Consumer services as an asset class: A primer

Consumer services are not a sector investors visit occasionally. They are the continuous, layered infrastructure of economic life — present in every transaction, interaction and daily routine. This primer explains what the asset class is, how large it is, and why private markets investors have taken an increasingly serious interest in it. 

The invisible infrastructure of daily life 

Imagine spending several months alone on an island, with no shops, no prices and nothing to choose between. Then one morning a boat appears on the horizon. The crew pulls you aboard, wraps you in a blanket and hands you water, and a few hours later you reach the harbour. 

The moment you step onto land, you are a consumer again. A doctor checks you over. You call your family. You buy a coffee, then a proper meal. A pharmacy fills a prescription, someone cuts your hair, and you check into a hotel for the night. Every tap of your card is settled by a bank you never think about. 

Within a day you have used healthcare, telecoms, food service, retail, personal care, hospitality and financial services, mostly without noticing.

Consumer services are the infrastructure of living among other people. Understanding them as an investment category begins with understanding how deeply they are embedded in economic life. 

What are consumer services 

Consumer services are economic activities that deliver value directly to individuals rather than producing a physical good. They are defined by what they do rather than what they make: healthcare treats patients, retailers connect buyers to products, hospitality provides accommodation and food, education builds human capital, financial services manage and transfer wealth, and personal services — from transport to legal advice to fitness — support the daily functioning of individuals and households. 

The UN Statistics Division’s Classification of Individual Consumption According to Purpose (COICOP) provides the most widely used framework for mapping this space.¹ In its current revision, COICOP 2018, it organises household expenditure into thirteen categories, with the largest — housing, food, transport, health and recreation — all representing services in whole or in part.

The sub-sectors most relevant to private markets investment include: 

• Retail – the distribution of goods and services to end consumers, spanning physical stores, e-commerce, food and beverage, and specialty formats. One of the largest and most fragmented private markets categories by deal volume. 

• Hospitality – accommodation, food service, tourism and leisure. Demand is closely linked to disposable income and travel behaviour, making it more cyclical than some other consumer services sub-sectors. 

• Healthcare services – primary care, specialist services, diagnostics, elder care and allied health. Characterised by regulatory complexity and, in many markets, significant public-sector involvement, but also by highly durable demand driven by ageing populations. 

• Education – private schooling, higher education, vocational training and edtech. Demand is structurally linked to labour market dynamics and the premium placed on credentialled skills. 

• Financial services – banking, insurance, wealth management and payments infrastructure serving consumer markets. A category undergoing significant structural disruption from technology. 

• Personal and professional services – a broad category including transport, legal, accounting, fitness, beauty and other services consumed directly by individuals. Often highly fragmented, creating consolidation opportunities for private capital. 

What these sub-sectors share is proximity to the end consumer: demand is generated by individual behaviour, habit and need rather than by business cycles or industrial capacity. 

Treating consumer services as a single asset class, however, risks obscuring an important distinction: the category spans a wide durability spectrum. At one end sit non-discretionary and habitual services — healthcare and elder care, essential personal services and staple retail — whose demand is relatively insensitive to the economic cycle. At the other sit discretionary and experience-led services — upscale hospitality, leisure and travel, and premium discretionary retail — whose revenues move closely with confidence and disposable income.  

On the economics alone, the investment case is strongest, and most defensible, at the non-discretionary end, where demand is least sensitive to income; the discretionary end offers higher growth but behaves more like a cyclical equity. Sub-sector selection, rather than category-level exposure, is therefore the primary decision. 

Market size 

The scale of consumer services is best understood through the lens of household consumption. The World Bank estimates global household consumption expenditure exceeded USD 63 trillion in 2024 — representing the market value of all goods and services purchased by households worldwide.²

Services consistently account for around 63% of global GDP on a value-added basis — approaching two-thirds — across developed and developing economies, reflecting the long-run structural shift away from goods production as economies mature. In high-income countries the share is typically higher still: above 75% in the United States (2021, the latest available year), for example.³ 

Within household expenditure, the largest categories by value are housing-related costs, food and non-alcoholic beverages, transport, health and recreation — all of which involve substantial service components. Education and personal care follow. The precise boundaries between sub-sectors vary by classification methodology, which is why directional framing from a single consistent source is more reliable than aggregating figures across different research providers. 

The scale of any one sub-sector reflects this: healthcare services alone represent trillions of dollars in annual global expenditure; retail is one of the largest industries by employment in most economies; and travel and tourism contributed approximately USD 11.6 trillion to global GDP in 2025 — close to one-tenth of the world economy — according to the World Travel & Tourism Council.⁴ Consumer services, taken together, represent the largest single component of economic activity in the modern world. 

