Fresh December 2025 trading data show non-food demand slipping while grocery inflation props up headline sales; card spending is lower and discount grocers gain share as retailers tighten inventory, pricing discipline and stress testing into spring.
Non-food sales are down 0.3% in December versus a year earlier. Total retail sales are up 1.2% over the same 12-month comparison, below the 2.3% average pace over the preceding 12 months through December. Barclays reports card spending 1.7% lower in December than a year earlier, the steepest annual fall since February four years earlier.
Grocery sales are up 3.1% in December versus a year earlier, while inflation is running at 4.3% in the same month, implying volumes remain pressured. Discretionary categories are absorbing the adjustment through heavier promotion and tighter stock discipline in clothing and general merchandise.
Abishai Financial Asia highlights cooling across channels, with store sales down 0.5% in December versus a year earlier and online non-food sales down 0.1% over the same 12-month comparison. Online penetration in non-food holds at 38.6% in December.
Argos posts sales 2.2% lower over the six weeks ending 3 January 2026, suggesting demand weakness extends beyond the festive window. Daniel Coventry, Director of Private Equity at Abishai Financial Asia Pte. Ltd., describes the pattern as “a value-led consumer cycle where discretionary demand is fragile, and retailers who can adjust ranges and pricing quickly are the ones who protect cash flow”.
Discount grocers continue to strengthen their position. A pricing comparison this month puts a comparable weekly shop about $22.8 higher at Tesco and about $53.6 higher at Waitrose than at the lowest-priced operator. Over the 12 weeks through late December, Aldi holds 10.1% market share and Lidl 7.6%, and Coventry notes “the gap is measurable at the basket level, which forces every operator to treat value perception as a balance-sheet issue”.
Non-essential outlays are down 1.3% in December versus a year earlier, and transactions on Black Friday run 62.5% above typical daily averages, underscoring promotion-led shopping. January surveys show 56% of adults plan to cut discretionary spending over the next three months and 64% expect to trim grocery budgets over the same period, pushing retailers towards loyalty pricing where members receive 17% to 25% reductions on selected lines in current January offers. Coventry characterises the behaviour as “planned shopping at scale, where data-led promotions and retention programmes are the primary levers for protecting margin”.
Industry forecasts point to around 7,000 store closures over the next 12 months, while cost models incorporate policy changes adding about $3,216 to annual costs per full-time employee. A survey this month shows 44% of retailers reporting elevated unsold stock, driving faster clearance cycles, tighter returns management and more frequent stress testing of inventory and liquidity. With a 40% business rates relief scheduled to expire in March, Coventry describes the operating environment as “a continuous stress test, where liquidity and working-capital control determine who can invest and who has to retrench”.
Digital competition remains a complicating force, particularly in fashion, where low-cost platforms accelerate trend cycles through machine learning and rapid fulfilment. Temu is estimated to process about 600,000 parcels a day into Germany, signalling the logistics scale being built across Europe. Abishai Financial Asia sees the combination of softer discretionary demand, sticky online penetration and rising costs as a setup where capital allocation discipline becomes paramount, and Coventry frames the near-term outlook as “resilience earned through data, liquidity and operational control rather than hopes of a sudden rebound”.
Abishai Financial Asia at a Glance:
Abishai Financial Asia Pte. Ltd. (UEN: 201016239E) is a Singapore asset manager established in 2010 and operates as a research-first partner in capital allocation.
- Approach: Risk-aware capital compounding in public markets via active equity selection, bottom-up research, disciplined rebalancing and overlay tools that enhance resilience and capital efficiency, including systematic tilts, opportunistic hedging and drawdown-aware risk controls.
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- Sustainability: ESG is incorporated through sector and issuer assessments, engagement expectations and governance screens, embedded where financially material across the investment lifecycle.
- Access: The firm is exploring compliant product wrappers and distribution pathways that could, subject to suitability criteria, broaden selected solutions to retail-qualified investors over time.
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Media: Peng Joon, p.joon@abishai.com
