Reviving the UK high street: where it’s working – and why

As e-commerce changes and consumer behaviours evolve, the physical high street has become a host for reinvention, and in many cities, it’s starting to win again after years of stagnant high streets and continued retail closures. 

The UK’s leading finance platform,  Funding Circle, has explored consumer confidence and the state of the UK’s high streets, revealing a shifting picture of recovery. Some high streets are thriving due to smart reinvention, income-driven demand, and growing visitor footfall, while others continue to struggle with rising vacancy rates and sluggish spending. With this in mind, we reveal the best-performing high streets and emerging retail trends in 2025. 

How are Brits spending in 2025

While the UK economy still has a long way to go when it comes to recovery, there are signs that consumers are spending more and differently in 2025. Deloitte’s consumer confidence tracker shows that while essential spending has dropped in Q2, with everyday purchases declining by 4.6 percentage points, discretionary spending like clothing, restaurants, and holidays saw a slight rebound (+1.5 ppt).

Overall discretionary spending rose by 1.5 percentage points in Q2, following a decline in essential purchases. Gen Z and Millennials are not letting rising bills and costs impact their discretionary spending, particularly when it comes to spending on restaurants and travel. Older groups, however, are seeing an increase in spending on leisure activities like fitness and cultural experiences. Overall, the strongest growth within discretionary categories in Q2 was observed in clothing and footwear (+6.6 pp), followed by holidays and hotels (+4.7 pp) and eating out and restaurants (+2.8 pp).

Sector	Percentage Change since Q1
Clothing and footwear:	+6.6
Holidays and hotels:	+4.7
Eating out and restaurants:	+2.8
Alcoholic beverages and tobacco:	+2.6
Going Out:	+1.6
Furniture and Homeware:	-3
Major Household Appliances:	-4
Electrical Equipment:	-4.6

Alongside this, consumers are reporting net increases in spending across 11 out of 12 leisure categories in Q2 of 2025, especially eating out (+9.3 pp), drinking in pubs & bars (+9.2 pp), and long holidays (+5.5 pp).

Sector	Percentage change since Q1
Eating out:	+9.3
Drinking in pubs & bars:	+9.2
Long holidays:	+5.5
Short holidays:	+5.4
Coffee shop/sandwich shop visits:	+5
Going to the gym or playing sport:	+3
Betting and gaming:	+2.5
Drinking in coffee shops/sandwich shops:	+2.2
Attending live sporting events:	+1.5
Other leisure activities:	+0.7
Culture and entertainment:	+0.2
In-home leisure activity:	-3.3

Small footprint, big impact

City centres may occupy just 0.1% of the UK’s land, but they account for a staggering 9.1% of all face-to-face consumer spending. Yet this power is not distributed equally. High street success is increasingly defined by location, local income, visitor appeal, and a high-quality leisure mix.

Cities like London, Edinburgh, York, and Cambridge now lead the way, with 1 in 10 shops vacant or fewer, thanks to ongoing tourism, thriving professional economies, and a strong mix of high-end and independent retailers.

Rank	City	Vacancy Rate (%)
62	London	7.4
61	Cambridge	8.5
60	Oxford	9
58	Brighton	9.2
59	York	9.2
57	Edinburgh	9.3
56	Liverpool	9.5
55	Southampton	10
54	Milton Keynes	10.2
53	Peterborough	10.3

Compare that with cities like Newport, Bradford, and Blackpool, where nearly 1 in 5 shops sit empty, and the picture becomes more stark.

Rank	City	Vacancy Rate (%)
1	Newport	19
2	Bradford	18
3	Blackpool	17.6
4	Basildon	17.4
5	Sunderland	16.8
6	Birkenhead	16.3
7	Stoke	16.3
8	Wigan	16.3
9	Swansea	15.4
10	Southend	15.4

City centres with stronger economies have stronger high streets

High street vibrancy is closely tied to disposable income. According to the report, for every 1% increase in local income, high streets see a 0.8% drop in vacancy. Cities like Reading and Milton Keynes, where average incomes are 25% higher than in other localities, enjoy lower vacancy rates and a more diverse retail offering.

Meanwhile, cities that haven’t shifted away from a retail-only model, especially those with fewer food, drink, or premium retail options, are seeing footfall diverted to large out-of-town retail centres like Metrocentre (Newcastle) or Meadowhall (Sheffield).

The modern high street: less retail, more experience

One of the biggest takeaways is that retail alone won’t save the high street. High-performing centres are embracing a more experience-driven mix, with food, drink, and lifestyle taking centre stage. In London, Manchester, and York, more than 25% of spending now goes to food and drink outlets. In contrast, smaller centres such as Wigan and Huddersfield remain dominated by lower-income, retail-heavy spending.

