Was it the most wonderful time of the year? Capgemini reflects on Christmas 2024 for retailers

For everyone in the retail industry, the 2024 festive period faced persistent economic headwinds, with consumers making careful spending decisions amid continued inflation. Despite this uncertain climate, total retail sales grew by 3.2% compared to 2023 in the last four weeks of the year, with particularly strong momentum in the final week before Christmas.  

But was it as lucrative as many hoped? Did the hard work fostering loyalty pay off? And are customers still demanding more evidence that big ticket items are worth the asking price? Here, Capgemini’s retail experts reflect on the key drivers of success across the grocery, high street, and luxury sectors.

1. Grocery 

The grocery sector proved especially resilient over the festive period, achieving sales of £14bn in the three weeks before Christmas.  

In his first Christmas as CEO of Tesco, Matthew Barnes will have been pleased to retain the company’s commanding market share lead. While Tesco dominated with 28.5% market share, other major players – Sainsbury’s, Aldi, Lidl, and M&S – also reported positive results. ASDA however, continued to struggle due to a leadership gap and debt burden, becoming the only major retailer to lose market share in the 12 weeks before Christmas. This setback complicates their recovery plans and adds complexity to their ongoing CEO search.  

Key Performance Metrics   

The festive season saw strong results across the board – and some retailers have even been shouting about their ‘best ever Christmas’ – but what data are we considering when we review this?

Throughout the industry, market share remains our primary focus, with the highly anticipated Kantar results detailing market movements. Sales growth and volume metrics reveal different insights when accounting for inflation, requiring careful year-over-year analysis.  

Internal reporting provides even deeper, richer data that can shape planning for 2025. Internal reviews focus on three key areas: customer behaviour, operational efficiency, and category performance. These reviews examine customer acquisition, promotional effectiveness, and customer loyalty. Key questions include whether margin investments justified customer gains and how to better balance category growth with profitability.  

Beyond customer insights, retailers must evaluate their own performance – including stock availability, adaptation to increased customer traffic, and IT infrastructure resilience under pressure.  

Understanding customer behaviour patterns is crucial for retailers’ long-term success. In a competitive market where shopping habits constantly evolve, retailers who successfully balance acquisition and retention efforts are better positioned to grow market share. These insights should inform future marketing strategies, loyalty programme development, and promotional planning to ensure sustainable growth in both customer base and revenue.  

The key takeaway for grocers is to leverage operational insights to drive strategic decision-making. This means ensuring robust IT infrastructure, inventory management and accurate forecasting to prevent costly disruptions during peak trading periods, while also adapting to evolving shopping behaviour – particularly the shift back towards in-store shopping (8% increase) versus online decline (1.7%). Success requires a balanced approach to category management, especially in premium and private-label offerings, and strong customer retention strategies through effective loyalty programmes. Looking ahead, retailers must remain agile, focusing on smart shopping initiatives and omnichannel experiences to meet changing consumer preferences.  

Consumer Behaviour  

The cost-of-living crisis continues to affect both the grocery sector and the high street. Average basket value dropped 4.9% year on year. The British appetite for bargains kept promotional activity central, with NIQ reporting 27% of sales were made through promotions. Tesco and Sainsbury’s led this trend, with 35% of goods sold on promotion – demonstrating the strength of their loyalty pricing initiatives.  

Despite ongoing economic pressures, consumers found room in their budgets for indulgence, with branded sales up 4.2% and premium own-brand products surging to 14.6% in December.  

Competition remained fierce as retailers launched market-leading offers early to capture volume ahead of competitors. Peak season tactics mirrored last year’s approach, with loss-leading vegetable offers designed to attract customers and encourage larger basket spending.  

In-store visits rose by 8% and sales by 3.6% – a positive trend that contrasted with wider high street performance. However, this growth came at the expense of online sales, which fell 1.7%. The busiest shopping day – 23^rd December – saw Aldi serve over three million customers, marking their busiest day ever, while Morrisons struggled with a painfully timed IT crisis that impacted operations.  

2. High Street

The Christmas period for delivered mixed results for high street fashion retail , with notable successes from key players who implemented effective strategies to deliver quality products while maintaining operational efficiency.  

Despite a 5.3% year-on-year drop in high-street footfall, shopping centres and retail parks experienced significant growth. This shift reflects an evolving consumer preference for convenient, all-in-one shopping destinations that offer multiple retail options under one roof.  

A more pessimistic outlook persists for the next six months. Consumers have energy and housing costs weighing heavily on their minds, so the challenges will continue for retailers . However, December volumes increased slightly year-on-year by 1.1%, with clothing holding its own against other high-street subsectors – some reason for cheer.  

Differentiation  

Those who bucked the trend found ways to stand out. Notably, M&S posted a 1.9% increase in sales thanks to their turnaround strategy focusing on quality, style, and value perception for general merchandise products. This product innovation was complemented by improved digital offerings that enhanced customer experience. Impressively, the M&S app accounted for 34% of total sales, up 3% from last year, and the retailer is doubling down with a forward-looking mindset aimed at building on these achievements in the year ahead.  

The Very Group also deserves recognition for its operational excellence and distinguishing itself through efficient fulfilment. Very excelled at processing orders and meeting promises, building customer trust and loyalty. Reports indicate orders were being processed in as little as 16 minutes!  

