Retail sales across the United Kingdom experienced a significant decline in December, as squeezed household budgets led consumers to drastically cut back on non-essential purchases. The key festive trading period failed to deliver a boost, with overall sales values dropping markedly compared to the previous year.
December Delivers a Festive Flop for Retailers
According to data released by the British Retail Consortium (BRC) and the business advisory firm KPMG, total retail sales decreased by 3.1% in December year-on-year. This figure is notably deeper than the average decline of 1.5% observed over the course of 2025. When adjusted for the effects of shop price inflation, the picture was even bleaker, with like-for-like sales falling by 3.9%.
The core of the weakness lay in non-food categories. Sales of non-food items in stores plummeted by 4.2% on a like-for-like basis over the three months to December. This sharp contraction underscores a fundamental shift in consumer behaviour, with spending tightly focused on essential goods. The BRC's chief executive, Helen Dickinson, characterised the month as "a disappointing end to a challenging year" for the retail sector.
Supermarkets Shine While Fashion and Homeware Falter
The retail landscape in December was one of stark contrast. The grocery sector proved more resilient, with food sales growth accelerating slightly during the month. This relative strength was largely driven by the ongoing expansion and competitive pricing of the German discount supermarkets, Aldi and Lidl, which continued to capture market share from traditional rivals.
Conversely, categories associated with discretionary spending bore the brunt of the downturn. Fashion, jewellery, and homeware all saw significant declines in sales as consumers prioritised necessities over gifts and festive decorations. Even online sales failed to provide a silver lining, with non-food online penetration falling to 43.6% from 44.8% a year earlier, indicating a broader pullback in spending rather than a shift in channels.
Paul Martin, UK head of retail at KPMG, highlighted the severity of the situation. He noted that the December figures represented "some of the worst sales growth seen in recent years," with real growth remaining negative when inflation is accounted for. The early timing of Black Friday in November was also cited as a factor, pulling some seasonal spending forward and leaving December trade more subdued.
Outlook Remains Cautious for 2026
The poor December performance caps a difficult year for UK retailers, who have been navigating a prolonged period of high operating costs and cautious consumer sentiment. With many household finances still under pressure from elevated energy bills, mortgage rates, and the broader cost of living, the outlook for the first quarter of 2026 remains uncertain.
Industry leaders are now calling for government action to support the sector. The BRC has urged the incoming government to address the "onerous" business rates system, which it argues places an unfair burden on physical stores and hinders investment. The focus for retailers in the coming months will be on stringent cost control and value-led propositions to attract the limited disposable income available.
In summary, the December retail sales data paints a clear picture of a UK consumer in defensive mode. While discount supermarkets continue to perform well, the broader high street and non-essential retail sectors are facing a prolonged period of adjustment as spending habits fundamentally change.
