Golden quarter week two: Five predictions for Christmas 2025

As we look ahead to Christmas 2025 we review what happened last year and what it may mean for the weeks and months before the big celebrations.

1.  Another, inflation-driven, record Christmas?

Christmas 2024 broke records, with UK shoppers spending over £13 billion, but behind the headline, volume growth was flat. Inflation drove value, not demand.

In 2025, food inflation has accelerated again. Our economics team expects retail food prices to outpace general inflation through the year, with uneven impacts across categories. While inflation may have peaked in August, price pressure remains high and unpredictable.

Retailers are responding. Tesco flagged intensifying price competition in its H1 results. Asda and Lidl have since announced further price cuts. Yet, despite rising shopper confidence in September, concerns about food prices persist.

Promotional activity was high in 2024, with our UK Christmas trading review highlighting how 27% of FMCG purchases were on promotion, the highest in three years. Brands drove much of this, accounting for 37% of promotional spend, but retailers played a key role too. With inflation still biting, promotional intensity is likely to rise further in 2025.

But, despite this, given inflation’s ongoing impact in 2025 and shoppers’ willingness to spend at Christmas, as shown in our shopper research on opportunities for events in 2025, it is likely that spending will be higher this year than last.

2. Loyalty programmes are likely to prove a strong footfall driver once more

In 2024, loyalty scheme pricing was to the fore, most notably at Tesco, where 35% of sales were via promotion, with Sainsbury’s only marginally behind at 34%. When the retailers announced their Christmas trading results, both noted the savings they offered meant prices had increased below the reported level of market inflation.

For  Christmas 2025, both retailers have evolved their loyalty scheme promotions during the year, increasing their personalisation. Retailers will have learnt from initiatives such as Tesco’s ‘Clubcard Challenges’, which was offered to 10 million shoppers in Christmas 2024, and will be aiming to improve the savings on offer and how they are marketed to shoppers.

As shoppers look to spread their costs over a longer period, loyalty promotions may start earlier than previously, starting with general merchandise products and items that shoppers can store for the Christmas period.

3. Premium private label products to prove popular again

Premium private label continues to be one of the standout growth stories in UK grocery retailing. While it accounted for just 7% of total sales during Christmas 2024, its influence is growing, and 2025 is shaping up to be a breakthrough year.

Retailers are investing in their top-tier ranges, and the results speak for themselves. During Christmas 2024, premium private label sales rose by 14.6%, significantly outpacing branded product growth of 4.2%. This trend is being driven by mainstream grocers and discounters, with each sharpening their offers to capture more spend.

Sainsbury’s recently celebrated 25 years of its Taste the Difference range, noting that products from the line now appear in a third of customer baskets. Tesco’s Finest range has delivered three consecutive years of double-digit growth, underlining its role as a strategic asset. Meanwhile, Aldi’s Specially Selected lines grew 12% year-on-year last Christmas, outperforming its total sales growth of 3.4%, and Lidl’s Deluxe range saw an 11% uplift.

Retailers are also improving execution. Premium lines are being signposted more clearly in-store, added to mission-focused fixtures, and supported through loyalty schemes. Lidl Plus, in particular, has proven effective in driving visibility and engagement.

With some shoppers expected to trade out of out-of-home dining and invest more in at-home experiences, premium private label is well-positioned to capture seasonal spend. Retailers are treating premium private label as a strategic growth lever, not just a seasonal trend, investing in quality, visibility and relevance, which will help them and their ranges gain this Christmas.

4. Innovation opportunities

Christmas 2025 is shaping up to be a season of experimentation. Our shopper research shows that over 80% of celebrators plan to buy products they don’t usually purchase, opening the door for innovation, indulgence, and occasion-led NPD.

For example, Baileys and Terry’s have collaborated to create the Baileys x Terry’s Chocolate Orange Irish Cream Liqueur. Arriving in-store 100 days before Christmas, the companies have said the new product ‘aims to drive seasonal sales with two brands synonymous with the festive period’.

Elsewhere, food trends suggest new fruity and spiced desserts that combine spiced rum desserts and holiday spices, and new fusion flavours that bring together dishes like Asian-spiced bacon-wrapped pigs in blankets to offer a different take on existing Christmas favourites.

These sorts of innovations, as seen with M&S’s strawberry sandwich, can capture shoppers’ attention and attract new customers to the store. With shoppers’ predisposition to try something new and evolving tastes, 2025 could see several innovative additions to the Christmas table.

5. Emerging Christmas celebrations to create opportunities

While indulgence remains central to the festive season, a growing number of shoppers are looking to celebrate Christmas more consciously in 2025. Our latest shopper research reveals a clear shift: many consumers are seeking to balance festive spending with sustainability and inclusivity.

Eco-conscious choices are gaining ground, and shoppers are looking for recyclable wrapping, reusable decorations, and products with lower environmental impact. This presents a clear opportunity for retailers to spotlight sustainable ranges and packaging innovations.

Also, mindful gifting is on the rise. Consumers are showing interest in gifts that offer added value, whether through health benefits, ethical sourcing, or environmental credentials. These preferences open the door for new product development and brand storytelling that aligns with shopper values. This is also seeing inclusive entertaining evolve. The demand for alcohol-free options and sophisticated mocktails is growing, as shoppers look to host gatherings that cater to a wider range of preferences and lifestyles.

Retailers and suppliers must work together to make sustainable and inclusive options more visible, in-store and online. Clear signposting, curated festive zones, and targeted promotions will be key to capturing this growing demand.

To keep up with how Christmas 2025 develops:

• Visit ShopperVista at the end of November to see our pre-Christmas research about how shoppers are thinking about the event.

• Go to Retail Analysis to see how in-store activations are being brought to life in the UK and globally.

• See our Away From Home site to appreciate how its sectors are approaching the event and aiming to win share from dine-in occasions.