.

What we’re reading

• Why wellness gifts are becoming more popular, as brands like Grüns and Noem Wellbeing lean into holiday gifting. 
• DoorDash is the latest company to launch a shopping app within ChatGPT. 
• Sunscreen brand Vacation has hired an investment bank to explore a minority stake deal, according to Beauty Independent. 

What we’ve covered

• Starbucks hired a first-of-its-kind role heading up fashion and beauty collabs. 
• How PopSockets deepened its relationship with Best Buy, Target and Walmart in 2025. 
• Why Rae Wellness relaunched after a two-year hiatus.