December Delivers But Challenges Remain for the UK’s Retail Sector

UK retail sales volumes rose by 0.4% month-on-month in December, according to the latest data from the Office for National Statistics (ONS), offering a welcome boost for fashion retailers after a challenging autumn trading period.

The increase follows a 0.1% decline in November and a sharper 0.8% fall in October, underlining how critical the festive period proved for the sector. While the so-called Golden Quarter fell short of expectations overall, December’s rebound suggests consumers were willing to spend albeit later and more selectively than in previous years.

Marty Bauer, senior e-commerce expert at Omnisend, said retailers would be relieved by the late-season uplift.

“Retailers will breathe a sigh of relief that last month saw a boost in sales, however it would have been a pretty bleak outlook for the high street if the Christmas shopping season had failed,” he said.

Bauer noted that consumer caution persisted through much of autumn, including Black Friday, but eased as Christmas approached.

“It suggests that while consumers remained cautious throughout autumn, including during the busy Black Friday period, many were still willing to open their wallets as festivities commenced.”

For fashion and accessories retailers, online proved particularly important. Bauer pointed to renewed momentum in digital sales, especially among jewellers.

“Online sales picked up again in December, with jewellers reporting stronger demand for precious metals. That points to shoppers holding off on higher-value or giftable purchases until later in the season,” he explained.

Rather than lost demand, Bauer believes shoppers are simply taking longer to commit. “The pattern we’re seeing is one of delayed decision-making rather than lost demand. Consumers appear to be waiting longer, comparing prices more closely and committing only when they feel confident they’re getting genuine value,” he said, adding that this has fuelled the growth of shopping comparison platforms such as Google Shopping.

He also warned fashion retailers against relying too heavily on blanket discounting. “Retailers who aligned promotions with real moments of intent, rather than relying on blanket discounting, are likely to have performed best in December. While the Boxing Day sales now often start in the days before Christmas, Brits welcome discounts as cost-of-living challenges persist.”

Phil Monkhouse, UK country manager at Ebury, described December’s performance as an unexpected but timely lift for the sector. “Festive spending unexpectedly picked up in December, with sales volumes rising by 0.4%, giving retailers a welcome holiday boost after a disappointing November and October,” he said.

Despite ongoing cost pressures, Monkhouse said consumer confidence appeared to improve as Christmas approached. “Despite ongoing cost-of-living pressures, consumers splashed the cash in December, suggesting confidence returned after an uncertain few Autumn months.”

However, he warned that challenges remain firmly in place for 2026. “Sales have yet to recover from the decline seen in 2023 and remain below pre-pandemic 2019 levels, underlining the ongoing financial pressures facing many businesses,” he said, pointing to sticky inflation, geopolitical uncertainty and trade tensions as ongoing risks.

Looking ahead, Monkhouse urged retailers to focus on resilience. “As we head into 2026, retailers will need to stay vigilant – prioritising robust FX risk management and securing access to flexible finance to help weather what remains an unpredictable trading environment.”

For the fashion sector, the message is clear: while December delivered a much-needed boost, shoppers remain value-driven, digitally savvy and cautious, with spending decisions increasingly delayed rather than impulsive. Retailers that can balance margin protection with targeted promotions and a strong online proposition are likely to be best placed as the industry navigates another uncertain year.