Barclaycard: consumer spending fell 7.1% in 2020 amidst a year of restrictions, yet lifestyle changes and shifting consumer habits led to growth for some sectors

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Consumer spending declined 7.1% year-on-year in 2020 – as coronavirus restrictions impacted many sectors, with high-street retailers and hospitality hardest hit. Yet there were some bright spots as changing consumer behaviours spurred e-commerce growth, while the rise of the ‘insperience economy’ saw digital services and subscriptions boom as Brits spent more time at home.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items rose by 4.1% year-on-year in 2020. This was largely driven by supermarket shopping, which saw an overall growth of 15.7%, with online grocery shopping surging 70.3% as the demand for delivery services increased. These trends, along with lower prices at the petrol pump, also contributed to a decline in spend on fuel, which dropped by 20.3%.

Turbulent time for high-street retailers and hospitality

Spending on non-essential items contracted 11.3%, as social distancing restrictions had a significant impact on high-street retailers and the hospitality sector. This was especially apparent for department stores which fell by 17.2% and clothing also contracted by 15.6% year-on-year.

While the Government’s ‘Eat Out to Help Out’ initiative provided a boost to restaurants after the first national lockdown, restrictive measures throughout the year saw overall spending fall 47.0%. Bars and pubs were inevitably also impacted by social distancing restrictions, seeing an overall drop of 36.7%.

However, there were some bright spots for non-essential retail. Spending at general retailers and catalogues grew by 40.7% and overall, online general retailers saw growth of 52.5%, while physical discount stores saw a 25.4% uplift as more Brits sought value for money in the purchases they made.

Staying local

A key positive outcome of 2020 was that support for independent businesses flourished, as many Brits chose to shop locally. Specialist food and drink stores – which includes off licenses, butchers and bakeries – saw an overall uplift of 28.6% year-on-year. This is supported by Barclaycard’s consumer confidence research, which revealed that over half (57%) of Brits said they wanted to increase their support of nearby businesses as a result of lockdown restrictions.

A trend towards staying local has been seen in travel behaviour too. August and September saw more holidaymakers embark on staycations over trips abroad, with UK hotels, resorts & accommodation seeing their smallest declines since the first national lockdown, at 19.1% and 18.1% respectively – a noticeable improvement on May (-89.8%).

However, overall travel – including airlines and travel agents – declined by 61.1% in August and 63.1% in September, showing the impact of international travel restrictions and quarantine guidelines on the sector.

The growth of the ‘Insperience economy’

As consumers spent more time at home this led to a rise in demand for digital entertainment, services and experiences. Boxsets and games consoles increased in popularity with spending on digital subscriptions and electronics seeing growths of 31.5% and 10.8% respectively. Meanwhile, spending on ordering takeaways online surged 49.1% and those offering services such as meal subscriptions grew by 62.4%, as fresh, hassle-free dinner options became a mainstay in many households.

Boom in home improvements

Many Brits also took the opportunity to spruce up their indoor and outdoor living spaces. After non-essential shops re-opened in June, spending at home improvement & DIY stores surged, driving an overall growth of 9.8% year-on-year. Furniture stores also enjoyed an overall uplift of 5.3%, as shoppers invested in big-ticket purchases.

Consumer escapism and pick-me-ups

Sports & outdoor retailers enjoyed significant growth in 2020, rising 7.2% overall, with the temporary closure of gyms encouraging Brits to purchase workout equipment and seek new ways to exercise inside and outdoors. 

Support for florists has also bloomed with purchases up 22.7% as Brits treated themselves and showed friends and family from afar they were missed. Many also took up new hobbies and crafts (9.8% rise) and added new companions to their households, with vets and pets seeing a 10.7% uplift in 2020.

Raheel Ahmed, head of consumer products, said: “2020 has accelerated many trends. E-commerce has seen huge growth, working from home has meant many are shopping more locally and experiences within the home, such as virtual work outs have become the norm. Spending within the retail, travel and hospitality sectors has been acutely impacted. However, we have also seen many businesses become more agile and move online and the demand for online groceries, digital entertainment and subscriptions has been huge. Home improvement, DIY & gardening have also seen a boost, as we all spend more time at home and near our local communities.

Hopefully with a vaccine being rolled out in 2021 we will see green shoots for the most severely impacted sectors. Having said that, some of the trends and changes we’ve seen in customer habits may be here to stay.”

Clare Bailey, independent retail expert and founder of The Retail Champion, said: “Speaking to retailers, I am encouraged that many are continuing to shop where they live and support local businesses. Whilst those retailers who depended on commuters have been seriously impacted by the reduction in footfall this year, it’s encouraging to see that some of this spend has been transferred to local companies.”

“In addition, in such challenging times, many businesses have also been agile enough to adapt their local offering of products and services to support changing consumer demands. Despite the adversity this year has thrown into the mix, the positive connection which has grown between consumers and their local butchers, bakers or greengrocers is truly heartwarming and a trend I hope continues to thrive in 2021.”