Consumer services in private markets 

Private equity’s interest in consumer-facing sectors has been long-standing, but 2025 marked a particularly sharp reassertion of conviction. According to Bain & Company’s Global Private Equity Report 2026, buyout deal value in retail rose 197% year on year, healthcare 115%, and consumer products 96% — among the strongest sector recoveries in the global buyout market. The surge was concentrated rather than broad-based: overall deal count fell 6% globally, and a handful of megadeals — including the USD 23.7 billion Walgreens Boots Alliance take-private — accounted for much of the 2025 increase.⁵ 

The investment thesis for consumer services typically rests on several structural characteristics that distinguish the category from more cyclical or capital-intensive sectors. 

• Demand durability – core consumer services such as healthcare, food, personal care and education address non-discretionary or habitual needs. Spending tends to be resilient through economic cycles, even when consumers cut discretionary expenditure elsewhere.

• Fragmentation and consolidation potential – many sub-sectors remain highly fragmented, with large numbers of owner-operated or regional businesses. Sponsors can create value by acquiring and professionalising them, building scale and improving operational consistency — a playbook with a long track record across healthcare services, fitness, personal care and food service. 

• Cash-flow predictability – subscription models, membership structures and recurring service relationships create predictable revenue that supports debt financing and long-term value-creation

  planning. 

• Brand and network effects – established consumer brands benefit from loyalty, switching costs and network effects that create durable competitive positions and support pricing power over time. 

These characteristics have made consumer services a consistent focus for both buyout and growth equity investors. The 2025 data from Bain reflects a re-rating of a long-established category: after a period of caution driven by inflation, cost pressures and consumer sentiment uncertainty, institutional capital re-engaged with consumer-facing sectors. The category has drawn dedicated specialists alongside the diversified megafunds: measured by the enterprise value of their consumer holdings, the largest consumer-focused sponsors include Roark Capital, 3i Group, Apollo, Blackstone and KKR.⁶ The surge is better read as re-engagement after a period of caution than as proof of a new structural thesis: much of the 2025 increase reflected recovery and a handful of large transactions, so the durable case rests on the sub-sector characteristics above rather than on a single year’s deal figures. 

Case study: KKR and A1 Garage Door Service 

A single recent transaction captures both the conviction and the consolidation playbook. In September 2026, KKR agreed to acquire A1 Garage Door Service, a Phoenix-based home-services operator, at approximately 20 times EBITDA — a striking multiple in an industry where small owner-operated businesses typically change hands at two to six times. 

A1’s earnings had grown from USD 27 million in 2022 to around USD 100 million in 2026 through a series of add-on acquisitions, the buy-and-build approach that defines consumer-services value creation in fragmented markets.  

The broader pattern is visible in the deal data: 21 private-equity-backed acquisitions of garage-door businesses in the first nine months of 2026, worth USD 4.2 billion — the strongest nine-month run in a decade bar 2021.⁷ 

Risks investors should understand 

Consumer services businesses carry specific risks that investors must weigh carefully. These vary by sub-sector, geography and business model, but the most significant structural risks include: 

• Consumer sentiment – discretionary services such as hospitality, leisure and retail are sensitive to economic conditions, confidence and disposable income. Downturns can compress revenue quickly, particularly for businesses without subscription or contractual revenue. This sensitivity is heightened by the concentration of spending power: in the United States, the top 10% of earners accounted for close to half of all consumer spending as of Q2 2025, so demand for discretionary consumer services is increasingly tied to the confidence and wealth of a narrow, asset-sensitive cohort.⁸ 

• Labour intensity – many consumer services businesses are people-intensive, making wage inflation, labour availability and workforce management significant cost drivers. Automation can mitigate some of this over time, but the transition carries its own execution risk. 

• Regulatory exposure – healthcare, education and financial services sit within extensive regulatory frameworks governing pricing, access and operational standards. Regulatory change can affect business models materially, particularly in publicly funded or partially subsidised sectors. 

• Competitive disruption – digital platforms and technology-enabled models have restructured large parts of retail, transport, financial services and hospitality over the past decade. Businesses without a clear digital strategy or platform moat face ongoing displacement risk. 

• Concentration – consumer services businesses can be exposed to geographic, customer or revenue concentration. Diversification across formats, geographies and customer segments is a standard mitigant in portfolio construction. 

• Exit timing – consumer-facing businesses are susceptible to sentiment-driven valuation compression at exit, particularly in sectors correlated with economic cycles. Holding-period management and exit-route optionality matter more here than in some other categories.