2025 European Holiday Shopping Outlook

What’s in store for retailers in the UK, France, and Germany this holiday season? Most will see subdued sales as consumer confidence continues to cool and macroeconomic uncertainty weighs on wallets. Overall, year-over-year growth will be more muted than merry, with nonstore (e-commerce and mail order) sales delivering most of the gains.

Bain forecasts that the UK will see a modest 2.5% year-over-year uptick in retail sales this November and December. But most of that gain is due to inflation, as we anticipate volumes will decline. When adjusted for inflation, real growth will likely be negative.

With inflation persistent at 3.8%—and even higher in essentials like food—shoppers’ discretionary budgets are under pressure. Layer in rising unemployment and the looming Autumn Budget announcement right in the core shopping season, and holiday cheer may be in short supply. However, not all signs point downward. Many households still have solid savings, and recent interest rate cuts could thaw some of the spending freeze.

In France, we project holiday retail sales to grow just 0.5% year over year, on par with 2024. With inflation around 1%, that means volume growth will likely be flat to slightly negative.

Political instability, rising unemployment, and slowing income growth are all weighing heavily on French consumers’ confidence and spending. From high-income households wary of higher taxes to low-income households concerned about social safety nets, most are feeling cautious. Still, a higher household savings rate—roughly 19% vs. a 16% historical norm—could offer enough cushion for gift giving.

Germany heads into the 2025 holiday season with tempered expectations. Bain forecasts 2.5% nominal growth in retail sales, softer than last year’s 3.9%. But unlike in the UK, we expect volumes to be flat.

German consumer confidence remains fragile amid political unease and cost-of-living concerns. Unemployment is higher than last year, and inflation rose to 2.4% in September, exceeding expectations. But resilient wages may help households check off their gift lists. As a result, German retailers can anticipate a more measured, but still meaningful, holiday season. 

While the forecast may be frostier than usual, smart strategies can help insulate retailers from the chill. Seasonal winners will empathize with shoppers’ strained financial positions and lift their spirits. Here’s how these retailers will still unwrap opportunity:

• Lead with sharp pricing on key value items and, as AI enables hyper-transparent pricing, stress value over lowest price to win over strained shoppers.
• Emphasize the unique and differentiated parts of your value proposition, as real growth will only come from share shifts.
• Double down on personalization with targeted offers and discounts, especially in the final weeks of the holiday season.
• Ensure frictionless digital journeys, with strong search, reliable click-and-collect, fast delivery, and easy returns as consumers turn to e-commerce channels.
• Use tech and AI for forecasting, pricing, and campaign optimization to stay agile and responsive.
• Play the long game, using the season to build loyalty and retention that will strengthen customer lifetime value.