Consumer spending declined 2.3% in December as tighter restrictions hampered high-street and hospitality, yet online retail saw strong growth, Barclaycard reports

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Consumer spending declined 2.3% year-on-year in December – the largest decline since June 2020 – as the tightening of tiered restrictions across the UK hampered high-street retailers and hospitality.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 4.5% year-on-year as Brits stocked up for the festivities, aided by a 14.7% rise in supermarket shopping overall and online grocery spend surging 88.0%. Meanwhile spend on fuel declined 20.7% as tighter restrictions saw many Brits cancel plans to visit loved ones over the Christmas period.

Spending on non-essential items dropped 4.9% – the largest decline since June 2020 (-22.3%) as the growing spread of coronavirus led to more Brits staying at home and unable to visit physical retail stores.

While in-store retail spending fell 8.3%, the significant shift to online shopping continued, with online retail rising by 52.2% and accounting for almost half (46.8%) of all retail spending in December.

Specialist retailers (which includes toy shops, jewellers and gift shops) and clothing both enjoyed significant growth online, rising 61.9% and 34.0% respectively, as shoppers turned to online stores for last minute presents and pre-Christmas sales.

Brits also continued to make the most of nights in by purchasing new boxsets, downloading new video games and ordering takeaways, with eating and drinking (81.0%) and digital content and subscriptions (41.4%) seeing strong online increases.

Shops in the local community continued to enjoy a boost as well, with specialist food and drink retailers such as butchers, bakeries and off licenses recording a 43.7% rise. This comes as more than half (54%) of Brits say they will do what they can to support local shops during 2021.

However, brick-and mortar retailers continued to be impacted by the restrictions, with department stores and clothing seeing declines of 15.2% and 7.3% respectively. The hospitality sector was also hit hard in December, with steep declines at bars and pubs (-71.4%) and restaurants (-65.4%) as new measures saw many Brits cancel festive social plans. 

While overall travel contracted by 63.8%, there was an improvement seen in spending across some categories in the sector. Airlines saw a less steep decline of 58.1% compared to the previous month’s decline of 73.6%. Additionally, travel agents recorded a smaller drop this month of 72.3%. This comes as one in five Brits (22%) say they are already making plans for a big holiday at some point in 2021, reflecting optimism that a potential recovery may come later this year.

The continued restrictions across the UK mean that Brits’ confidence in the UK economy remains low at 22% – almost 20% lower than at the same time last year.

However, consumer confidence in household finances has held up at 68%, with almost a quarter (24%) of the nation feeling more confident about spending on non-essential items than they have been for a long time. Of those who are feeling more optimistic, 40% say it is because they have saved more than normal recently.

Raheel Ahmed, head of consumer products, said: “Changing restrictions continue to have an impact on our spending habits – which was particularly acute across the high-street and hospitality sectors in December, with restaurants, pubs and bars hardest hit during a low-key festive season in the majority of the UK. As a result of further restrictions, online grocery spend surged and fuel declined as the majority cancelled their plans and stayed home for the holidays.  

“Additionally, many still continued to support their local shops where possible, spending more time in their local community. Small businesses have continued to remain agile to these changing consumer habits – with many going online for the first time. From dog walking services to subscriptions of weekly meal kits, small businesses are exploring new ways to reach their customer base.  

“With the latest government guidance to stay at home and a vaccine roll-out on the horizon, we are all hopeful of a brighter and more prosperous year ahead. Yet for now, the reality of lockdown life remains and it’s once more a hugely challenging time for high-street retailers as well as the hospitality, leisure and travel industries.”