Barclaycard: Consumer Spending Declined By 1.9% In November

Despite another challenging month, there were some bright spots in November as consumers shopped online to make the most of seasonal sales, while Covid-19 vaccine news also contributed to Brits feeling more upbeat as the Countdown to Christmas began.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 4.9 per cent year-on-year, as ‘circuit breaker’ restrictions meant many Brits stayed at home and shifted their spending to essential stores and online.

Supermarkets saw a 17.9 per cent year-on-year rise in expenditure, up from 13.9 per cent in October, helping to offset a 23.8 per cent decline in fuel. Online grocery shopping also saw a steep 97.4 per cent rise as Brits went online to start stocking up on Christmas supplies.

Spending on non-essential items contracted 4.6 per cent, with department stores and clothing seeing declines of 18.0 per cent and 13.0 per cent respectively – the largest drops in both categories since June, when the first lockdown measures were still in place.

While physical stores experienced another challenging month, ecommerce sale rose, with general retailers and clothing enjoying online rises of 73.8 per cent and 35.6 per cent respectively.

In a month of much-anticipated new console and video game releases – and as Brits spent more time at home – electronic sales saw a 28.9 per cent uplift year-on-year, an improvement from the 12.4 per cent seen in October.

Longer evenings also saw people keep themselves entertained with digital subscriptions, which rose by 43.1 per cent, reflecting levels not seen since June (up 43.5 per cent), just before the first national lockdown measures gradually lifted. This comes as nearly three in 10 (28 per cent) consumers reveal they have been spending more on goods and services to entertain themselves indoors under the latest restrictions.

Food and drink specialist stores – which includes greengrocers, butchers and bakeries – grew 54.3 per cent, a 3.6 per cent improvement from last month, as shoppers continued to support local businesses. In fact, a third (32 per cent) say they will make an extra effort to support their community this festive season, with almost half (48 per cent) of those planning to buy Christmas gifts and food specifically from small and local shops.

Discount stores – which were among retailers able to stay open when non-essential shops closed in England – also proved popular with a rise of 37.8 per cent, as half (51 per cent) of consumers say they have become more careful to seek out value for money in the purchases they make.

Christmas shopping also boosted online spend at specialist retailers (85.8 per cent), a category which includes toy shops, jewellers and gift shops.

However, social distancing restrictions continued to hamper the long-suffering hospitality sector, with steeper year-on-year declines at restaurants (-56.7 per cent) and pubs & bars (-56.3 per cent) than were seen in October (which recorded contractions of 32.7 per cent and 13.5 per cent respectively).

Looking ahead to 2021, a third of Brits (33 per cent) say they are feeling more upbeat about their finances and job security due to news about the Covid-19 vaccines. Confidence in household finances remained steady at 69 per cent, up slightly from last month (67 per cent), and one in five (20 per cent) plan to purchase big-ticket items in the near future, as they are optimistic that life will start returning to normal soon.

For some, Christmas is an opportunity to raise spirits and spoil their nearest and dearest: one in four (26 per cent) admit to putting their Christmas tree up earlier than usual and a fifth (21 per cent) say they will spend more than normal on gifts for loved ones. However, not all consumers are feeling optimistic, with confidence in the UK economy remaining low at 23 per cent, versus the 31 per cent seen in November 2019.

Raheel Ahmed, Head of Consumer Products, said: “Despite the restrictions in November, Brits are feeling more positive about their household finances as they start to prepare for the festive season. Christmas trees are going up just that bit earlier, and many are planning to spend more treating their loved ones after such a testing year.

“Supermarkets, local shops, and online retailers have all performed strongly, while the longer evenings at home saw spend soar on digital subscriptions and electronics, helped by new consoles hitting the market.

“Unfortunately, the hospitality and entertainment sectors have continued to suffer. The big question now is whether Brits will flock to the high street for Christmas shopping after the November lockdown, providing a much-needed boost in December.”

Source : Barclaycard

Source : PwC

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