E-commerce grows strongly despite modest overall spending in November, Visa Europe reports

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Household spending continued to increase in November, according to the latest Visa Europe UK Consumer Spending Index data. That said, the annual rate of growth slowed from +2.1% in October to a 21-month low of +1.1%, which partly reflected a particularly strong spending performance in November 2014. Expenditure also rose on the monthly and quarterly measures, and at faster rates than in October, suggesting that underlying spending trends remain positive.

Channel data indicated a robust rise in e-commerce spending in November (+4.1% on the year), as has been the case for just over two years. Meanwhile, face-to-face spending fell modestly in November (-1.5%), after a slight increase in October (+1.0%).

Expenditure rose in five of the eight broad spending categories in November. Growth was led by Hotels, Restaurants & Bars (+8.5% year-on-year), Recreation & Culture (+4.8%) – which includes theme parks, cinemas and books stores – and Clothing & Footwear (+3.5%). Meanwhile, expenditure growth moderated in the Household Goods (+1.5%) and Food & Drink (+1.0%) categories.

Kevin Jenkins, UK & Ireland managing director Visa Europe said: “All eyes were on Black Friday but spending for November as a whole confirms the trends we saw at the tail end of the month. Online spending surged, driven by double digit spend increases on the big weekend amid continued appetite for mobile, laptop and tablet shopping.

“The high street as a whole suffered a disappointing month, though our data suggests a flat, rather than declining performance on Black Friday itself. How long it takes for a Christmas stampede and how much appetite consumers have left following days of discounting should emerge in the next few days. It’s already clear though that the big winners this year were retailers who got their integrated offering right.

“Face-to-face wasn’t all doom and gloom in November though and winners on the high street did emerge. Brits tucked into meals and a tipple after shopping as hotels, bars and restaurants saw spending leap another 8.5% year on year. And the appetite for entertainment remains strong as we enter pantomime season with a 4.8% jump in recreation and culture spend.”

Annabel Fiddes, economist at Markit, said: “The latest set of Visa Europe’s UK Consumer Spending Index data suggest that expenditure growth softened slightly in November, with the annual rate of growth slipping from +2.1% in October to +1.1%. However, this followed on from a particularly strong November 2014, when the Black Friday discount event first really took hold in the UK and growth hit a near five-year high of +4.1%. “November was a relatively disappointing month for the high street, which saw a modest  -1.5% year-on-year drop in expenditure. In contrast, e-commerce retailers signalled a further healthy increase in spending (+4.1%).

“Looking forward, a positive economic backdrop is likely to support further increases in expenditure as consumers continue to see near-stagnant price trends, higher real wages, and record low interest rates.”