Industry experts predict the UK's fashion and footwear sector will see the lowest growth across all retail categories this year.

GlobalData’s associate retail research director Sophie Wilmot told attendees of a recent webinar on UK retail Christmas trading: “Sadly, we think fashion and footwear will once again be the worst performing sector” in the UK.

She explained 1% growth is forecast for clothing and footwear, however, this is expected to come from inflation with volumes being slightly lower than last year and a small proportion of spend shifting to the secondhand market.

Fashion and footwear UK retail expected to lose out to health and beauty in 2025 

She continued: “We think health and beauty is taking spend away from clothing and footwear as consumers are more interested in guilt-free buys. 

“We’ve also seen a shift towards shoppers investing in slightly more expensive classic pieces.” 

She pointed out UK fashion retailer Next has suggested consumers have cost and the environment in the back of their minds. 

However, she added: “Obviously we are still seeing very strong growth from Shein, so it’s clear that fast fashion is still desirable, but there’s definitely a mindset shift going on towards more premium pieces.” 

In terms of the UK economy more generally, Wilmot said UK consumers are feeling a “bit nervous” at the start of 2025, but she maintained: “All the macro indicators are looking fairly good for the year ahead”. 

“We anticipate this uncertainty among shoppers will ease off and we expect to see higher growth in UK retail spending in 2025 aided by inflation. We do also expect positive volumes this year, following three years of negative volume growth amid the cost of living crisis.” 

Next has warned of a 1% price increase on all goods in 2025, but Wilmot suggested most other clothing retailers would “struggle to put up their prices and maintain the same sales volumes given that demand has been so muted in the sector”. 

In addition to price rises, she said “we’re already seeing retailers cutting jobs”. She gave River Island as an example in the fashion sector and said it is “reportedly axing some head office positions”.

Just Style had not received confirmation of this from River Island at the time of going to press. 

Wilmot added that outside of fashion, UK supermarkets Sainsbury’s and Morrisons have also both announced job cuts. 

“Regardless of our forecast for sales, retailers already have a lot to contend with to ensure that this year’s trading is profitable,” she said.

Overall, she believes consumers are “feeling wary”, however the macro environment looks fairly stable, despite retailers having a big challenge when it comes to costs and profitability. 

The online retail market is expected to display a more positive performance in 2025. 

Wilmot explained: “Convenience is back at the top of consumers priorities, partly due to many office workers returning to their workplaces more frequently, while retailers continue to improve their proposition and extend their range of products.” 

Tough UK Christmas 2024 trading for fashion and footwear 

Looking back to the Christmas 2024 trading period, Wilmot highlighted that non-food didn’t improve as much as expected despite many sectors being up against weak comparatives in 2023. 

She shared: “We saw a disappointing performance in clothing, footwear and the home sectors and we didn’t see the post UK-budget boost that we had expected to come through, particularly for those bigger ticket home purchases.” 

Moving forward, GlobalData’s retail research director Patrick O’Brien suggested: “Consumers do have a bit more discretionary income, though that extra spend is with the middle class who may have traded down in the cost of living crisis and can be enticed to trade up.”

He added: “Even in clothing we’re seeing evidence of trading up with Next highlighting that people were not spending more. They were buying fewer, more premium items, but spending a similar amount overall.”

Value fashion retailer Primark had a poor Christmas hampered by low footfall at the beginning of the season. However O’Brien suggested it may struggle to keep those that traded down in the cost of living crisis when their financial situation improves. This is because much of the mid market now have broader product propositions, stronger online offerings and better fulfilment.