The UK’s traditional Boxing Day sales saw a significant decline in physical store footfall this year, with the rise of online shopping and all-year deals overshadowing the once-iconic shopping event. Several major retailers, including John Lewis, Next, Marks & Spencer, and Aldi, also chose to remain closed on Boxing Day, further reducing in-store activity.

Data from MRI Software revealed that Boxing Day footfall across UK retail destinations dropped by 4.9% compared to 2023. High streets experienced a steeper decline of 6.2%, while shopping centres saw a 4.2% reduction in foot traffic.

Retail Sector Under Financial Strain

The decline in Boxing Day shopping is exacerbating financial stress for UK retailers, with many already struggling amid tough economic conditions. Corporate restructuring firm Begbies Traynor reported that 2,124 retailers faced financial distress in the first 11 weeks of the fourth quarter, a slight decrease from 2,142 last year but markedly higher than the 1,696 reported in the third quarter of 2024.

Julie Palmer, a partner at Begbies Traynor, highlighted the compounded challenges in the sector, stating:
“The weaker-than-expected retail sales performance in November, traditionally a critical month, underscores the tough trading conditions as consumers hold off on purchases amid low confidence and rising prices. Measures from the Autumn Budget, such as increased National Insurance Contributions and minimum wage hikes, will further strain businesses, likely leading to elevated insolvency levels in 2025.”

Changing Shopping Trends

Boxing Day, once synonymous with massive in-store discounts, is increasingly becoming a day for relaxation, family time, and travel rather than shopping. Cold and wet weather, coupled with the convenience of online retail, discouraged many from venturing out.

The surge in online shopping has reshaped consumer habits, with many preferring the ease of browsing deals from home. Retailers have responded with year-round discounts and steep online offers during holiday seasons, reducing the appeal of traditional end-of-year sales events.

This shift has led to mixed outcomes. While online discounts have helped attract shoppers and stabilize sales for some retailers, it has undermined the allure of Boxing Day as a physical shopping occasion.

Broader Economic Pressures

Higher interest rates, soaring inflation, and geopolitical uncertainties have dampened consumer sentiment, causing shoppers to prioritize essential spending over big-ticket purchases. At the same time, retailers are grappling with rising operational and labor costs, further squeezing profit margins.

As the UK retail sector faces mounting challenges, the decline in Boxing Day sales symbolizes a broader shift in consumer behavior and highlights the urgent need for adaptation in an evolving marketplace.

As 2025 begins, global stock markets are poised for another year of potential rallies, building on the record highs achieved in 2024. Analysts predict that easing inflation, decreasing interest rates, and evolving market dynamics will play key roles in driving performance. However, risks remain, ranging from sovereign debt issues to geopolitical uncertainties.

Market Drivers

Global equities surged in 2024, fueled by advancements in generative artificial intelligence and robust economic recovery. The positive momentum is expected to carry into 2025, with investment firms like Brooks Macdonald forecasting that cooling inflation and interest rate cuts will sustain market growth.

In the U.S., the possibility of extending or enhancing tax cuts could further boost markets. Chris Crawford, managing partner at Crawford Fund Management, also pointed to Bitcoin’s mainstream adoption as a growing trend.

Investment director Russ Mould from AJ Bell highlighted the changing market rules, largely driven by AI, urging investors to adapt their strategies to capitalize on these shifts.

Risks and Challenges

Despite the optimism, challenges loom on the horizon.

1. Sovereign Debt:
   High debt levels in major economies could threaten growth. The U.S. debt-to-GDP ratio has reached 123%, with the annual interest burden exceeding $1 trillion. Analysts warn that rising bond yields or prolonged higher interest rates could strain economic stability.
2. Trade Developments:
   President-elect Donald Trump’s proposed tariffs could impact global trade, particularly with China and the eurozone. While some analysts believe these measures may remain targeted, disruptions to supply chains and inflationary pressures in the U.S. are potential concerns.
3. Currency Dynamics:
   A strong U.S. dollar, driven by reduced trade deficits, could lead to global liquidity challenges. Emerging markets, which often borrow in dollars, may face increased debt-servicing costs.

Shifting Market Trends

The dominance of tech giants—dubbed the “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla)—may wane in 2025. Analysts caution that these companies’ lofty valuations could face pressure from unexpected recessions or sustained inflation.

Crawford predicts that small and mid-cap equities, which have underperformed in recent years, could attract renewed investor interest.

Mergers, Acquisitions, and IPOs

The year is expected to see a wave of mergers and acquisitions, driven by relaxed regulations and favorable credit markets. IPOs, too, are anticipated to make a comeback, potentially drawing generous valuations.

While optimism prevails, analysts advise caution, urging investors to stay vigilant as market dynamics evolve.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult a financial expert for tailored guidance.