UK shoppers shake off austerity and push up spending, reports Barclaycard

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Growth in retail sales

Growth in retail sales

Consumer spending in the UK continued to grow strongly in July 2013, according to Barclaycard’s monthly analysis of UK spending.
 
Total spending for the month was up 4.8% on the same month last year, driven by spending on groceries, petrol and clothing, all of which reached in-year highs as Brits enjoyed more outdoor activities with the arrival of summer, researchers found.
 
The increasing spend follows impressive figures for May (4.1%) and June (4.9%) and means growth in consumer spending has now exceeded the rate of inflation for fourth months in a row; the first time it’s done so for three years, said Barclaycard.
 
A ‘feel-good factor’ arising from the UK’s recent sports successes, the birth of Prince George and Britain’s first prolonged heatwave in seven years also had an impact on spending. According to Barclaycard, which processes nearly half of all card transactions in the UK, pubs saw significant year-over-year spend growth of 10.8% in July.
 
The arrival of summer also encouraged consumers to get out onto the high street, with in-store spend growing at its highest rate all year at the expense of online spend. Spending in stores grew by 4.0% year-on-year, the highest since the beginning of 2012, whereas online sales, though still growing, increased by a more moderate 8.5% (vs. 12.5% in June 2013). It’s only the third time in the past 19 months that online spend growth fell into single digits.
  
In-store spending by category
Rising Falling
Garden centres +17.7% Furniture stores -5.7%
Pubs +10.8% Electronic stores -3.9%
Women’s clothing +9.6% Department stores -0.4%
Restaurants +9.5%    
DIY stores +7.6%    
 
Val Soranno Keating, chief executive of Barclaycard, said: “The UK’s economic recovery truly gained pace in July when, for the first time in three years, consumer spending exceeded the rate of inflation for four months in a row, showing that the long-awaited consumer-led recovery has arrived. It’s an undeniable vote of confidence in the future by British shoppers and shows that they’re finally shaking off the longest period of austerity in a generation and are more readily parting with their money.
 
“Whilst spending was inevitably boosted by a July ‘feel-good factor’, there are good reasons to believe this trend will continue into the second half of the year, with consumer spend staying strong and retailers reaping the benefits.”
 
Online vs. offline spend
 
Online spend share as a proportion of total spend grew to 20.4%, up 0.7% on the same time last year (July 2012: 19.7%).
 
Though slowing compared to prior months, most of the categories of online spend remain up on 2012. In line with the strong performance overall, online women’s clothing spiked in July – up 44% on a year-over-year basis, possibly due to consumers bargain hunting during the summer sales period. 
 
Despite bricks and mortar stores struggling, online department stores saw impressive growth in spend of 20% compared to 2012. Online cinema and theatre (14%) spend also saw a big increase compared to July last year. 

Regional spend

In July, for the first time this year, London evidenced the strongest year-on-year spend growth (5.9%) of the 12 regions monitored, followed by East of England (5.7%) and with Scotland (3.6%) bottom of the list.
 
Total spending by region
Region Overall spend growth in July 2013 vs. July 2012
London 5.9%
East of England 5.7%
South East 5.3%
East Midlands 5.2%
South West 5.0%
Wales 4.5%
West Midlands 4.5%
North West 4.5%
Northern Ireland 4.4%
North East 4.2%
Yorkshire Humber 4.0%
Scotland 3.6%