2025 Retail Review: What Worked, What Didn’t, and How to Win in 2026

As we close the curtains on another year, it’s safe to say that 2025 provided retailers with a mixed bag in terms of sales and performance. After a stagnant Q1 which saw inflation rates jump, the summer months brought about a rise in spending, as online retailers saw a 1.7% sales boost, a return to levels not seen since February 2022.  

As we entered Q4 and Black Friday approached, we saw the high street struggle as retail sales fell in the run-up to Christmas. However, consumer spending remained high on Black Friday and Cyber Monday with a 4.7% increase year on year.  

But with the announcement of the latest government budget bringing about declines in consumer confidence and spending in 2025, what will 2026 hold for online retailers? Join us as we wrap up the good, the bad, and the ugly from retail in 2025 and share our top tips for making the most of the new year when it comes to growing your business.  

The Good: Social Ecommerce Expands as Brands Access New Audiences

Social commerce spending, powered by sites such as TikTok and Instagram, is expected to reach £80bn by 2030. The channel experienced growth of around 40% in 2025, growing faster than any traditional ecommerce channel. This increase has been led by unique marketing opportunities, such as shoppable posts and live streams tapping into the frenetic, fast-paced content synonymous with these platforms. 

The retailers who’ve performed best in this space are those who understand these new forms of content. Businesses should look to adjust their budgets to embrace social ecommerce marketing going forward, as well as measuring conversion rate and ROI on activities on these platforms. AI tools may also make creating content for these sites even simpler and optimised, structured product data will allow for up-to-date information to be easily shared with customers and platforms. 

The Good: Growth in Affiliate Marketing as Retailers Seek Secure Sales

In a retail landscape where traditional avenues of performance continue to decline, leveraging a network of sales opportunities has been a secret weapon for many retailers in 2025. Affiliate marketing has allowed businesses to tap into a huge audience of ready-to-buy consumers in a retail space where shoppers are spending more time researching their options. 

Not only has affiliate growth guaranteed retailers sales in a difficult year, it offers a strong ROI compared to other channels with a £16 average ROAS helping retailers stay afloat in a difficult economic landscape. For retailers looking to invest further in affiliate marketing in 2026, the best approach is to research competitor activity within the wider affiliate and partner marketing space, whilst setting up accurate testing to monitor performance and adjust your strategy accordingly.   

The Bad: Direct Traffic Continues to Decline

As social and affiliate traffic presented new growth opportunities in 2025, more traditional means of customer acquisition continued to fall. Namely, direct-to-site traffic trended around -10% year on year, representing a major downward trend in investment of large scale Above the Line (ATL) campaigns by businesses.  

The reduction in ATL spending alongside users spending more time researching purchases, with price becoming a major driving factor and brand loyalty now a shorter-term arrangement, have all impacted Direct to site traffic this year. 

For retailers, this means that 2026 may be the year they invest in themselves, focusing on brand building and loyalty programmes to give shoppers a reason to keep coming back. In a world where overseas retailers will continue to undercut domestic merchants, offering simplified checkouts and streamlined delivery options may help your site stand out.  

For retailers, directly answering the pain points of customers through optimised SEO content and enhanced customer service will help your products seem like the best solution in the face of cheaper competition.  

The Ugly: Retail Stores Struggle as Costs Rise

Despite a variety of high and lows in terms of ecommerce performance in 2025, the landscape for physical retail was much bleaker. Despite a small improvement at the end of the year during the festive period, cautious spending and low consumer confidence led to a sharp decline in high street spending last year.  

With rising business rates and declining footfall in city centres, it’s likely that this trend will continue in 2026, however there are ways that brands can make the most of their physical locations this year. The most important priority is understanding how your customers shop; if certain products or customer profiles are favoured in in-person transactions, you should maximise your physical spaces with these in mind.  

Loyalty programs can also help carry the customer journey between online and offline spaces, allowing your brand to stay on a customer’s mind whether they’re at home or on the high street. 

What Will Retail Look Like in 2026?

While we expect many of the trends we saw last year to carry over into 2026, there are certain key areas which online retailers should be focusing on to maximise their growth this year. 

The Continued Rise of AI-Powered Shopping

It’s safe to say that AI is no longer just a buzzword used by marketers when discussing the future of the industry, it’s here and it’s here to stay. 

With ChatGPT Shopping launching at the tail-end of last year and Google’s AI Max and Performance Max campaign types changing the state of paid search, retailers should be including AI in every element of their marketing strategies.  

From preparing for paid ads within AI platforms, to ensuring your product feed is optimised for AI shopping, there are many steps that online retailers can take to ensure that they’re ahead of the curve in 2026. 

Omnichannel Presence to Rebuild Trust

Despite the decline in high street sales in 2025, store experiences remain vital throughout the customer journey. From providing customers with reassurance regarding product quality to bolstering confidence in an unsettled retail landscape, physical shopping is here to stay. 

For brands, this presents an opportunity to grow their omnichannel marketing efforts in 2026, building trust with consumers whilst ensuring brand visibility across all channels.  

Social Commerce Grows

The biggest change for 2026 will be the adoption of new channels as traditional ecommerce streams slow down. Driving real connections between brands and consumers through personal, engaging content will be priceless in such a competitive landscape. 

And the earlier brands begin to build this relationship, the better. Rather than fighting for attention further down the line, brands need to be building a captivated audience today through regular content uploads and direct communications. By implementing short-term KPIs as their profiles grow, retailers can diversify their strategies and access new audiences while maintaining their online activity across existing online spaces. 

How Can Retailers Win Big in 2026?

While it’s far too early to tell you what the biggest retail trends of 2026 will be, we can use our decades of experience to tell you what you should be looking out for this year. More specifically, these are some of our top tips for staying ahead of the competition to win big in 2026.  

Ecommerce Technology

Overall, 2026 will require a new approach from retailers if they want to succeed in the rapidly changing online retail landscape over the next 12 months, and beyond. In a world of AI tools and smarter shopping behaviours, ecommerce technology is about to become critical in terms of improving efficiency and visibility across all channels.  

At Productcaster, we’ve already been using our leading ecommerce technology to power our business and retail clients. From our award-winning CSS which reduces CPCs and increases competitiveness in shopping campaigns, to ProductMaximiser, ProductTester, and FeedManager which all work to boost your visibility through identifying opportunities, optimising product information, and deploying detailed product data.  

Interested in finding out more? You can book a demo today or speak to one of our experts and discover what Productcaster can do for you. 

Understand the Changing Landscape

Staying ahead of how AI is changing the search landscape, and retail as a whole, is going to be vital in 2026 as unprecedented updates and new platforms threaten to leave behind those who don’t adapt. To stay ahead of competitors, you’ll need cutting-edge insights and perspectives in terms of adopting new tactics to succeed an AI-led search environment.  

To help your business succeed in the world of AI search and continue to grow in 2026, we’re hosting our first webinar of the year on February 24th: Staying Visible In 2026 – Retail SEO in an AI Search Landscape. We’ll be exploring the opportunities available for retailers in terms of AI search experiences and how retailers can boost their organic visibility with a future-proof, AI-led SEO strategy.  

Register today to secure your space at our webinar here. And, don’t worry if you can’t make it; if you register, we’ll send you a recording of the session so you won’t miss out.