Fashion spend rose last month, footwear was standout category
There was slightly contradictory news on consumer spending and retail sales on Tuesday as the regular monthly reports from Barclaycard and the British Retail Consortium suggested both weakness and strength.
First, the upbeat BRC-KPMG retail sales monitor. It said total sales increased by 11.9% in January, compared to a 1.3% decline in lockdown-hit January 2021. On a two-year basis, total retail sales grew by 7.5% and like-for-like, sales rose 8.1% year-on-year, suggesting inflation was playing a part in the higher total sales figure.
Clothing, jewellery and watches were strong, but footwear was the most buoyant fashion category. Household appliances, electronics and homewares also stood out. Non-food sales increased by 11.1% on a total basis and 6.5% on a like-for-like basis. By comparison, food sales did less well.
And the numbers also suggest that online sales are holding up well overall, even though physical stores are also clearly recovering. Online non-food sales fell 24.2% in January, compared to growth of 83% this time last year. But that makes sense given that there was a lockdown back then. On a two-year basis sales increased by 31.8%, highlighting how online is now a key channel for many consumers.
Helen Dickinson, chief executive of the BRC, said it was “encouraging to see such strong sales in January, even once inflation has been accounted for”.
But of course, as KPMG’s Paul Martin pointed out, “this unusually strong performance for January, which is traditionally a slower month, should be put in the context of last year’s lockdown”.
And what about the Barclaycard report? Well, it was the tone that was distinctly different here with the company stressing how January’s increases lagged previous rises, although sales still rose.
It said consumer card spending grew 7.4% in January year-on-year, which was the smallest rise since April last year as a combination of inflation, Plan B restrictions and soaring energy costs dampened consumer enthusiasm.
As more Britons worked from home and were less inclined to mix socially, face-to-face retail spending (apart from grocery essentials) dropped 8.5%, it said. And while spend on clothing was up 4.9%, that was well below the 8.8% increase in the previous month. Similarly, sports and outdoor retailers saw a 14.5% uplift, but that was down from the 22% in December.
Some of the headwinds are likely to persist over the coming months, but Barclaycard said “their near-term impact may be somewhat mitigated by anticipated uplifts from Valentine’s Day, growing inbound tourism, and Britons spending more on activities and experiences to lift their spirits during the winter months”.
The hospitality and leisure sectors also saw an overall decline of 6.3%, which may be one reason people were less inclined to shop for new clothes. That said, spending among younger consumers remained stable, “possibly driven by less concern about catching Covid-19 when socialising and shopping”, Barclaycard said.
Most consumers also said inflation is front of mind and their household finances and discretionary spending are being impacted.
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