Christmas trading 2025

The majority of UK retailers have now released their 2025 Christmas trading updates. Despite the budget-related uncertainty, a weak economic backdrop and permanent retail headwinds, sales have generally proved to be remarkably robust for individual operators. Almost 90% of retailers reported either LFL or total sales growth over the peak-trading period, with average total sales growth from those that reported of c.7% (up from c.5% last year). Overall, consumers appeared to prioritise food and drink, traded up to premium ranges while also seeking discounts, and cut back on select non-essential goods.

_{NB (1): Results are taken for the UK as standard, when not available, Group results are taken
NB (2): Not all reporting periods are directly comparable}

_{*Worldpanel by Numerator data}

As always, official data sources portray a more negative scenario, with the BRC reporting a ‘drab Christmas for retailers’, despite YoY growth in December sales of 1.2%. This can be explained by the BRC’s traditionally negative perspective and longstanding agenda of talking down the retail market. And there is the usual caveat around differing reporting periods, with retailers able to tailor the trading period to paint the most positive picture. In addition, the Christmas period is clearly now much broader than just December.

We await the ‘official’ ONS data, but in the meantime, detailed analysis of Christmas trading statements reveals that retailer sentiment and performance is, once again, far more positive than the official narrative. The numerous reports of either ‘record’ or ‘strong’ sales from the retailers themselves jar somewhat confusingly with the headlines of ‘weak’ and ‘disappointing’ overall Christmas trading. Other trends to emerge from the festive updates include:

Data from Worldpanel by Numerator showed that consumers spent a record £13.8bn on grocery in the 4 weeks to 28 December, up +3.8% YoY. However, this growth was largely driven by inflation, with volumes remaining under a degree of pressure. There was significant evidence of consumers trading down, with supermarket value ranges now an indicator of savvy shopping.

As always, the discounters performed well, with Lidl (+10%) and Aldi (+3%) posting robust festive growth, while Tesco (+3.2%) retained the largest share of spending. The updates also pointed to consumers increasingly trading up, with premium and online channels performing strongly, with robust growth at Waitrose (+5.5%), Marks & Spencer (+6.6%) and Ocado (+12.8%).

The evidence from the Fashion sector is more limited - Primark delivered relatively resilient results compared with the wider clothing market over the Christmas period, with UK sales rising 3% and LFL sales up 1.7%. The results also provided useful context into markets outside the UK, with Europe LFL sales down 5.7% as consumer confidence remains weak.

And in line with the rest of an exceptional year, Next delivered a healthy performance over the festive period (total sales: +10.6%). Sales in the UK were up by a more muted, but still impressive, 5.9%, as consumers focus on buying fewer, higher quality items in clothing and home. Mulberry’s strong results (LFLs +6.5%) also highlighted the trend, with better-off consumers trading up to more premium brands.

Elsewhere, trading-up was also in evidence in other retail categories. Results from The Cotswold Company (+17%) and OKA (+21%) demonstrated healthy consumer appetite for high-quality homewares products. And in Health & Beauty, Space NK reported ‘record-breaking peak period’, with its biggest ever sales week over Black Friday. THG also reported strong sales, with overall growth of 7%, partly due to prioritising high-margin prestige brands. Clearly there is consumer appetite to spend on quality products across the retail spectrum.

Specialist and hobby-related retailers also outperformed general retail over Christmas as shoppers invested in personal interests. Crafting and collectible hobbies saw robust demand, notably Games Workshop (retail sales +5.4%) and Hobbycraft (+6.3%), while pet retailers (Jollyes: +10.4%, Pets at Home: +4%) demonstrate the ongoing demand to balance rising household costs with a continued desire to treat pets.

Footfall was down 2.9% YoY in the five weeks to 3 Jan, according to data from the BRC-Sensormatic (high street footfall: -0.9%, retail parks: -2.5%, shopping centres: -5.1%). However, this continues a long-standing trend of declining overall footfall, and is arguably of limited use in analysing holistic health of the retail market, with footfall no longer an accurate indicator of spend levels.

As always, the devil is in the detail, with prime locations (despite limited evidence) likely to have outperformed the market in terms of footfall and spend over the festive period. Heart of London Business Alliance (HOLBA) has reported festive footfall in London’s West End reached its highest level since 2020 (+19% in Dec). Silverburn reported a ‘particularly strong’ end to the year seeing footfall rise by 20% during the key pre-Christmas trading week, while Glasgow Fort saw an 8 % increase in footfall last year, with festive numbers again strong. And The Entertainer reported stores in regional malls showing the strongest performance overall. Clearly, while the evidence is anecdotal, the best retail locations appear to be attracting a greater proportion of footfall, and available spend is becoming more concentrated at the prime end of the market.

Many retailers referred to in-store investment and expansion as a key driver of success over the Christmas period. With online sales plateauing, several major retailers (notably Marks & Spencer and John Lewis) increasingly investing into their physical assets, both existing and new (often at the expense of online). This highlights a welcome ongoing commitment to physical retailing from some of our bellwether retailers.

A significant proportion of the investment is on in-store experiences, which are becoming increasingly vital as they offer the chance to provide emotional connection, immersion, and impact – all elements that online shopping cannot replicate. Immersive shopping environments (such as John Lewis’s ‘Gifting Emporium’ in Bluewater) drive brand loyalty, increase dwell time, and boost conversion rates.

Despite the myriad challenges and weak macro-economic growth, retail was actually the strongest-performing real estate asset class last year, according to MSCI data. As we enter the new year, the outlook for economic growth and consumer spend remains below-trend.  However, the retail occupier markets are the healthiest they have been in the last 10 years, and we expect resilient demand to continue through 2026 in prime destinations and relevant locations, despite mounting cost pressures for retailers. Shrinking prime supply in city centres and historically low levels of development will lead to increasing disparity in prime retail outperformance versus the market, fuelling rental growth, low vacancy and improving footfall.

This is the year that we expect this occupier market strength to finally filter through to the investment market, which is primed for take-off in 2026. Shopping centres in particular will perform well, with 2026 set to be the strongest year for the sector since 2016. Prime shopping centre yields are expected to compress in the year ahead from 7.5%, which will represent only the second compression in the past 10 years.

Overall, we are expecting rising retail transaction volumes against a solid but unspectacular macroeconomic backdrop. We also predict that the resurgence in physical retail will gather pace, with physical retail spend forecast to outpace online growth over the next five years with an extra £34 billion spent in stores versus £29 billion online. The world remains volatile and complex, but 2026 looks set to be a year of challenge but opportunity for the UK retail real estate market, marking the start of a new, more positive, cycle.