Food & drink is the most consistently thriving sector across all cities, particularly where there’s strong footfall or tourism, offering a wide mix of cuisines (e.g. Afghan, Korean, Vietnamese in large cities). Beauty and wellness sectors are booming in younger-skewed cities such as Manchester, Newcastle, and Brighton. Premium retail is concentrated in high-income and high-footfall locations such as London, Leeds, and Oxford. Leeds sees £1 in every £3 spent at premium retailers. 

Cities with cultural appeal or tourism pull (York, Edinburgh, and Cambridge) are performing well due to their experiential mix and diversified economies. York, for example, is the only city in the study where visitors outspend residents, accounting for 40% of all in-centre spending. This has helped it maintain high occupancy and fuel growth in food, culture, and tourism sectors.

High-income cities with high footfall (e.g., London, Leeds, York, and Cambridge) support premium, leisure, and wellness sectors. Lower-income, retail-reliant cities (Wigan, Huddersfield) struggle with diversification and footfall, reflected in high vacancy and slower sectoral change. Gen Z and student populations (Manchester, Bristol, and Brighton) drive success in wellness, food, fitness studios, and creative retail.

City	Thriving Sectors	Notes
London	Food & drink, premium retail, wellness, beauty services	Strongest overall recovery; high footfall, diverse cuisines, low vacancy (7.4%)
Manchester	Food & drink, indie retail, Gen Z-led wellness & beauty	>25% of spending on food/drink; growing cultural & experiential economy
York	Tourism, food & drink, independent boutiques	Visitor spending > resident spending (40% of total spend); diverse food offer
Edinburgh	Food & drink, cultural retail, tourism-led experience economy	Strong visitor economy, low vacancy rate (9.3%), good balance of culture and retail
Leeds	Premium retail, fashion, boutique fitness	£1 in every £3 spent at premium retailers; large city centre catchment
Cambridge	Food & drink, café culture, local artisan businesses	Strong local economy, low vacancy (8.5%), growing wellness sector
Bristol	Indie cafés, wellness, creative retail	Vibrant Gen Z and student market; emphasis on ethical/experiential spending
Oxford	Premium retail, bookshops, cafés	Strong visitor and student spending; low vacancy (9%)
Brighton	Vintage retail, vegan cafés, wellness & tattoo/grooming sectors	High share of alternative lifestyle spending; low vacancy (9.2%)
Birmingham	Food markets, multicultural cuisine, mid-range fashion	Growing food scene; higher retail diversity vs smaller Midlands towns
Newcastle	Beauty services, budget food, nail bars, barbers	High service-based activity; resilient footfall despite lower incomes
Sheffield	Coffee shops, student-targeted retail, independent food	Mix of affordability and student culture; growing coffee and beauty sectors

Looking ahead: what makes a high street work in 2025?

The high street is changing and for the better. For business owners ready to launch, the opportunity is real, but success depends on three key ingredients: location, timing, and understanding consumer behaviour.

In 2024 alone, Funding Circle helped support over 87,500 UK jobs and contributed more than £2 billion in tax revenue through the small businesses it financed. With demand growing for independent shops, experience-led services, and community-first concepts, now is the time to get started.

Here are four practical tips for setting up a successful small business in 2025:

Follow the footfall, but read the local room:

Cities like York, Cambridge, Edinburgh, and Brighton are thriving thanks to strong footfall, diverse spending, and cultural appeal. These places offer great opportunities for food-led independents, homeware boutiques, and community-first small businesses.

Go where small businesses are welcome:

High streets in Bristol, Manchester, and Leeds are shifting toward independent, experience-led retail; think local breweries, cantina-style eateries, vintage interiors, and wellness studios. These areas benefit from Gen Z and Millennial demographics who prioritise community, sustainability, and uniqueness.

Small towns, big potential:

As consumers turn away from retail parks and shopping centres, smaller market towns with rising incomes and lifestyle appeal are gaining traction. Think boutique bakeries in market towns, local coffee roasters in commuter areas, and pop-up spaces in coastal cities.

Spot the sector trends: 

If you’re in food, wellness, homeware, or premium casual retail, you’re aligned with the strongest growth areas. But don’t overlook cultural and hybrid spaces—bookshops with wine bars, salons with social lounges, or gyms that double as event venues.

From boutique bakeries in York to nail bars in Manchester, the UK high street is not dead—it’s just changing. Cities that invest in place-making, experiential retail, and income-driven regeneration will win. Those clinging to an outdated retail-first model may struggle to keep the shutters up. As the UK high street evolves into a space shaped by experience, community, and creativity, there’s real opportunity for entrepreneurs to play a role in its revival. Whether it’s opening a bakery in a bustling market town, launching a wellness studio in a growing city centre, or bringing a fresh food concept to a newly regenerated district, the demand is there, and so is the support.

Funding Circle helps small businesses access fast, flexible finance to get off the ground or expand their operations. With loans tailored for startups, independents, and established retailers alike, Funding Circle empowers local entrepreneurs to seize retail spaces, hire staff, invest in equipment, and contribute to thriving, modern high streets across the UK.