According to a report by Barclaycard, UK fashion spend increased in March, despite consumers tightening their belts. Consumer card spending as a whole grew by 17.7% compared to the same period in 2019. This surge can be attributed to consumers becoming more active socially, taking holidays, participating in sports, and returning to the office. With the arrival of sunnier weather and the lifting of Covid restrictions, Britons flocked to pubs, restaurants, and shops to refresh their wardrobes in anticipation of the months ahead.
However, retail sales specifically did not fare as well. The British Retail Consortium (BRC) reported that sales growth in shops slowed down due to tightened budgets caused by inflation. In fact, sales for March fell by 0.4% year-on-year on a like-for-like basis. The total sales growth was only 3.1%, significantly lower than the 12-month average and down from the 6.7% increase seen in February. The BRC attributed this sluggish growth to rising prices, with prices among BRC members rising by 2.1% in the year leading up to last month.
Despite these challenges, spending on essential items saw a growth of 18.1%, as consumers had to pay more for petrol and supermarket goods due to surging inflation. Discretionary spending also rose by a healthy 17.5%. Spending at bars, pubs, and clubs skyrocketed by 41.7%, while entertainment spending grew by 20.3%.
The report by Barclaycard also highlighted that consumers are still eager to spend on non-essential items. Shoppers increased their spending at clothing, sports, and outdoor retailers by 10.1% and 18.8%, respectively, compared to 2019. Additionally, a significant number of people are purchasing products in anticipation of an April heatwave, with 18% of consumers buying summer clothing and 8% purchasing sports equipment.
Despite the lifting of travel restrictions and the ability for consumers to holiday abroad, Barclaycard predicts that the staycation trend will continue. This is expected to boost spending in popular tourist towns and cities such as London, Edinburgh, and coastal resorts. However, the overall spending outlook in the short and medium term remains uncertain. Barclaycard’s survey revealed that 91% of Britons are concerned about the negative impact of rising bills on their household finances, indicating a lack of optimism about the future of the UK. Positive sentiment has fallen to 27%, the lowest level since January 2021 when Britain was in full lockdown.
Useful links:
1. BRC’s report on the impact of Covid-19 on retail sales
2. Barclaycard’s analysis of consumer spending in March
