Retailers have endured something of a rollercoaster ride over the last few years, but the good news is that, even as continuing price rises eat into available spending power, consumer spending remains robust. The question now is: how can retailers make the most of consumer resilience?
According to the Lloyds Bank Business Barometer, released in July 2025, retail businesses are retaining economic optimism and showing resilience in the face of recent challenges.
Retailers report that people are still being careful with their purchasing decisions, but are managing to buy key items and making every pound stretch further to do so. But what can retailers do to make sure they understand customers’ circumstances and help them make the right purchasing decisions?
Look Through the Payment Data Lens to get Closer to Your Customers
We understand that great business decisions start with understanding your current and target customers. Knowing which are the most popular spending categories for different age groups during peak sales events can help merchants to create more targeted offers and incentives for shoppers.
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By gathering insights from more than 35,000 UK businesses and 27 million customers, Lloyds Merchant Services helps retailers understand evolving shopping patterns, improve payment success rates and drive profitability. These insights are a useful tool that help businesses to make smarter decisions and tailor their offerings to what customers really want.
Our analysis of anonymous and aggregated consumer spending across debit and credit card transactions during Black Friday 2023 shows that:
- Millennials spent the most in retail subsectors analysed on Black Friday 2023 (£83,800,854), with clothing having the highest value spend across all demographics.
- Retailers enjoyed 35% higher spend value, along with 15% higher spend volume, and 17% higher average transaction value than an equivalent working week in October 2023.
- Clothing was the most popular retail item, both online and offline, with Gen Z spending the most on clothing.
Contactless, BNPL, and Loyalty Schemes are on the Rise
By monitoring changing spending trends, retail merchants can keep pace with the way people pay in the UK. For example, according to data from UK Finance, almost four out of ten (38%) of all payments in 2023 were contactless, and one-third of UK adults were using mobile contactless payments at least once a month.
We’ve also seen a shift toward alternative payment methods like installment-based buy now, pay later (BNPL). As of 2025, two in five UK adults (42%) have used BNPL services at some point, or 22.6 million people, and a further one in 10 consumers (9%) intend to use BNPL in the future. This would take the total number of users to half of the population (51%).
At a time when people are looking for more value for money, loyalty schemes are booming in popularity. Whether it’s a discount on bulk or repeat purchases, cashback or exclusive in-app perks like instant bonus points, these schemes are now a firm favourite with customers. In fact, more customers expect loyalty schemes to come as standard, and research from Boston Consulting Group shows they are more likely to give their money to a merchant with a loyalty program than one without.
But to truly capitalize on this, merchants need payment solutions that seamlessly integrate with loyalty schemes and apps. This turns every transaction into an opportunity to gather customer insights, deepen engagement and drive repeat business.
The Phygital Revolution: Blending In-Store and Online for the Best Omnichannel Experience
The in-store shopping experience of being able to see, touch and feel items, like trying on clothes, or sampling food, is something customers still crave.
Retailers have realised they can offer the same fast and fluid online or mobile payment experience to in-store customers. This ‘phygital’ evolution brings together physical stores and other in-person locations, with advanced digital payment technologies like mobile apps, digital wallets, QR codes and mobile POS devices that can take payments on the go, wherever the customer is, instead of having them wait in line at a countertop checkout. Or it can take the form of someone going to a store to look at a product, check the product QR code in real time for availability and purchase it online to be delivered at home.
These trends reinforce the need to have POS infrastructure that can be adapted to the unique needs of retail merchants, whether they’re in-store, online or omnichannel.
Why an Integrated POS System is Essential for 2025 and Beyond
By integrating POS devices with services like stock management, CRM systems and cash flow tools, retail merchants can offer smoother, more secure payment experiences. This helps build customer loyalty. It also unlocks cost and operational efficiencies — essential when margins are tight. And importantly, it allows merchants to adapt quickly to evolving customer preferences and new payment methods.
They can also benefit from peace of mind over customers’ payment data too, as integrated solutions can protect them with security safeguards like strong customer authentication (SCA), two-factor authentication and PCI DSS data encryption.
Ultimately, with the right POS payment solutions in place, today’s retail businesses stand on the verge of unlocking a new world of business growth opportunities.
Melinda Roylett was appointed as the Managing Director of Merchant Services at Lloyds Banking Group in January 2023. She brings deep payments and financial technology experience, combined with a deep passion for helping small- and medium-sized businesses to fulfill their growth ambitions. Together with the team, Roylett is responsible for delivering part of the Business and Commercial Banking payments strategy, including developing products and propositions for card acquiring (Cardnet) payment types and enabling customers to do business with ease. Before joining Lloyds, Roylett worked at financial services companies including Square and PayPal, as well as Global Head of Small and Medium Businesses at Afterpay. She also has breadth of strategic leadership experience from her time as the General Manager, UK and Ireland for Uber and was in Lloyds in 2006 as a Senior Manager in Cards and Payments.
