Now that the decorations are packed away and the last mince pie has been eaten and digested, let’s take a look at how Christmas 2025 impacted on the retail sector. Who were the winners, who lost out – and what does it all mean for the sector in 2026?
Grocery led the charge
UK shoppers spent a record £19.6bn on groceries at Christmas 2025, according to NielsenIQ (NIQ)’s Christmas 2025 report – spending cautiously (down 0.5% in volume) but on more expensive items (up 2.5% in value). Ecommerce grew fastest (9.9%), with Ocado leading on online growth for the second year running (sales up 12.8%).
Budget supermarket Lidl was the fastest-growing bricks-and-mortar retailer, with a 5.8% increase in footfall. One of the big winners of Christmas 2025, the discounter exceeded £1.1 billion in turnover in the four-week period to Christmas Eve, according to WorldPanel’s Grocery Market Share data, and saw its market share increase by 0.5% to 7.8% – the largest gain among the supermarkets. Key to this growth was Lidl’s loyalty scheme, Lidl Plus, which saw active users rise by 28% in November and redemptions increase by 43% year over year.
Sainsbury’s, Waitrose, M&S, Tesco and Morrisons saw their sales increase by 5.7%, 5.5%, 4%, 3.7% and 3.1% respectively, with Tesco maintaining its market-leading position. Asda was the only major supermarket to struggle, with a 6.5% decline in sales in December, according to NIQ’s data.
High Street struggled as discretionary spend fell
Outside the grocery sector, December proved to be a “dismal “month for retail, according to BDO, whose High Street Sales Tracker recorded the worst set of monthly sales figures since November 2024. Total retail sales across discretionary spend categories fell by -1.4% in December, compared to the same month in 2024. In-store sales fell by -0.5% year-on-year, and online sales by -0.6%.
Sophie Michael, head of retail and wholesale at BDO, highlighted changing consumer behaviour due to ongoing economic uncertainty as the driver behind these disappointing results. “Due to persistent food inflation and high living costs, consumers reduced their discretionary spending over the Christmas period, focusing on festive food, drinks and experiences instead of products,” she said. “Continued economic uncertainty and low consumer confidence were also driving down spending.”
Some retailers bucked the trend. Next saw full-price sales rise by 10.6% in the nine weeks to 27 December. Much of this growth came from international sales, which were up 38.3%. However, sales in the UK also increased by an impressive 5.9%, as shoppers responded to its broad product range and strong delivery and click-and-collect offerings. As a result, the retailer upgraded its full-year profit before tax guidance.
Social commerce outperformed expectations
Although no results have yet been officially released, analysts expect TikTok Shop to record an extremely robust Christmas 2025 period, given its record-breaking results during Black Friday Cyber Monday (BFCM). It saw a 50% year-on-year uplift in sales, with major brands and retailers including M&S, Clarks, Sainsbury’s, and Lidl launching on the platform. One in four Brits reported planning to buy their Christmas gifts on TikTok Shop, according to research by Kantar, and some analysts predict that social commerce sales in the UK will hit £2.4bn during the entire Christmas period, with TikTok Shop dominating.
What lies ahead for the sector?
So, what does Christmas 2025 tell us about the state of retail – and what 2026 holds for the sector? With the world gripped by economic uncertainty and major global players at loggerheads, consumer confidence looks set to remain weak. Accountancy multinational KPMG’s latest consumer pulse survey suggests that ongoing concerns about the health of the UK economy are holding consumers back from spending, especially on dining out and big-ticket items such as cars and furniture.
Experts warn that retailers could face a rocky road in 2026, exacerbated by a difficult Christmas 2025. “With balance sheets already feeling the pressure after a poor Christmas and the increases to cost bases announced in previous Budgets, it will be difficult to provide the necessary investment in new product lines going forward,” said Sophie Michael. “This leaves little cause for optimism for this year, but despite the hurdles the sector has historically faced, resilience prevails. Once again, 2026 will see retailers having to continue to adapt and find new ways to attract customers to loosen the purse strings.”
As Michael intimates, much of the sector’s success depends on retailers’ ability to innovate and remain agile. The growth of TikTok Shop demonstrates that retailers are meeting consumers where they are – on TikTok, with its two billion monthly active users. Interestingly, it’s not just major brands or retailers who stand to gain from this new form of commerce – small businesses are still driving much of TikTok Shop’s growth, with their data showing an increase of 200% of new sellers joining TikTok Shop from October 2025. Jan Wilk, head of TikTok Shop UK, said: “It’s been a standout year for British brands, big and small, joining the platform and for LIVE Shopping, which continues to grow at pace – providing shoppers a new way to discover, shop and enjoy the products they love.”
Christmas 2025 highlighted a clear split in retail: supermarkets and value-focused brands came out on top, while discretionary spending took a hit. With consumer confidence still shaky and costs rising, the year ahead will be challenging. However, retailers that stay flexible, invest in innovation, and tap into emerging channels like TikTok Shop – while continuing to offer value and a great experience – will be best positioned to succeed.
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