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Feb 11, 2020
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Fashion flops in January as clothing sales fall, online penetration increases

Published
Feb 11, 2020

Two new spending surveys, from Barclaycard and the BRC, on Tuesday showed fashion stores struggling in January, discount stores on the rise and online spend strengthening its hold on UK consumers. 


UK consumers may have visited the sales last month but their overall spend stayed weak


Consumer spending may have risen overall in January, according to the latest monthly survey from Barclaycard, but fashion didn't fare so well with clothing stores’ sales falling during the month.

In fact, spend at those stores was down as much as 2.2% with overall transaction numbers down 3.2%. That also came alongside a 1.8% drop in spending in department stores, although at least those locations saw a 4.5% increase in transactions, presumably on the back of discounted goods during the clearance sales.

Barclaycard bases its data on the massive volume of transactions that go through its cards, as well as taking other transactions into account in order to arrive at a more representative picture, and its survey is a good indicator of what was happening during the month. It said that overall spending rose 3.9% in January, “marking a distinct uplift from the low levels of growth seen in 2019”.

And there was some good news as pharmacy, health and beauty stores experienced growth of 5.9% “as consumers pursued healthier lifestyles at the start of the new year”. But it's unclear how much of that increase could be attributed to the beauty segment.

It seems that much of the increased spending at the start of 2020 was driven by factors that were of absolutely no benefit to the fashion or beauty sectors with rising petrol prices and increased spending on leisure (for instance cinema spending jumped 22%) being key factors.

And while confidence in the UK economy reached its highest point in more than three years, over half of UK adults also believe the economy could get worse in the next few months – which doesn't bode well for spending intentions as far as the new fashion season is concerned.

Another factor that could affect future fashion spend also became clear during the month with Barclaycard saying that 56% of consumers say they’ve become more conscious of their personal impact on the environment and consequently intend to change their behaviour. In recent months that has resulted in consumers buying less fast fashion and thinking more about secondhand. Some 33% also plan to buy fewer plastic goods. 

And another trend also showed up clearly during the month with consumers being very value-conscious as spending at discount stores rose a hefty 9.5%.

RETAIL SALES AND ONLINE GROWTH

And in a separate survey on Tuesday, the British Retail Consortium reported total retail spending up only 0.4%. The BRC survey excludes the non-retail spend that is included in the Barclaycard figures.

Its survey showed that the average increase in the past 12 months was just 0.2%, the lowest since its records started in 1995. And it added that like-for-like sales were flat.

The BRC also said that over 
the three-months to January, non-food retail sales in the UK fell by 1.5% on a like-for-like and 1.3% on a total basis, but in January, non-food in general "was in slight growth year-on-year".

But in the three months, in-store sales of non-food items declined 3% on a total and 3.3% on a Like-for-like basis. So it's no surprise that online non-food sales increased, albeit by only 2.5% in January, against growth of 5.4% in January 2019.

The non-food online penetration rate also increased from 29.5% in January 2019 to 30.6% this time in a further sign of the shift to online shopping by UK consumers. 
 

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