UK retailers ended 2025 on a weak note, according to Shore Capital, which described Christmas trading as “dull” and heavily disrupted by last November’s Budget.
Data from the British Retail Consortium shows total retail sales grew just 1.2% in December. Food did the heavy lifting, helped by inflation rather than volumes, while non-food sales slipped 0.3% despite relatively easy comparisons. Pre-Christmas gifting was soft as shoppers held back, waiting for discounts.
What followed was a clear two-phase Christmas. Trading was weak in the run-up to the big day, then picked up sharply after Christmas as consumers piled into physical stores to take advantage of heavy markdowns.
ShoreCap said oversupply and aggressive discounting boosted footfall, but likely came at the expense of margins.
Grocery sales were solid, with growth of about 2.5% in the four weeks to late December. Volumes were slightly negative, but shoppers traded up to premium own-label ranges.
Discount dynamics were mixed, with the big listed grocers outperforming, while some value players struggled with like-for-like volumes.
Non-food was more fragile. Clothing and footwear were weighed down by discounting. Furniture, surprisingly, also softened after holding up earlier in the autumn.
Health and beauty, toys and computing were brighter spots. Online penetration was broadly flat, while physical stores benefited from dry, cold weather after Christmas.
Looking ahead, ShoreCap struck a cautiously hopeful tone. Inflation is expected to ease, and there is scope for interest rates to fall later in 2026.
Consumer confidence remains weak, but high household savings suggest spending power is there if sentiment improves.
Against easier comparisons, 2026 could look better for UK retailers – if policy mistakes stay out of the way.