Report Summary

29 December 2024 – 01 February 2025

3 minute read

Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30-day membership trial now.

Retail sales

Retail sales rose by xx% year-on-year in January, according to the Retail Economics Retail Sales Index, following a weak Golden Quarter.

Consumers focused spending on promotions, health and wellness and January sale discounts as the economic backdrop remained fragile.

Fragile confidence

Shoppers continue to adjust to a higher cost of living and increased prices as the economy navigates a long and uneven path towards stable inflation and lower interest rates. Shoppers are cutting back in some categories and prioritising the pursuit of value in others.

Consumer confidence fell five points in January, the sharpest December-to-January decline since 2011, highlighting renewed consumer concerns over the economy.

Focused on value

January brought more evidence that shoppers are prioritising value, particularly when it comes to essentials and supermarket spending. Nielsen reported that xx% of FMCG purchases were made on promotion, with promotional spending now comprising xx% of total supermarket sales – the highest January level since 2021.

Wellness boosts categories

Health-focused trends drove purchasing in several categories as consumers embraced wellness-focused goals at the start of the year. Social media is playing a growing role in driving trends and purchasing in this space, with fitness and wellness content creators gaining in authority.

Food, health & beauty and electricals all saw evidence of the wellness trend driving sales, with Kantar reporting that over a quarter of take-home food and drink purchases were chosen with health in mind. Alcohol purchases declined sharply.

Electricals (+xx%) continued to enjoy a rebound in sales following a deep decline in November, with consumers looking for bargains in the January sales. Wellness devices helped to drive this - John Lewis reported the £300 Shark CryoGlow sold out in its first week, with online searches for LED face masks up 28% YoY.

Outlook

Consumers are carefully weighing up their spending priorities, with holidays at the top of the list, and home-related categories often being delayed or reduced.

Inflation jumped to xx% in January and cost-of-living pressures persist, topping consumers’ lists of concerns for 2025 according to new research from Retail Economics.

Inflation is expected to rise to xx% in Q3 2025 due to higher global energy costs, before falling back to the 2% target.

The Bank of England cut interest rates to xx% in February, which may help encourage an easing in the consumer mindset when it comes to big-ticket purchases.

Households continue to splash out on holidays and other services at the expense of retail. Entertainment spending surged xx% in January, driven by cinema trips and streaming services (Barclays).

Most UK households feel less wealthy than they did five years ago, with inflationary essentials and higher rent and mortgage costs meaning discretionary incomes have fallen.

The approaching April tax and minimum wage increases are adding to retailers’ challenges in a difficult environment. 

A continued focus on value-driven strategies and omnichannel investment will help attract spend as caution continues.

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Confidence falls down