UK Retail Trends 2024: What Lies Ahead For Christmas?

What are the key UK retail trends that will impact this year’s holiday shopping season? This Christmas, UK retailers are counting on a record £88.3 billion of spending to help them recover after yet another tumultuous year and a challenging budget announcement.

This optimism extends to e-commerce with a study by FedEx forecasting that parcel carriers will collectively distribute 1.29 billion shipments across the UK between October and December 2024, 10.9% more than in the same period in 2023.

For small retailers, however, the stakes are higher as they navigate inflation, rising costs and challenging promotional behaviors from bigger retailers.

UK retail trends in consumer spending behavior

Inflation and concerns over the cost of living dominated the consumer’s minds during Christmas 2023, and there were clear signs that customers were holding back. Now, in 2024, with the Consumer Price Index showing inflation back down to the low single digits, customers appear more prepared to spend.

Research by cloud-based advertising platform Teads suggests that 53% of consumers are planning on spending more this year on their children, and 33% are planning on spending more on their spouse.

Despite this increased optimism and generally positive sentiment towards spending, the customer remains clearly interested in offers and discounts.

58% of Brits will be shopping on Black Friday or Cyber Monday this year, according to research by Clearpay, a buy-now, pay-later (BNPL) provider.

Their research showed the top two reasons why people are shopping during the Black Friday and Cyber Monday period were to save money on purchases, with 54% stating that they are out “to get a bargain” and 51% looking for “cheaper Christmas presents”.

Despite easing inflation and cost of living pressures, the customer remains cautious. This reflects a shift towards conscious, considered purchasing that places an emphasis on close family relationships. Retailers who use promotional offers carefully will be well positioned to capture these customers’ attention this holiday season.

UK retail trends in e-commerce

E-commerce is set to be bigger than ever this Christmas, with European parcel deliveries between October and December forecast to be enough to fill Wembley Stadium 34 times over, according to FedEx, 9% more than during the same period in 2023.

E-commerce and Christmas shopping appear to go hand in hand, with a clear spike in the percentage of sales happening online being seen during the 4th quarter in most years.

Hybrid retail is growing. Customers often browse online before shopping in store, or vice versa, blending digital and physical experiences. While e-commerce is already set to dominate Christmas shopping, it may play an even bigger role than the numbers of orders placed online implies. 61% of UK consumers are looking at products online before heading to physical stores, according to research by e-commerce company Shopify.

With over a third of total UK retail sales set to happen online this Christmas and hybrid shopping on the rise, retailers need to be focused on providing a seamless shopping experience wherever customers shop.

UK retail trends in marketing

“Holiday email marketing this year is all about personalization and exclusivity,” explains Jamie Domenici, chief marketing officer of email marketing software Klaviyo.

“Take [clothing brand] Good American, for example—they know I’m tall and like to shop in the mornings after school drop-off, so they send me personalized messages and product recommendations when I’m most likely to shop.”

Domenici notes that this “tailored experience” is crucial for retailers looking to drive loyalty and sales, and keep the customer coming back.

“Technology is what can unlock competitiveness: our data shows 40% of UK shoppers are more likely to purchase from and spend more money with brands that actively integrate technology into the shopping experience,” states Deann Evans, managing director, EMEA at Shopify.

Her advice to retailers at this time of year? “Test different offers, reward loyal customers, retarget past visitors, and turn seasonal shoppers into year-round shoppers.”

This is the perfect opportunity for retailers to use the latest technology to facilitate closer connections with shoppers at this crucial time of year.

“Brands are using AI to tailor gift ideas to shoppers’ unique tastes, while creating urgency with early access to sales and VIP-only discounts….they’re meeting customers wherever they are,” says Domenici.

Retailers that prioritize personalization and technology are not only driving loyalty, but are redefining the shopping experience at Christmas and beyond.

UK retail trends for independents

While e-commerce is set to take center stage, and bigger retailers remain heavily promotional during the Christmas period, smaller retailers must find a way to stand out and is aligned with their customer.

“Effective communication is key—independents need to make sure shoppers are aware of the unique products and services they have to offer,” explains Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA).

There is opportunity for independent retailers to use technology to level the playing field, as the Shopify Holiday Retail Report showed that 21% of UK shoppers have actively sought smaller independent brands to buy from during their festive shopping.

Technology is a great leveler, allowing smaller retailers to utilize many similar tools as big retailers in a way that historically would have been unthinkable, “to attract, convert, and retain customers while adapting to changing shopping behaviors” as Evans describes it.

“By leveraging social media and really engaging with their local communities, small businesses can make the most of these peak selling weeks and position themselves for success in 2025 and beyond,” agrees Goodacre.

Creativity and local engagement remain key for independent businesses looking to compete with the bigger retail chains. By leveraging technology and showcasing their unique offer, they can thrive even in a challenging retail environment.

UK retail trends this Christmas

As Christmas 2024 unfolds, the UK retail trends suggest that the industry has reasons to be optimistic. Consumer sentiment is improving and advances in technology make it easier than ever to build a “personal at scale” model of communication with the Christmas shopper.

With e-commerce set to take center stage, the high street, including independent retailers, will need to not only leverage hybrid shopping to help drive interest and footfall, but continue to creatively foster connections that allow them to take a place at the heart of their communities.

As the holiday season unfolds, adaptability, creativity and the ability to communicate effectively with the customer are the key UK retail trends that will define the winners of Christmas 2024 – and set the stage for shifts in the industry in 2025.