After a lacklustre Golden Quarter, retail sale growth is expected to continue to stagnate in the first quarter (Q1) of 2026, according to the latest predictions from the Retail Think Tank (RTT), a body of industry experts and thought leaders.

The RTT predicts that a combination of factors will continue to limit retail spending throughout Q1 2026, including higher household essential costs, concerns about the economy and prioritisation of discretionary spend on holidays and experiences, health and wellbeing.

Growing use of resale sites, such as Vinted, as well as overseas online marketplaces, including SHEIN and Temu gaining greater market share, may also impact some retailers, it warns. While food retail is expected to achieve modest growth, the RTT forecasts that many non-food categories will remain flat during Q1, resulting in retail sales growth of ~1% compared to 2025.

But while the outlook for the sector as a whole is muted, the group say that innovation, resilience and a relentless focus on value are all factors that will see some individual retailers outperforming the sector and their peers.

“As we saw at Christmas, some retailers will outperform the sector average, defying the challenging consumer climate and highlighting that there remains opportunity for specific channels, categories and brands to thrive,” said Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK.

“This year will be another year of navigating disruption, from ongoing geopolitical instability to weak consumer demand and sustained pressure on labour and supply chains,” Natalie Berg, Retail Analyst for NBK Retail, commented. “But retailers will still need to make targeted strategic investments, such as cybersecurity.”

“Channel complexity will continue to intensify, driven by the growth of resale and social commerce, AI and the emergence of agentic AI, and the entrenchment of digitally native disruptors,” she added.