Retail & Consumer Horizon Scanner

Retailers face a tight labour market, rising expectations and pressure to boost productivity. Success in 2026 relies on stronger retention strategies, flexible working, wellbeing investment and smart use of automation. With major employment law reforms ahead, businesses must update policies and prepare for greater responsibilities, consultation duties and worker protections.

Consumer demand for health and wellness is surging, from personalised nutrition and mental‑wellbeing tools to clean‑label products and gut‑health solutions. Functional snacks, wellness drinks and weight‑loss trends are reshaping buying habits. Brands must innovate responsibly while navigating tightening advertising rules to avoid making regulated medicinal claims.

AI regulation remains uncertain going into 2026: With UK businesses operating without a dedicated AI Act. Organisations should prepare by strengthening governance, managing data protection risks, and improving AI literacy. With rapidly advancing multimodal models, firms must balance opportunity with oversight across procurement, sales and service delivery.

Retail and leisure continue shifting toward immersive, experience‑led environments. Operators are investing in engaging formats, flexible leases and tech‑enabled personalisation while adapting to cost pressures and regulatory change. Experiential destinations outperform traditional spaces, making customer‑centric design, data use, partnerships and property strategy critical for growth in 2026.

UK consumers are increasingly switching between “saving” and “splurging,” cutting back on everyday treats while spending on meaningful rewards. Food and grocery remain resilient, with loyalty schemes driving performance. In fashion, health and beauty, shoppers prioritise practicality, wellness and timeless buys. Success lies in balancing value, experience and accessible luxury.

Social commerce is becoming a core retail channel, with platforms like Instagram and TikTok driving fast, frictionless purchasing and projected UK growth to £16bn by 2028. Influencer content, live shopping and mobile payments fuel this shift. Success requires strong personalisation, transparency and compliance to build trust and sustained growth.

Sustainability is now a major driver of consumer choice, with rising demand for ethical products, transparent ESG action, and circular practices. Retailers embracing reuse, repair, recycling and responsible packaging can gain loyalty and competitive advantage while avoiding greenwashing risks and meeting new waste and packaging regulations.

Technology and AI are reshaping retail, streamlining shopping and boosting efficiency through automation, personalisation and smart robotics. While frictionless journeys matter, consumers also want emotional connection, driving a rise in experience‑led ‘slow retail’. Retailers must balance innovation with careful, human‑centred AI adoption and ensure legal and compliance foundations are strong.

2026 brings fresh challenges and opportunities as technology, regulation, and consumer expectations evolve. Businesses will need agility and strategic focus to stay ahead. MHA blends global expertise with local insight to help organisations navigate complexity and capture growth. Here are their key industry predictions for 2026, shared with Freeths.