Summary: The Big Picture
• Food sales performed strongly over the Christmas period, with major supermarkets and grocery retailers reporting solid growth as consumers prioritized festive food spending. (Financial Times)
• Fashion and non-food categories — including clothing, homeware and general merchandise — lagged behind, with many retailers noting subdued consumer confidence, weaker footfall, and lower discretionary spend. (Financial Times)
• Overall sentiment in the sector is mixed: food and grocery segments provided a boost, but broader retail health remains challenged by economic pressures and consumer caution. (Financial Times)
Case Studies: Key Retailers
Marks & Spencer (M&S) — Food Up, Fashion Down
- Food Sales: M&S reported a 5.6% like-for-like increase in food sales over the Christmas quarter to December 27, attracting a record number of customers. (MarketScreener UK)
- Fashion & Non-Food: By contrast, its Fashion, Home & Beauty divisions saw like-for-like sales decline ~2.9%, reflecting weaker demand in these categories. (MarketScreener UK)
- Causes: The company attributed weaker fashion performance partly to subdued consumer confidence, milder weather reducing winter clothing spend, and lingering effects of a cyber-attack earlier in 2025 that disrupted online operations. (MarketScreener UK)
- Market Reaction: Despite the mixed results, M&S shares rose around 3% on the trading update, showing markets rewarded strong food performance even as non-food struggled. (MarketScreener UK)
Commentary: M&S’s results illustrate how food retail can act as a stabilizer in tough consumer conditions — balancing out softness in discretionary categories. (MarketScreener UK)
Tesco & Sainsbury’s — Grocery Growth, Weak Non-Food
- Tesco: Reported a rise in UK food sales over the festive period, with market share at decade highs — although overall growth was slightly below summer’s performance. (MarketScreener UK)
- Sainsbury’s: Like-for-like grocery sales rose ~5.4%, but general merchandise and clothing sales declined, with its Argos non-food arm underperforming. (London South East)
- Retail Conditions: Sainsbury’s CEO described broader retail conditions as challenging, with cautious customers and competition from discount and online players impacting non-food trades. (Express & Star)
Commentary: Tesco and Sainsbury’s results echo a wider polarization in retail demand: staples and festive foods remain resilient, but discretionary retail — especially fashion and homeware — is under pressure. (Express & Star)
Primark & Non-Food Players
- Primark: The owner of Primark flagged “difficult” Christmas trading, with its shares sliding significantly amid weak clothing demand in both the UK and Europe. (The Standard)
- Other Non-Food: Many high-street fashion and general merchandise retailers saw softer sales and greater discounting, reflecting consumer spend tightening given inflation and economic uncertainty. (Financial Times)
Commentary: Primark’s warning highlights that wider non-food retail weakness is not isolated — fashion brands and general merchandise chains are struggling with lower discretionary spending. (Financial Times)
Wider Retail Comments & Analysis
Consumer Behavior
Analysts attribute the split between food and fashion sales to:
- Cautious spending: Shoppers prioritised essentials (groceries, festive meals) over discretionary items like new outfits or home gifts. (Express & Star)
- Economic pressures: Persistent inflation, higher costs of living and jobs uncertainty weighed on confidence. (Financial Times)
- Discount competition: Aggressive pricing from online platforms and value retailers further pressured traditional fashion and non-food channels. (Express & Star)
Retail Sector Outlook
Retail leaders remain cautious about 2026, predicting continued headwinds rather than a strong rebound, even as they focus on value-led offers and investments to attract cost-conscious shoppers. (Financial Times)
Expert Perspectives
Retail Economics: Analysts see a “stark divide” emerging:
Food retailers capitalise on cautious festive budgets, while general merchandise struggles with fragile consumer sentiment and footfall decreases. (Express & Star)
Market Observers: The mixed picture suggests that while UK retail isn’t collapsing, the composition of growth is uneven — with defensive categories like groceries outperforming discretionary sectors. (Express & Star)
Key Takeaways
Food and grocery sales were notably robust over Christmas — often outperforming expectations or historical trends. (Financial Times)
Fashion and non-food retail lagged, with several major players reporting declines or warning of tougher conditions ahead. (Financial Times)
Consumer behavior reflects tightening wallets and selective spending, meaning essentials take priority over discretionary purchases. (Express & Star)
Retail outlook for 2026 remains cautious, with sector leaders bracing for continued economic challenges. (Financial Times)
Here’s a detailed, up-to-date look at how UK retail performed over Christmas 2025, with case studies showing strong food sales but weak fashion and non-food results, plus direct comments from industry leaders and analysts.
