More evidence that fashion retail is struggling as Visa Index shows spending fall
The headline of Visa’s latest UK spending report was that “UK consumer spending fell slightly in October”, which would be good news in the current weak shopping environment. But then came the caveat: “Clothing & Footwear registered the steepest reduction in spend during October (-3.2% on the year), which also marked the first decline in this sector since April.” Ouch.
It seems that even when the backdrop isn’t that bad for retailers in general, for the fashion sector, the news is still bleak.
Overall, consumer spending fell by 0.2% after having risen in August and September. That divided down into a 2% drop overall for face-to-face spending and a 2.6% increase for e-tail.
The Index, compiled by IHS Markit, may have shown just a small fall overall, but the discrepancy between the physical stores figure and online also suggests that the physical stores figure for fashion was actually worse than the headline 3.2% drop (we weren’t told how online and spending in stores actually divided down).
That said, miscellaneous goods and services, which includes the buoyant beauty sector, managed a rise of 1.7%, which was higher than both August and September’s increase.
Adolfo Laurenti, European Principal Economist at Visa, said: “A dip in October spending, particularly pronounced for Face-to-Face expenditure, dispels the sense of optimism that a few months of small gains had generated during the summer. No doubt this disappointing reading will cause some concern for high street retailers as we head into the key Christmas shopping period.
“We look at improvement in wages and an easing in inflationary pressures as factors that may fuel hopes for some much-needed respite for retailers following what has been a very difficult year to date.”
And Annabel Fiddes, Principal Economist at IHS Markit, added: “The reduction appeared to be predominantly driven by reduced spending on the High Street [and] suggests a further shift to online spending ahead of the Black Friday shopping period. However, the overall picture suggests a relatively disappointing performance in terms of household spending in the year to date. Notably, expenditure has only risen in four months of 2018 so far.”
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