Biggest shopping day on record fails to create bumper Christmas for retailers, reports Barclaycard

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Despite the biggest shopping day on record, with the highest spend growth of the festive season coming over the Black Friday/Cyber Monday weekend, consumer spending over the Christmas shopping period grew by just 4.1% – in line with previous months, according to new data from Barclaycard.

Black Friday spend shot up 18% year-on-year as value-seeking shoppers concentrated more of their spend than ever before on shopping early to take advantage of the discounting frenzy. Adding in six per cent growth for Cyber Monday, the four-day weekend posted the strongest spend growth of the year, at 10.7 %.

Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, said Black Friday and Cyber Monday also gained the first and second spot respectively for the top online spending days in all of 2014.  The rise of Black Friday – more traditionally associated with Thanksgiving in the US – is relatively recent, the day having only placed tenth in spending volumes in 2012.

The busy start to the shopping season had a knock-on effect on periods traditionally known for high spend during the festive period, however. Spend in the first half of December grew just 2.3% and the week before Christmas was up by 3.8%. As demonstrated in many of the sales figures posted by major high street retailers over the last week, the large price cuts seem to have taken a toll on retailer profitability, while not necessarily increasing sales substantially.

Online remained the shopping channel of choice, and spend grew 10.4% over the Christmas period. This capped off six months of double-digit growth, increasing at more than four times of that in-store – where spending grew just 2.4% over the festive period.

Boxing Day was another heavy discounting day that displayed a strong performance, with spend up 9% year-on-year. More people chose to shop from the sofa as online spend grew 16% for the day, while in-store spend was up six per cent.

The focus of consumer spending on the biggest discounting days reflects the new fiscal responsibility they have shown following the financial downturn. Not only do they now seek out value, but consumers have higher personal savings, a continued long term trend of declining overdrafts and credit card balances down 10% compared to 2008 – with interest-bearing balances down 4% year-on-year and broadly flat since March.

Category spend

Petrol saw the biggest drop in spend during the holiday season as prices came down, falling 8.2%. With some extra money in their pockets, and greater financial confidence stemming from an improving economic backdrop, continued falls in unemployment and lower inflation, consumers spent more on going out, gifts and treats.

Restaurant growth shot up 16% as Brits wined and dined to celebrate the holiday period, while jewellery jumped 6.9% and clothing 4.3% as consumers bought something special to put under the Christmas tree.

Travel also performed well, with airlines seeing a 6.9% rise in spend as Brits travelled for the holidays and booked getaways for 2015.

Spending in the household sector enjoyed a 4.0% rise, though fortunes were mixed for retailers – DIY stores posted a 6.9% increase on 2013 whilst electronics grew moderately at 2.0% and furniture growth was only flat.

Categories with increasing spend % Categories with decreasing spend %
Restaurants 16.0% Petrol -8.2%
Airlines 6.9% Sweet stores -1.0%
Jewellers 6.9% Off-licences -0.5%
Household 4.0% Furniture stores 0.0%
Clothing 4.3%

Val Soranno Keating, CEO of Barclaycard, said: “The shopping frenzy created by the biggest-ever Black Friday and Cyber Monday masked what was an otherwise lacklustre Christmas spending season, with overall spend up just 4.1% year on year and in line with the last six months. Consumers have now become accustomed to shopping with discounts as they seek more value for their money – a behaviour which has become entrenched since the economic downturn and which it seems is here to stay.

“This frugal behaviour is reflected in a wider trend towards fiscal responsibility, with savings up, overdrafts down and interest-bearing credit card balances steadily declining over the last four years. It seems shoppers would rather not part with their hard-earned money unless they see a very good reason to do so, and are clearing their balances when they do.

“In 2015, we expect consumers to have more money to spend thanks to falling fuel prices, continued drops in unemployment, lower inflation and discounting by retailers – but they’ll continue to make savings where they can. The latest Christmas results demonstrate retailers have found this shift in consumer behaviour very challenging – it’ll be interesting to see how they adapt this year.”