UK State of Spend Report: Retail

"If the price is right"

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New Cardlytics State of Spend study reveals tentative recovery in consumer confidence

After two years of post-pandemic recalibration, UK consumers are shopping again – just not like they used to. 

The latest data from Cardlytics reveals a retail landscape defined less by indiscriminate demand and more by considered choice. 

While spending remains resilient in many categories, shoppers are now clearly applying more scrutiny to how and where they spend. Value, convenience, and perceived quality are under the microscope, and if expectations aren’t met, consumers are pulling back.

This divergence is playing out differently across the retail sector. Categories like high-street fashion and beauty are holding strong, buoyed by brand loyalty, reviving high streets, and the occasional feel-good purchase. 

But grocery and household tell a more precarious story, where price sensitivity and shifting shopping habits are forcing brands to work harder and smarter to keep customers loyal. 

Whether shopping in-store, online, or through delivery apps, today’s consumer expects more than just competitive pricing. 

They’re looking for value that feels personal. For retailers, the challenge is clear: speak directly to customer priorities, or risk being left behind.

Retail: A resilient core – but rewards go to relevance

Fashion and beauty continue to defy broader economic headwinds. Spending on make-up and beauty products surged by 19% year-on-year in Q1 2024, and growth has carried into 2025, albeit at a more modest 5%. The number of transactions in the sector has outpaced spend, suggesting that while shoppers remain engaged, they are consciously managing budgets – opting for smaller, more frequent purchases that still offer a sense of indulgence. It’s a pattern that reflects the so-called “lipstick effect”: the tendency for consumers to turn to affordable luxuries during uncertain times.

High street fashion is also faring well. After growing 9% in 2024, the category recorded a further 5% uptick in early 2025, driven by established brands with a strong physical presence and a loyal customer base. This comes despite recent cyber attacks on major retailers, which - in good news for the sector - hasn’t deterred shoppers as of yet. Rather than stop spending, it just shifted it - as shoppers showed they are loyal to their habits over individual brands. 

Online fast fashion, meanwhile, showed little momentum through 2024, but increased sharply in Q1 2025 with a 13% rise in spend. Discount-led promotions and trend-led buying may be drawing cautious consumers back to basket - but this trend remains nascent stages.

However, not all categories are experiencing this trend. Department stores saw a 4% drop in spend in 2024, with a further 5% decline in 2025. Transactions have followed the same downward trajectory, pointing to a broader shift away from traditional department store formats. As shoppers prioritise experience, value and, crucially, brand alignment, department stores may be losing relevance to more focused propositions.

Cardlytics Analysis

Retailers that combine physical presence with a strong sense of brand identity continue to perform strongly. But brands can no longer rely on habitual customer loyalty. Our data shows clear momentum for brands that are giving customers a feel-good factor to shopping, whether that be through price, experience or personalisation. 

Case Studies

• A leading e-commerce & retail brand partnered with CDLX to drive new customers and ensure incremental revenue, by leveraging CDLX’s pay-per-performance channel to incentivise spend from competitors via cash back reward. The campaign delivered £1m revenue across 20K redemptions, captured 27% SoW across redeemers from competitors. Across the “New” segment, CDLX captured 77% SoW from competitors. 
• A major European health & wellness brand partnered with CDLX to acquire new customers, re-engage and retain lapsed and existing customers, and drive sales over a six week period in Q1 2025. Leveraging our proprietary transaction data into data-driven marketing, the campaigns drove over £2M Revenue and an average ROAS of £24.41. During that period, the brand increased share of wallet by 52%, crucially gaining ground on key competitors in the health and wellness industry.

Grocery: Essential, but under pressure 

Supermarkets remain a staple of consumer spending, but the data tells a story of growing caution. After recording 9% growth in 2024, so-called ‘big grocers’ saw a 3% fall in spend in the first quarter of 2025. The number of transactions have held steady however, suggesting that shoppers are still showing up – they’re just spending less when they do.

This theme appeared prominently across convenience grocery. 

Spend rose by 11% in 2024, before dipping 4% this year. Unlike the supermarkets, however, transaction volumes declined modestly, pointing to a broader behavioural shift. Shoppers appear to be planning more carefully, opting for fewer top-up trips and returning to larger, weekly shops.

In contrast, grocery delivery continued to grow, extending its gains from last year. After a 16% rise in 2024, the category saw a further 13% increase in early 2025, with both the average transaction value and number of orders increasing. Once considered a pandemic-era habit, online grocery ordering now looks like a lasting behavioural shift – particularly for customers who value predictability, convenience and the ability to budget in advance.

