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 only modest value growth but largely flat volumes, according to new research from the Institute of Grocery Distribution (IGD).
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 the ongoing pressure on household budgets.
The findings are taken from the IGD’s new Seven Predictions for Christmas 2026 analysis.
Remaining resilient
Despite shopper confidence falling 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, the IGD said.
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 the 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
The IGD said it also expects more festive spending to shift into the home, as consumers look to reduce the costs of 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 retailers, the IGD added.
Premium private label ranges are expected to be among the biggest beneficiaries, as consumers seek restaurant-quality experiences at home for less.
Unpredictable demand
The 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 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.
The IGD advises that both 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.
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