Baby, kids and toys emerges as UK’s strongest retail category as grocery falls behind, EY research finds

Consumer perceptions of UK retailers have improved over the past 12 months, but rising expectations are creating a widening gap between winners and losers, according to EY’s latest Retail Performance Index.

The UK’s Baby, Kids and Toys sector emerged as the highest-rated retail category among consumers, while Grocery has fallen to the bottom of the rankings, according to the report.

The study, based on feedback from more than 10,000 UK consumers across over 200 retailers, found customer sentiment has improved across almost every retail category since 2023. However, growing consumer expectations are making it increasingly difficult for retailers to maintain a competitive edge.

The Baby, Kids and Toys category climbed two places in 2026 to take the top spot in rankings, overtaking all other retail categories. Health, Beauty and Wellness ranked second, while Sports and Outdoors continued to gain ground with both sectors benefiting from long-term shifts in consumer behaviour towards physical health, mental wellbeing and active lifestyles.

At the other end of the rankings, Grocery dropped three places to rank last, making it the only category to record a decline in consumer perception since 2023.

UK RPI Retail category ranking by median, 2026

Silvia Rindone, EY-Parthenon UK&I retail lead, said: “Our latest findings suggest that emotionally driven spending categories are proving the most resilient as households continue to manage economic pressures.

“The retailers that are winning consumer favour today are often the ones positioned to win market share tomorrow. What makes this year’s findings particularly interesting is that the best-performing categories are those that have tapped into powerful emotional and lifestyle drivers.

“Consumers continue to prioritise spending on children, health and wellbeing, even when household budgets remain under pressure creating opportunities that genuinely understand evolving customer needs.”

Grocery falls behind as customer expectations rise

The research highlights growing divergence with grocery retail, with the gap between the strongest and weakest performers widening. Continued inflationary pressures and the frequency with which consumers interact with grocery retailers have made shoppers increasingly sensitive to value and service standards.

Silvia Rindone, added: “Grocery retailers are facing a unique challenge because customers interact with them more frequently than almost any other retail category. That means every price increase, stock availability issue or service failure is far more visible.

“The result is a category where leaders are pulling away from the pack, creating a much clearer distinction between those delivering consistently strong experiences and those struggling to keep pace.”

Middle market under pressure

Despite improving sentiment across retail sector, the EY Retail Performance Index found many retailers are increasingly being squeezed in the middle.

The study shows that both top-performing and lower-performing retailers have improved their customer perception scores since 2023, while median performers have seen far less progress.

Capabilities that once differentiated retailers, including seamless digital experiences and integrated online and in-store journeys, are now considered the norm by consumers.

“What was previously viewed as innovative just a few years ago is increasingly now regarded as standard practice,” said Silvia Rindone.

“Retailers cannot rely on simply keeping pace with competitors. The businesses creating sustainable advantage are the ones identifying what matters most to customers and investing in the areas that genuinely influence perception and loyalty.”