Consumer spending fell 16.3% in January as lockdown measures took effect, Barclaycard reports

Consumer spending declined 16.3% t year-on-year in January – the sharpest decline since May 2020 – as the retail, hospitality and travel sectors felt the full impact of national lockdown measures.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 3.9%, bolstered by a 17.0% rise in overall supermarket expenditure, with online supermarket spend seeing significant growth (126.8%). This was driven by a surge in demand for home deliveries, with almost four in 10 (3%) Brits saying they found it harder than ever to secure a delivery slot.

Online supermarket spending by the over 65s has grown much faster than other age groups, more than quadrupling (+332.5%) compared to last year. One likely reason is that Brits recognise the scarcity of delivery slots, and the fact that older and more vulnerable people are relying more heavily on online grocery shopping, with nearly six in 10 (57%) saying that they would rather visit the supermarket in person to avoid taking a slot from someone who needs it more.

Fuel, however, saw its sharpest decline (-32.3%) since June 2020 (-33.8 per cent) – when measures from the first national lockdown were still in place – as prices at the pump continued to fall and more Brits stayed at home.

Spending on non-essential items declined 24.2%, as more shops across the UK temporarily closed due to the restrictions. The steepest declines on the high-street were seen at department stores (-36.8%), pharmacy, health and beauty (-27.2%) and clothing (-25.05).

The hospitality sector had another very challenging month as Brits’ social plans remained on hold, with bars & pubs, and restaurants recording significant declines of -93.7% and -84.2% respectively.

Despite the slight improvement in travel spending in December, tighter restrictions and news of tougher border controls saw a drop in holiday bookings and overseas trips in January, with travel agents (-87.2%) and airlines (-81.6%) hit hardest at a time when consumers would typically have been making the most of summer holiday bargains. In January 2020, these categories accounted for 10.9% of all non-essential spend – whereas this year they accounted for just 2.2%.

However, some retailers have performed strongly despite the lockdown. Spending on digital content & subscriptions and electronics grew 38.3% and 14.7% respectively, as Brits continued to invest in boxsets and video games to keep themselves entertained during nights in.

Consumers have continued to crave fresh and convenient meal options too. In an ongoing trend, ordering takeaways and fast food proved highly popular, with the category seeing its largest ever growth (32.6 per cent). Meanwhile, online food and drink specialist retailers, such as those supplying weekly recipe boxes, saw a significant increase of 92.1%.

Spending at physical food and drink specialist stores – which includes butchers, bakeries, and greengrocers – also grew (40.5%), as Brits continued to support nearby independent businesses. This comes as 45% say they plan to continue shopping more locally, even after lockdown ends, to support their community.

As consumers became more reliant on internet shopping, online retail surged 73.2% and accounted for 54.9% of all retail spend in January. Specialist retailers, which includes stationery shops and sports & outdoor retailers, recorded particularly strong growth online (87.7%), as many Brits bought equipment to home-school their children and keep fit while schools and gyms were closed.

Amidst the challenging circumstances, just 40% of Brits were confident in their job security this month – dropping 10% from last January to the lowest level in over a year. Confidence in household finances stayed steady at 67%, but younger Brits (18-34-year-olds) are feeling considerably less confident (555) than the over 55s (78%). 

The nation is, however, looking forward to life after the lockdown, with the majority of Brits (57%) most looking forward to spending quality time with friends and family whom they haven’t seen in a while.

Raheel Ahmed, head of consumer products, said: “As the impact of the latest lockdown start to takes its toll, we’ve seen particular sectors struggle, as physical premises across the UK were forced to close. Last month’s glimmer of hope for the travel sector also seems to have stalled as tougher border controls saw bookings drop.

“Yet, on a more positive note, we have seen a surge in many online categories as the demand for home deliveries continues to rise. From meal kits and subscription services, to online grocery shopping, Brits have continued habits they formed in the first lockdown, with a record high seen in spending on takeaways and fast food.

“While confidence in job security has reached its lowest point in over a year, the ongoing vaccine rollout means that Brits believe there is hope on the horizon, and we all look forward to being reunited with much-missed family and friends later in the year.”