Through category growth and margin-accretive channels, Kurt Geiger achieved its most profitable month in 62 years. The company’s direct-to-consumer sales grew by 17%, boosting average margins, while a 54% increase in handbag sales helped diversify beyond its core shoe business. The company is now focusing on international expansion to maintain this momentum.   

Promotional Activity  

Tough conditions pushed retailers to launch Boxing Day sales early to clear inventory and make space for new season stock. Once one retailer made this move, competitors had little choice but to follow suit. Boxing Day footfall fell by 4.9%, and this impact will likely affect January performance. Combined with post-budget changes, this could leave some prominent brands on shaky ground in 2025.  

Social Commerce   

The rapid growth of this branch of e-commerce – using social and digital media to enable product discovery, conversion, and transactions – has played a pivotal role in shopping behaviours over the 2024 holiday season, with platforms like TikTok Shop and Instagram becoming key revenue drivers.  

At this year’s NRF 2025: Retail’s Big Show, a TikTok executive shared that 53% of Gen Z consumers discover products on social media first, and live shopping drives higher conversions than traditional e-commerce. This statistic is backed up in the latest consumer trends report from the Capgemini Research Institute, with 60% of Gen Z and millennial shoppers saying they’ve made purchases directly through social media platforms in the past year.  

Retailer focus needs to be on creating authentic content, often facilitated by smaller micro-influencers who connect with customers. Alongside seamless integration with social media channels, the power of these platforms lies in their advanced algorithms, which amplify visibility and help content gain viral momentum. Through viral challenges and influencer product endorsements, content can reach millions of views within 24 hours. 

3. Luxury   

The global luxury market slowdown was a hot topic prior to the festive season, with Christmas offering little respite as tough conditions persisted for luxury brands. As well as dampening consumer demand, the sector faces mounting challenges in maintaining its credibility, with 76% of customers citing prices have increased more than quality justifies. Bearing in mind this consumer scepticism at an all-time high, luxury brands must ensure that they deliver meticulously crafted products to justify their premium price points, uphold their value proposition, and win the hearts and wallets of luxury spenders.    

However, LVMH has made a promising start to 2025, reporting a 1% increase in sales to €29.9 billion for the last three months of 2024, defying a forecast of a 3.3% decline. Likewise, Richemont reported a robust end-of-year performance, with sales up 10% predominately driven by US and European demand for jewellery, offering a glimmer of hope for the luxury sector.  

Fortnum & Mason emerged as a success story, posting a remarkable 14% increase in sales during the Christmas trading period, thanks to its quintessentially British flagship store and the influx of international customers that come to visit it. However, online sales told a different story, with sales over Christmas 7% lower than 2023 and multiple customers complaints around delayed festive hampers due to ‘staffing issues’. A basic but critical lesson for the retailer in the importance of forecasting and managing demand in peak trading periods.   

Battersea Power Station – an upmarket version of successful retail parks – demonstrated the power of convenience by blending high street, luxury, and food retailers. The development saw an 11% increase in footfall during the final two months of the year, with Christmas sales surging by 13.4% year-on-year. These impressive results highlight both the effectiveness of well-curated retail ecosystems and the growing shift in customer sentiment towards convenience-driven commerce, as reported in our consumer trends report.  

Limited reporting on luxury brand’s performance is hardly surprising as many brands remain family-owned and therefore under less pressure to disclose financials. However, for publicly traded luxury companies, the lack of reporting speaks volumes about the industry’s ongoing challenges.   

The luxury sector faces critical crossroads. To survive, brands must go back to basics, reinforcing quality and craftsmanship while delivering unique brand narratives and delivering exceptional customer service. The endorsement of comprehensive retail ecosystems, exemplified by Battersea Power Station’s success, shows the importance of convenience and integrated experiences. However, luxury brands cannot overlook operational fundamentals – proper staffing, delivery, and customer service remain crucial. Most importantly, the sector needs to rebuild consumer trust, particularly with younger demographics who are increasingly exploring alternative luxury options.

What lessons can retailers take into the 2025 Christmas season?  

Operational Excellence: As retailers look ahead to December this year, operational readiness will be paramount to success. With planning already underway for the year’s largest event, retailers must focus on the fundamentals of retail excellence – proper staffing levels, efficient delivery systems, and exceptional customer service – must be prioritised to handle peak trading periods effectively. Retailers should focus on maintaining strong availability across key categories while preparing their infrastructure to manage high-traffic periods both in-store and online.  

Differentiation: Differentiation will continue to be crucial in an increasingly competitive market. Retailers must clearly define their unique value proposition, whether through competitive pricing, superior product quality, or a diverse product range that sets them apart from competitors. The trend of ‘smart shopping’ is expected to persist, with consumers actively seeking the best deals and continuing their little and often’ shopping behaviour across multiple channels.  

Ecosystems: The evolution of retail spaces presents both challenges and opportunities. Success stories like Battersea Power Station demonstrate the potential of creating integrated retail environments that combine shopping, dining, and leisure experiences. This may prompt retailers to reassess their location strategies and consider how their physical spaces can better serve changing consumer needs.

Looking ahead, retailers must navigate ongoing economic pressures as consumers continue to face challenges with energy and housing costs. The key to success will lie in striking the right balance between offering value to price-conscious consumers while maintaining operational efficiency and a strong digital presence. Those who can adapt to these evolving market conditions while maintaining their core strengths will be best positioned for success during the 2025 festive season. 

Download our latest report from the Capgemini Research Institute to discover more consumer behaviour trends likely to shape retail in 2025.