UK consumers will save on festive essentials while trading up to premium treats this Christmas, creating a more polarised festive basket and leaving grocery retailers facing modest value growth but largely flat volumes, according to IGD research.
More than half (51%) of shoppers say they plan to buy more premium own-label products, highlighting how consumers are increasingly seeking affordable indulgence despite ongoing pressure on household budgets.
Despite shopper confidence falling to -3 in September, Christmas spending is expected to remain resilient. Rather than cutting back across the board, IGD expects shoppers to make deliberate trade-offs, seeking savings on commodity categories before reinvesting in centrepieces, desserts, party food and drinks.
This trend is expected to create opportunities for both discounters and premium own-label ranges as shoppers save on everyday essentials while selectively trading up on festive treats.
Jon Wright, Head of Insight at IGD, said:
"Shoppers still want to create memorable festive occasions, but they're becoming increasingly strategic about where they save and where they spend. The retailers that perform best will help shoppers make those trade-offs, combining strong value credentials with compelling opportunities to trade up."
Home entertaining gains momentum
IGD also expects more festive spending to shift into the home as consumers look to reduce spending on restaurants, pubs and takeaways.
Rather than cancelling celebrations, many shoppers are expected to recreate them at home through premium meal solutions, party food and drinks. This is likely to create further opportunities for grocery retailers while increasing competitive pressure on parts of the hospitality sector.
Premium private-label ranges are expected to be among the biggest beneficiaries as consumers seek restaurant-quality experiences at home for less.
Retailers prepare for more unpredictable festive demand
IGD also expects promotions, loyalty schemes and early festive purchases to play a major role in Christmas 2026, with promotions accounting for 33.3% of December 2025 sales, the highest level since Christmas 2019.
Combined with growing demand for premium private-label products and at-home entertaining, pressure on household budgets could encourage shoppers to spread the cost of Christmas over a longer period, bringing festive spending forward and creating more uneven demand patterns across categories and channels.
IGD says retailers and suppliers will need to remain agile, ensuring strong availability across both value and premium festive lines while responding quickly to shifts in demand. These findings are taken from IGD's ‘Seven predictions for Christmas 2026’ retail analysis, available free as part of IGD's Golden Quarter Christmas insights coverage.