Overview: Mixed Christmas Trading for UK Retail
During the Christmas period, UK consumers shifted spending patterns, prioritising food and groceries while cutting back on fashion, gifts and non-essentials. This left headline food sales looking solid — but fashion and broader non-food categories lagging. (Financial Times)
Retailers and economists describe this as a polarised retail landscape where food resilience contrasts sharply with weak discretionary spending, shaped by cautious consumer confidence and economic pressures. (Financial Times)
Case Study A — Marks & Spencer (M&S)
Food: A Standout Performer
M&S reported a 5.6% year-on-year rise in like-for-like food sales in the quarter ended 27 December, driven by premium festive ranges and record customer numbers. (Reuters)
CEO Stuart Machin said food sales “continue to outperform” their markets and that the retailer increased market share as consumers shopped for Christmas meals and party products. (Investing.com UK)
Impact: Food strength cushioned the broader business, and M&S shares rose ~3% on the update, trimming annual losses. (Reuters)
Fashion & Non-Food: Under Pressure
By contrast, fashion, home and beauty saw like-for-like sales fall about 2.9%, as weaker consumer confidence, fewer high-street visits, and last year’s cyber-attack stock issues hit performance. (Investing.com UK)
Analyst Dan Coatsworth noted M&S “went back to its old days” of food offsetting weaker clothing trade. (Investing.com UK)
Key takeaway: M&S’s case clearly shows the divergence between defensive grocery buying and softer fashion demand during the holiday season.
Case Study B — Sainsbury’s (Supermarket + Argos)
Solid Grocery Growth
Sainsbury’s reported a 5.4% rise in grocery sales, outperforming many peers and contributing to a 3.4% overall like-for-like increase. (London South East)
Premium own-brand ranges — like Taste the Difference — performed particularly well. (Supply Chain Digital)
Weak Non-Food & Argos
At the same time, its general merchandise and clothing sales fell ~1.1%, and Argos saw a 1–2% decline, hitting overall sentiment. (London South East)
CEO Simon Roberts pointed to inflation concerns, cautious shoppers and stronger online discount competition as headwinds in non-food. (Express & Star)
Impact: Strong grocery was not enough to buoy the entire group — Sainsbury’s shares fell around 5% on the mixed figures. (London South East)
Case Study C — Broader Fashion & Non-Food Segment
Primark (ABF)
Primark’s owner Associated British Foods described its UK and European trading as “difficult”, with clothing sales weaker than expected and a profit warning following subdued consumer demand. (Express & Star)
Next
Next was an outlier in fashion: full-price sales rose and helped it lift its profit outlook — showing that online and price-competitive fashion can still find traction. (Reuters)
Comments & Analysis from Retail Leaders
Consumer Behaviour Insights
Retail expert Nicholas Found said households “spent smarter” — prioritising food value and selective treats while holding back on discretionary items like clothing and homeware. (LBC)
He noted a “stark divide” in retail performance: food categories capitalised on cautious spending while general merchandise felt the effects of fragile confidence. (LBC)
Market Reaction & Broader Implications
• Supermarkets such as Tesco and Sainsbury’s gained or defended market share in food, but their non-food segments weighed on overall retail indices. (Reuters)
• Retailers warned that 2026 could remain tough, with inflation, cost of living pressures and employment uncertainty continuing to temper discretionary spending. (Financial Times)
Key Takeaways
Robust food demand: Grocery and festive food lines helped supermarkets and food-oriented retailers exceed expectations over Christmas. (Financial Times)
Fashion and non-food weakness: Clothing, accessories and general merchandise saw subdued demand, hurting traditional high-street players. (Reuters)
Consumer caution: Analysts attribute the pattern to cost consciousness, inflation effects and falling consumer confidence. (LBC)
Uneven winners: Retailers with flexible online channels or strong food portfolios fared better than those dependent on discretionary sales. (Reuters)