In January, while overall consumer spending in the UK saw an increase, the fashion sector experienced a decline in sales, in stark contrast to the rising beauty sales. The surge in spending was largely driven by purchases in supermarkets, with a particular focus on meat-free products during Veganuary. However, this did not translate to higher sales for clothing or department stores.
According to the recent report by Barclaycard, consumer spending as a whole rose by 2.9% last month, surpassing the rate of inflation. Despite this positive trend, the fashion sector continued to struggle, with clothing and department store expenditure declining for the fourth consecutive month. This decline can be attributed to a shifting consumer mindset, with over 50% of UK adults expressing that January clearance sales are less important to them now.
The report also highlighted that non-essential spending only increased by 1.7%, indicating a reluctance among consumers to splurge on fashion items. With retailers offering discounts throughout the year, the appeal of traditional sales periods has diminished. This presents a significant challenge to retailers, as they try to attract consumers without relying heavily on markdowns, especially in the early part of the year.
Consumer caution is evident in the market, with 70% of consumers prioritizing value for money in their purchases and 54% expressing concerns about rising prices impacting their spending power. Against the backdrop of Brexit uncertainty, consumer confidence has plummeted to 30%. Year-on-year spending in clothing shops saw a decline of 3%, with department stores and specialty retailers also experiencing decreases. However, cosmetics sales saw a notable increase of 10.3%, offering a ray of hope in an otherwise challenging retail environment.
The British Retail Consortium’s latest report echoed these findings, with total sales up by 2.2% year-on-year, driven by food purchases and post-holiday discounts. BRC Chief Executive Helen Dickinson warned that the momentum from discounts may not be sustained post-sales, especially in the face of a potential no-deal Brexit. The uncertainty surrounding Brexit poses a significant risk to the retail sector, exacerbating the difficulties faced by fashion retailers in stimulating consumer interest and spending.
For more information on consumer spending trends, visit this BBC article. To learn about strategies for retailers to navigate challenges in the fashion sector, check out this Retail Gazette blog post.
