UK retailers eye brisk festive season as consumer confidence rebounds

British consumers are preparing to spend again. According to Shopify’s latest Holiday Retail Report, the average UK shopper plans to part with 181 pounds across Halloween, Black Friday, and Christmas, up from 159 pounds last year, signalling renewed confidence ahead of the 2025 festive season.

Despite lingering unease around the Autumn Budget and ongoing cost pressures, 80 per cent of UK retailers expect higher sales than in 2024, well above the global average of 72 per cent. For an industry bruised by inflation and a patchy first half of the year, the data points to cautious optimism.

“Retail stands at a moment of renewal,” said Deann Evans, Managing Director, EMEA at Shopify. “Demand is returning, and confidence is stirring — but shoppers are more discerning than ever.”

Spending limits and emotional triggers

The rebound comes with boundaries. Nearly two-thirds of UK shoppers (63 percent) have set a strict spending cap for the holidays, compared to 51 per cent globally, while 39 per cent say they will “stick to it closely.” That restraint underscores a season where emotion, not impulse, may drive spending.

Consumers appear split between indifference (26 percent) and nostalgia (25 percent), with family and mood playing a strong role in intent to buy. Over half (52 percent) cite family influence on purchases, and 40 per cent say their emotional state at the time affects what they choose to buy.

Retailers, meanwhile, are preparing to fight for attention: 39 per cent of UK businesses expect promotional pricing to account for almost two-fifths of sales, with 68 per cent introducing new deal structures. For fashion and lifestyle brands, that means discount strategy remains a critical lever, though margin management will be equally key in a market that prizes selectivity over volume.

AI accelerates retail personalisation, but trust remains currency

Artificial intelligence continues to reshape the retail experience. Ninety per cent of UK business leaders are positive about AI’s impact, and 93 per cent are already investing in AI-powered discovery tools and shopping assistants.

Consumers are following, albeit cautiously: two-thirds (66 percent) plan to use AI for holiday shopping, especially for finding inspiration or deals. Yet 67 per cent remain wary, and 74 per cent say buying from a human still matters.

That duality is central to retail’s new equilibrium. “The most successful brands will pair AI-powered personalisation with human service,” Evans added. “Trust, transparency, and emotion are still the decisive factors in purchase decisions.”

Rediscovery across channels

One of the strongest signals in the report is the return of cross-channel discovery. UK shoppers are once again browsing and buying fluidly across touchpoints, with 80 per cent saying they discover products across multiple channels, up from 70 per cent in 2024. Both physical and online discovery are up 19 per cent year-on-year, while social media, through ads, influencers, and family connections, continues to grow as a source of inspiration.

This reflects a shift toward unified commerce, where discovery, engagement, and conversion operate seamlessly across digital and physical environments. For fashion retailers, that means fewer boundaries between the boutique, the website, and the app, and a greater premium on narrative consistency.

Hybrid shopping as the new default

The hybrid model is now fully embedded: 41 per cent of UK consumers plan to split shopping evenly between online and offline, surpassing the global average of 37 per cent. The biggest spenders lean omnichannel, buying smaller items online and heading in-store for major purchases.

Yet friction persists. Half of UK shoppers have abandoned purchases due to complex checkout processes, and 50 per cent say that beyond price, fast, simple experiences matter most. Discounts remain a loyalty driver for 44 per cent, but service and convenience are closing the gap, with a third of consumers citing strong customer support as a deciding factor.

For fashion brands, this holiday season will be about conversion, not just of sales, but of sentiment. The challenge is to translate short-term promotions into long-term relationships, blending AI efficiency with human empathy and digital reach with in-person experience.