Spend eases in October, as wet weather dampens spirits and Brits save for Christmas

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Barclaycard’s monthly analysis of UK spending shows that consumer spend eased again in October, up 1.9% year-on-year, as consumers continued to take a cautious approach to managing their finances and saved up ahead of Christmas. This was the first month since March where spend growth was below the rate of inflation and may reflect the fact that with wages continuing to fall in real terms, and consumers unwilling to use savings to fund purchases, discretionary spend is becoming more limited.

The wetter weather and the arrival of the ‘St. Jude’ storm towards the end of October also deterred people from hitting the high street and led to many opting to shop from the comfort of their own homes. In-store spend grew just 0.3% year on year, whereas online spend recorded another month of strong performance, up 8.7%.

Consumers shop little and often

Shoppers continued to look to bag the best bargains and spending habits showed once again a ‘little and often’ trend. Average transaction values were down 3.7% in October compared to the same time last year, but volume levels were up 6.0% year on year as people sought value for money. 

Performance in the travel and entertainment sector was mixed; with restaurant spend showing an impressive 11.9% year on year increase, although consumers continued to spend less on each visit, with the average ticket price down 6.4% compared to 2012. Cinema spend, meanwhile, fell 3.2% vs. last year, recording its lowest reading so far in 2013, due in part to the strong performance of Skyfall in 2012. Airline spend improved, up 3.0% year on year, although this is still far from the double-digits growth seen in the first half of 2013.

Rebounding housing market leads to rise in DIY spend

The rebounding housing market continued to drive up DIY store spend with figures up 10.2% compared to last year, the highest DIY growth witnessed in 2013.

Electronic stores also saw an 8.5% year on year increase in spend in October, their best performance this year. Whilst clothing spend slowed from September and was up only 1.4% year on year in October, family clothing continued to grow at a solid 3.6%, reaching a three month high.

Val Soranno Keating, chief executive of Barclaycard, said: “After six months of above-inflation growth in spending, we’ve seen a slowdown this month showing that, despite a generally positive outlook for the economy, consumers continue to manage their finances cautiously. But with the underlying economic fundamentals still positive there are plenty of reasons to think this is a blip rather than a trend. With mortgage approvals running at record rates and Christmas just around the corner, consumers may just be more discerning when it comes to spending their hard-earned money. The continuing absence of wage inflation, coupled with consumers’ unwillingness to use their savings to fund purchases, is another possible reason for the slowdown. 

“The wetter weather at the end of October is also likely to have contributed to people staying at home rather than venturing out onto the high street and where consumers are spending they continue to look for value. While their love affair with eating out continues – restaurants showed an impressive 11.9% year on year increase – they are spending less each visit. And spend on public transport continues to be strong, comfortably outstripping spend on petrol in October.”

Barclaycard processes nearly half of all credit and debit card transactions in the UK.

The shift from driving to public transport continued in October. Public transport grew at 5.8% whereas petrol spend was down 4.4% on October last year. This was its second consecutive month of negative growth, reaching a seven month low, as lower petrol prices failed to create higher demand. 

Online vs. offline spend

Online spend share as a proportion of total spend grew to 20.6%, up 1.2% on the same time last year (19.3%), and most of the categories of online spend were up on 2012. 

Online spend growth by select categories  
Women Clothing +40.9%
Furniture Stores +34.4%
DIY Store +24.2%
Electronic Stores +19.1%
Family Clothing +18.6%

Regional spend

In October, the East of England showed the strongest year-on-year spend growth (3.1%) of the 12 regions monitored, followed by North West (2.9%). Northern Ireland spend growth was the lowest, at just 0.2%.

Region Growth
East of England 3.1%
North West 2.9%
South West 2.3%
Yorkshire Humber 2.3%
East Midlands 2.1%
London 2.0%
Wales 1.9%
West Midlands 1.8%
South East 1.7%
Scotland 1.1%
North East 1.0%
Northern Ireland 0.2%