This article explores five key forces shaping what’s next:

1. Operational and financial resilience:  Volatile costs, wage pressures and new rules mean businesses need stronger plans. They need flexible supply chains and better cost control.
2. Investing in AI: Automate repetitive tasks with AI. Then, reinvest in human connections that build trust and loyalty.
3. Winning early in the discovery journey: Optimise your visibility across AI tools, social platforms and marketplaces. This helps influence decisions before customers reach your channels.
4. Making sustainability pragmatic and profitable: Circular behaviours grow when they offer value and convenience. Prioritise repair, resale and recycling where it is easy and the benefits are clear.
5. Positioning cybersecurity as a commercial advantage: Many businesses are using AI in cybersecurity. This makes strong digital protections a key difference, not just a safeguard.

The retail and leisure sector enters 2026 with a mix of cautious optimism and ongoing pressure. While inflation is easing and household finances are stabilising, confidence remains fragile. Spending patterns are also becoming increasingly varied. 

Growth is returning, but it is selective and on new terms. Businesses that adapt early, use data to make decisions, and strengthen their operations are most likely to lead the market.

Our report data highlights economic growth is expected to be around 1% in 2026. However, new laws and rules will continue to impact investment and consumer spending. 

Still, the sector is far from standing still. Volume growth across retail, leisure and hospitality should rise by 0.4%. The best positioned businesses will make the most of changing consumer missions and more focused demand.

Our research shows that businesses ready to adapt fastest will get the most value in 2026. This means adopting AI, improving efficiency and creating new customer-focused ideas.

This article looks at the trends for the year ahead, where the real opportunities are, and the strategies retail and leisure leaders can use to adapt and thrive. It will help them navigate a more selective, experience-driven market.

In 2026, customer behaviour is more intentional, fluid and influenced by digital channels than ever before. Old demographic groups no longer fully explain spending patterns. Instead, decisions are shaped by a customer's mission, mindset and the moment.

Inflation has eased and real wages are improving. However, confidence remains cautious. This creates a "K-shaped" recovery. Financially secure households are spending more freely. More exposed groups remain hesitant.

Young, affluent and digitally savvy customers are driving higher growth in areas like travel, hospitality and home services. Lower income households continue to prioritise essentials. For brands, understanding financial resilience, digital habits and emotional drivers is now key to unlocking spending.

AI has become common, changing how customers find, compare and choose products and experiences. About a quarter of customers are already comfortable using AI for shopping decisions. Adoption is strongest where AI makes things easier and adds value, such as personalised recommendations or finding deals.

More than six in 10 businesses are already using AI in marketing, customer support and operations. The technology is quickly becoming a pathway to spending. As AI driven discovery tools become the first filter for buying decisions, the competition moves earlier in the process.

Brands that optimise their presence for AI agents, search and social platforms will do better than those relying only on traditional channels.

For retail and leisure providers, this means investing in data, metadata and content that improve discoverability. It also means making sure AI provides a smooth handoff to your own channels.
 

Despite signs of economic stability, cost pressures are still a big challenge. Rising labour costs, business rates, supply chain volatility and new rules continue to squeeze profits. Many businesses have used a mix of improvements, selective price increases and absorption to stay competitive.

In 2026, half of all investment is going towards efficiency. This rises to 60% in hospitality. This shows a shift towards automation, building capabilities and strong operations.

Automation, in particular, is essential. More than eight in 10 businesses plan to increase automation this year. This could help counter rising labour costs and support service delivery at scale. Our insight into Future Fit companies supports this direction. Sustainability, agility, workforce redesign and digital transformation are now key to long-term resilience.

The role of physical stores is changing. Cost pressures, omnichannel expectations and changing behaviours are pushing businesses to rethink their property strategies. Many are moving to smaller spaces, experience-focused formats or combining stores. Some are even using space for mixed use or community services.

Stores now offer reassurance for returns, order fulfilment, advice and experiences. In retail, about eight in ten online returns go through stores. This creates valuable chances to re-engage customers at a lower cost. This shift helps businesses increase loyalty and operational efficiency, while making the last mile smoother.

Three big forces are changing where and how customers spend:

• Social commerce is growing fast: UK social commerce is expected to more than double to £20bn by 2030. This is driven by impulse purchases, influenced by creators, where inspiration comes before the desire to buy. 
• Circular behaviours are now common: Customers are increasingly adopting circular habits like resale, repair and buying refurbished goods. This is mainly driven by saving money, rather than just sustainability messages.
• International markets offer strong growth: The UAE and India have become high-growth destinations for UK retail. This is supported by rising demand for British brands and evolving trade agreements.

These trends open new avenues for businesses willing to diversify their channels, rethink pricing and tap into global demand.
 

We want to help your business respond with confidence and clarity. Whether it is automation, sustainability, international expansion or digital resilience.

Speak with your usual bank contact today.