Mar 9, 2021
As stores stay closed, UK consumers cut back on non-essentials, say Barclaycard, BRC
Mar 9, 2021
British consumers cut back heavily on spending as they spent a second month in a Covid-19 lockdown in February but confidence in the economy hit a 12-month high, payment card firm Barclaycard said on Tuesday.
Consumer spending was 13.8% lower than a year before, similar to January’s plunge of around 16%, Barclaycard said.
Spending on essential items grew 5.3% and online grocery shopping surged. But spending on non-essentials plummeted 22.1% with many businesses still closed. And with consumers unable to get out and socialise, the motivation to buy new fashion items was low.
And spending at discount stores was a bright spot, up 32.3%, as over half (56%) of Britons say they’ve become more careful to seek out value in the purchases they make.
After suffering its biggest slump in three centuries last year, Britain’s economy is expected to grow strongly once the restrictions are lifted between now and late June.
Barclaycard said a survey it had commissioned showed consumers’ confidence in the wider economy rose by 4 percentage points to 28%, its highest point since the pandemic hit last year.
Many people were thinking about where to spend the savings they had racked up while stuck at home. A fifth of those who had saved more than normal said they would take a big holiday and 13% planned treats for themselves. All of that suggests fashion purchases could be on the agenda in the months ahead.
A separate survey published on Tuesday by the British Retail Consortium (BRC) also showed how households, for now at least, were focusing their spending on essential items.
Its measure of overall retail spending at major retail chains rose by 1% in February compared with the same month last year, faster than the average growth rate of 0.6% in the past three months. Over the three months to February, total food sales increased 7.9% but sales of non-food items fell by 5.5%. However, spending on clothes for kids returning to school was higher.
Paul Martin, UK head of retail at accountants KPMG, which produces the survey with the BRC, said the Budget last week offered only short-term help for retailers.
“Conditions will continue to be incredibly challenging as they face subdued demand, thinner margins and rising logistics costs, alongside the accelerated structural changes to the sector,” Martin said.
Additional reporting by Sandra Halliday
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