The fashion industry in the UK is experiencing a decline in consumer spending due to the rising cost of living. In March, consumer spending on debit and credit cards increased, but it was unable to keep up with the high rate of inflation, resulting in a decrease in real terms. Britons are making further cutbacks to adjust to the increasing cost of living, and unfortunately, fashion is one area where spending has been reduced.
Clothing stores have seen the sharpest decline in six months, with a decrease of 3.4% compared to the previous year. This can be attributed to a significant number of consumers, around 54%, who are cutting down on discretionary spending. Specifically, 63% of these consumers are reducing their spending on new clothes and accessories.
While fashion is suffering, spending on groceries has seen a boost of 7.1%. However, even this increase is below the inflation rate for groceries, which currently stands at 18.2%. The cold weather in March has led households to increase their spending on utilities by 39.3% to maintain heating. This raises the question of how consumers are choosing to spend their remaining disposable income.
Interestingly, one area that has seen significant growth is digital content and subscriptions. This sector experienced its highest growth since October 2022, indicating that consumers are spending more time at home rather than socializing. TV shows like “Succession” and “Ted Lasso” have contributed to this increase in spending on digital content.
Home improvement and DIY stores have also seen a rise in spending, with a month-on-month increase of 4.3%. As the warmer months approach, more consumers are taking the opportunity to spruce up their homes and gardens.
Additionally, the category of “other specialist retailers” has experienced a boost of 3.5%, marking its strongest performance since April 2022. This growth can be attributed to increased spending at florists and card shops for occasions like Mother’s Day. However, it is crucial to note that this year’s figures may be inflated due to differences in reporting periods compared to the previous year.
Barclays has also identified a trend among Gen-Z consumers, who are allocating a higher proportion of their income to discretionary purchases compared to those aged over 25. Despite having less overall cash, Gen-Z individuals are spending 41% less on essential items, but only 21% less on non-essential items. Factors like living with parents result in fewer essential spending obligations, allowing more income to be allocated to discretionary categories like fashion and beauty, as well as socializing. This trend among Gen-Z consumers may further drive fashion and beauty purchases.
In conclusion, the fashion industry is facing challenges as consumers prioritize essential spending and reduce discretionary purchases. With uncertain economic conditions, it remains to be seen how this trend will evolve in the coming months.
Useful links:
1. BBC News: Fashion industry struggles amid declining consumer spending
2. Business of Fashion: UK fashion industry hit by decline in consumer spending
