Consumer spending in the UK saw a notable increase in 2021, especially in the fashion and beauty sectors, according to a report released by Barclaycard. The report revealed a growth of 5.9% in consumer spending compared to the pre-pandemic year of 2019. This rise can be attributed to the easing of Covid restrictions and the successful vaccination programs, which instilled confidence in consumers and led to a surge in social activities. Specifically, clothing sales experienced a significant boost of 7.6%, driven by people’s desire to update their wardrobes and flaunt their newly acquired fashion items.
Moreover, pharmacy, health, and beauty retailers also witnessed a substantial increase of 17.5% in consumer spending. The demand for healthcare and beauty products remained high throughout the year, as individuals sought to take care of their personal well-being and maintain their appearance.
Although the hospitality and leisure sector continued to face challenges due to the ongoing pandemic, the implementation of social distancing measures sparked a newfound interest in “insperiences” and outdoor activities. As a result, digital entertainment, as well as sports and outdoor retailers, saw growth in their respective industries.
Notably, online shopping experienced a surge in popularity during the early part of 2021 when non-essential retail and hospitality establishments remained closed. In March 2021 alone, online retail witnessed a staggering increase of 87.7% compared to 2019. These online shopping habits seemed to have become ingrained in the behavior of many consumers, as e-tail recorded an impressive growth rate of 63.2% annually. In contrast, face-to-face retail spending only saw a minimal rise of 0.6%.
The shifting habits of consumers also played a crucial role in the emergence of the “insperience” economy. Takeaways, digital content, and subscription services became highly popular among households, who opted for indoor activities such as movie-watching and gaming. However, this shift towards staying at home may have slightly impacted the fashion and beauty sectors, as individuals felt less inclined to purchase new clothes, shoes, and beauty products. Nevertheless, alternative activities such as staycations in the UK presented opportunities for sales. Due to travel restrictions and Covid caution, many consumers had to adjust their holiday plans, leading to a significant growth rate of 15.9% in the hotels, resorts, and accommodation category in August.
Interestingly, the demand for staycations was largely driven by older consumers, with the spending of those aged 50-64 increasing by 27.7% in June. Conversely, spending among 16-24-year-olds declined by 18.4%, potentially indicating a difference in preferences and financial capabilities between these age groups.
Homeowners’ inclination towards spending on home improvements, DIY projects, and furniture may have redirected some of their spending away from the fashion and beauty sectors. In contrast, the sports category thrived in 2021, with sports and outdoor retailers experiencing an impressive overall increase of 21.9% throughout the year. Within the sports sector, golf-related purchases stood out, with spending on golf clubs alone rising by 50.2%.
Overall, the report emphasizes the significant shifts in consumer behaviors and preferences that took place in 2021. The fashion and beauty sectors benefitted from the relaxation of restrictions, while the “insperience” economy and outdoor activities gained traction. Furthermore, the surge in online shopping indicates a long-term transformation in consumer habits, highlighting the need for businesses to adapt to this new landscape.
Useful links:
– Barclaycard Consumer Spending Report 2021 Q3
– BBC News: UK consumer spending back to pre-pandemic levels