Cardlytics Analysis

The return of the big weekly shop, combined with the decline in spontaneous convenience visits, signals a shift towards planned, value-driven behaviour. For grocers, this is both a challenge and an opportunity. 

The ability to personalise offers, reinforce loyalty, and remove friction at checkout is becoming critical, particularly as shoppers become more deliberate in how and where they spend. Cashback rewards can help bridge the gap between price expectations and perceived value, especially when tailored to individual behaviours. Delivery providers are responding well to this shift, offering consistent, low-surprise experiences that support budgeting and convenience. A similar customer-first approach is increasingly expected in-store, where value and planning now take precedence over impulse.

Case Study

A leading food delivery platform and CDLX partnered to drive new customer acquisition and incremental revenue, using cashback rewards to incentivise spend from competitors.

The campaigns delivered 119K redemptions and £2.9M in revenue, capturing 44% share of wallet across lapsed and acquisition segments. Incremental revenue from the "New" customer segment alone reached £470K, with repeat customers generating an additional £7.2M in spend post-campaign.

Household: Still spending, but pulling back

After a period of steady post-pandemic investment in the home, household spending is beginning to cool. While consumers are still investing in their living spaces, they are doing so with increasing caution – prioritising essential upgrades over discretionary improvements. Across all categories, the number of transactions has remained broadly stable, but average spend is softening – indicating a shift towards smaller, more deliberate purchases.

This was the case for DIY, which saw spend increase modestly by 4% in 2024, before falling 1% in early 2025. Transaction volumes held steady, but average spend edged down – showing that consumers are now focusing on smaller-scale fixes or improvements, rather than large projects.

Value homeware followed a similar pattern, emphasising the importance of affordability in the household goods sector. While total spend softened, the number of transactions held firm, showing a consumer preference for incremental upgrades that deliver a sense of progress without straining budgets. Elsewhere, spending on garden and outdoor products declined in early 2025, reflecting a clear pivot towards core priorities, with seasonal or aspirational purchases falling by the wayside.

Spend for electricals declined by 6% in 2025, alongside a 7% fall in transactions. But average spend rose 6%, suggesting a more selective, quality-focused approach to purchasing habits. Consumers appear to be waiting longer between purchases, but when they do buy, they are choosing higher-spec replacements – reinforcing the idea that perceived value, rather than just price, is driving decision-making.

Cardlytics Analysis

In the household sector, the rules of engagement have changed. Big-ticket spending is cooling, but our data shows that consumers are still willing to invest when they feel the value is tangible, especially on higher-spec replacements in categories like electricals. 

Cashback rewards are proving particularly effective in this space, encouraging considered purchases while reinforcing the idea of getting more for less. Retailers focused on affordability are outperforming their lifestyle-led counterparts. 

The signal from consumers is clear: value and functionality matter more than non-essential or lifestyle-led propositions. Brands that demonstrate they understand their customers’ priorities - and reinforce that through personalised offers and targeted cashback - will go further in earning loyalty and driving conversion.

Case Study

A leading DIY brand and CDLX partnered to improve incremental sales, drive new customers and repeat visits as well as deepen loyalty with existing customers. Using CDLX’s proprietary purchase intelligence data, the campaigns identified and targeted customers with personalised value-driven offers. 

Over the six-week period, over £800k in incremental sales were driven. The brand has seen 39% of campaign customers return to shop again, and captured 60% share of wallet from key competitors during that time.

Navigating a more cautious consumer landscape

Our analysis for the first four months of 2025 painted a clear picture of an increasingly value-conscious consumer. While there were bright spots — such as sustained demand for affordable luxuries and resilient online grocery growth — the broader retail environment showed signs of growing caution. The data indicated that a softening in consumer confidence could be on the horizon — something that recent retail sales figures from May have now confirmed, with sharp drops in sales linked to rising inflation and consumer cutbacks.

The opportunity for brands lies in how they respond. Our data shows that personalisation, value-driven propositions, and transparent rewards are more important than ever. Shoppers are still spending, but they are making deliberate choices about where they see true value. Cashback rewards and tailored offers can play a crucial role in reinforcing loyalty and driving conversion during this period of increased scrutiny.

For retailers, the message is clear: relevance, value, and trust must be at the heart of every interaction. Businesses that consistently prove they can deliver meaningful value at the right price will be best positioned to secure customer loyalty and drive sustainable growth in the uncertain months ahead.