Recent reports have increasingly been suggesting that UK shoppers are back in a spending frame of mind and a new study agrees with that. But it also says they’re willing to spend “only if the price is right,” and are being more thoughtful about their purchases.
Cardlytics, which operates an advertising platform based on spending insights from over 24 million UK bank accounts, said that “after two years of post-pandemic recalibration, consumers are shopping again – but not as they once did”.
Its new data “reveals a more cautious and value-driven consumer, with spending growth concentrated in categories like fashion and beauty that align with quality, convenience and affordable indulgence”.
The State of Spend: Retail Report claims that “shoppers are still active but are applying more scrutiny to where and how they spend”.
It looked at three key sectors — retail, grocery, and household — and how consumer behaviour differs across each. “From value-driven and feelgood spending in fashion and beauty, to more cautious grocery shopping and increasingly selective investment in household essentials, the report has revealed consumer habits are evolving, and brands must keep up,” it explained.
Zeroing in on fashion and beauty, it said “high street fashion and beauty categories are holding firm, buoyed by brand loyalty and a desire for small feelgood purchases”.
It analysed January, February, and March spending from this year and the previous two years and said that this time, beauty spend rose 5% year-on-year, “with transaction volumes outpacing spend, indicating shoppers are still indulging, but doing so more often in smaller amounts – aligning with the so-called lipstick effect of customers turning to smaller and more affordable luxury items in times of uncertainty”.
But it’s not all good news. Department stores, by contrast, “continue to lose relevance – and sharply”. Spend declined 4% in 2024 and a further 5% in early 2025, “reflecting the challenges of a one-size-fits-all model in a market where consumers are seeking out more targeted, brand-led propositions”.
Meanwhile, it’s interesting that online fast fashion, “after flatlining in 2024, bounced back with a 13% uplift in Q1 2025, helped by discount-led promotions and the return of trend-led buying. This suggests that price and novelty still hold sway – particularly when brands can meet both at speed”.
Lucy Whittemore, SVP UK Partnerships at Cardlytics, said: “We’re seeing a more discerning consumer – still spending but doing so more selectively and looking for clear value, trusted brands and a sense of reward. Physical retail is regaining momentum for brands offering something distinctive, and in a more competitive, cautious environment, loyalty won’t be won by price alone. Targeted offers, personalised rewards and a clear brand proposition will be key.”
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