Consumer Sector 2026: Key trends that will redefine retail

The reliance on technology to drive efficiencies continue to accelerate and sustainability regulation will begin to reshape business models at pace. Combined with a highly competitive trading landscape, these forces create a challenging operating environment but also a window for consumer businesses to redesign how they create value.

At the heart of 2026 lies a pivotal shift: physical stores, already squeezed by costs and convenience-driven behaviour, are being asked to do more without the necessary investment. As AI pushes more transactions online and consumer journeys fragment, the high street now plays a hybrid role, acting simultaneously as showroom, service centre, returns hub and brand touchpoint. Yet cost structures have not evolved at the same speed. Wage inflation and energy costs continue to rise, while many operational tasks in-store are labour-intensive, generating little direct revenue. Without intervention, retailers risk running busy stores that quietly destroy value.

The organisations that thrive in 2026 will be those that embrace this hybrid reality, redesign store economics and customer experience, and integrate technology and labour models built around what the store actually does, not what it used to do.

The following trends illustrate the new landscape and what leaders should prioritise next.

1. The new economics of the physical store

The biggest issue facing UK high street retailers in 2026 is the growing mismatch between what stores are required to deliver and how they generate profit. This trend is only reinforced by the figures showing that this past December marked the eight consecutive month of declining footfall, according to data from the British Retail Consortium (BRC)[1]. Convenience-led behaviour has accelerated, pushing more customers towards click-and-collect, returns drop-offs and service-led touchpoints rather than pure in-store purchases. But with inflationary pressures still elevated labour and energy costs continue to climb.

At the same time, discount formats continue to grow, while premium retailers must work harder to justify prices in a cautious spending environment. Discounters thrive because their models relentlessly simplify; premium players succeed through experience and relevance—but both depend on radical clarity over a store’s purpose.

2. Agentic AI reshapes demand, service and operations

2026 marks the first mainstream year of agentic AI commerce, where autonomous AI agents search, compare, recommend and complete purchases for consumers. Major platforms and payment providers have introduced agent-driven capabilities, meaning demand increasingly originates inside AI systems rather than on traditional websites or apps.

The opportunity is significant. Retailers using AI in customer personalisation and application development are already reporting the strongest returns on investment. Yet governance, model accuracy, data integrity and integration with human expertise remain essential to grasp this opportunity whilst managing risk. Businesses must establish AI-ready product data, safe-use governance, and human-machine workflows that unlock speed, accuracy and personalisation without compromising trust.

3. The value mindset becomes the consumer default

With an ever-changing geopolitical environment consumer confidence remains fragile. The UK continues to see caution-driven behaviours shaped by lingering cost-of-living pressures, selective premiumisation and disciplined budgeting.

Retailers therefore need value strategies that work across price points: rational price ladders, clear “good-better-best” propositions, and loyalty programmes aligned to tangible savings rather than soft perks, with a move from solely cash-discounts to cash-equivalent value options. Shoppers expect value without compromising experience. Retailers must redesign their value propositions around transparency, relevance and experience. Ensure price ladders, pack sizes, promotions and loyalty schemes fit the persistent value mindset.

4. Sustainability regulation tightens and becomes financially material

2026 brings one of the biggest regulatory shifts the consumer sector has faced. UK Packaging EPR moves into fee modulation, meaning businesses will pay more for hard-to-recycle materials and less for greener alternatives. The EU follows with major rules too: the Ecodesign Regulation bans destroying unsold apparel and footwear from July 2026, while new anti-greenwashing rules (ECGT) tighten what brands can claim. The Packaging and Packaging Waste Regulation also applies from August 2026, imposing stricter recyclability and labelling requirements which will substantially impact agri‑commodity‑based foods (cocoa, coffee, soy, palm, cattle, rubber, wood) and hard‑to‑recycle packaging formats (such as multilayer plastics and fibre composites).

Together, these measures make packaging choices, claims, and product data financially significant. Businesses that prepare early, integrating compliance into product design, marketing and supply chain decisions, can protect margins and strengthen consumer trust.

5. Supply chains shift from lowest-cost to resilience and agility

The era of single-country, lowest-cost sourcing models is ending. 2026 continues the pivot towards nearshoring, diversification and real-time visibility. Organisations are investing in digital twins, regionalised production, and more transparent supplier relationships to mitigate disruption and improve responsiveness.

This shift supports several core needs:

Shorter lead times for fast-moving or trend-driven categories
Reduced concentration risk from geopolitical volatility
Lower working capital via improved inventory accuracy
Enhanced service levels as demand patterns fluctuate

Several product categories face heightened supply‑chain exposure, notably apparel, footwear and electronics due to tariff‑driven sourcing shifts and semiconductor‑related disruptions, as well as bulky goods like furniture, which are sensitive to volatile freight routes.

Supply chains will continue to become strategic drivers of growth rather than cost centres. Tariff mitigation, multi-node fulfilment and intelligent demand planning will be essential capabilities as retailers and brands prepare for a more variable global environment.

The consumer sector in 2026

This new year will not reward businesses chasing the next trend, it will reward those that execute well, build intelligent, resilient systems, and align their economics with how consumers truly behave today and in the future.

The winners will be organisations that integrate credible value, measurable AI-enabled personalisation, compliant sustainability practices and re-engineered store models, turning caution into confidence and confidence into sustainable growth.