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Consumer spending growth slows to 2.0 per cent in March as the ‘Beast from the East’ keeps shoppers at home

Mon Apr 09 19:01:00 EDT 2018

  • Consumer spending grew 2.0 per cent year-on-year in March, down from 3.8 per cent in February and the lowest level of growth since April 2016
  • In-store spending contracted 1.9 per cent as consumers chose online shopping over the high street in the face of inclement weather
  • Despite the slowdown in March, overall spending in Q1 2018 remained relatively stable at 3.1 per cent, down only slightly from 3.2 per cent in Q4 2017
  • Consumer confidence rebounded, with confidence in household finances increasing by 10 percentage points in March – the highest level since October 2017

Consumer spending growth slowed as temperatures fell in March, rising just 2 per cent year-on-year – the lowest level since April 2016 – as the poor conditions brought by the ‘Beast from the East’ took their toll on the high street. 

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that in-store spending fared particularly poorly, contracting 1.9 per cent as a third (34 per cent) of consumers reported the cold weather prompted them to spend less overall on the high street. Expenditure online grew by 11.7 per cent, however, as Brits chose to shop from the comfort of their own homes in the face of inclement weather.

Shoppers continued to prioritise the essentials, which rose 3.8 per cent, while spending on the ‘nice-to-haves’ increased by just 1.1 per cent. The strong performance in essentials was bolstered by supermarket spend (5.1 per cent) reaching the highest level of growth since June 2017, even as petrol spending declined 1.8 per cent year-on-year.

Bright spots in non-essential spending were restaurants and pubs, up 7.2 per cent and 7.7 per cent respectively. This was, however, a dip in growth compared to February (9.7 per cent and 10 per cent) and was also impacted by the cold weather – nearly half (45 per cent) of consumers said it led to them rein in on leisure and experience spending. Garden centres saw the biggest fall, contracting by a record 26.4 per cent as the ‘Beast from the East’ dashed any hopes of early planting.  

Despite the slowdown in March, overall expenditure for the quarter was broadly stable with growth of 3.1 per cent in Q1, down only slightly from 3.2 per cent in Q4 2017 and matching the figure for Q3 2017.

Signs of stability also extended to consumer sentiment; 64 per cent of Brits are confident in their household finances, up 10 percentage points from the month prior and the best reading since October 2017. Likewise, the proportion of those confident in the UK economy rose from 34 per cent in February to 37 per cent last month, a seven-month high.

While these figures suggest reasons to be optimistic, however, it’s important to note that a meaningful minority of consumers feel worse off now than they did last year. Compared to 2017, a third (33 per cent) say they are less confident in their ability to save money for a rainy day, and a quarter (25 per cent) say the same about covering the cost of a night out.

All in all, a sense of caution still remains; 44 per cent of consumers indicate that they have adapted their spending to cope with rising prices and one in five (19 per cent) are shopping at discount stores more often, helping the likes of Aldi and Lidl to gain market share. The trend looks likely to continue – although the prevailing rate of inflation slowed slightly last month, nearly half of consumers (49 per cent) say they do not plan to change their spending habits any time soon.

Paul Lockstone, Managing Director at Barclaycard, said:

“The ‘Beast from the East’ took its toll on the high street in March, keeping shoppers at home and leading to a slowdown in consumer spending. Despite the dip in growth last month, however, expenditure was broadly stable in the first quarter.

“It seems consumers have become accustomed to adjusting their budget and as a result, are more confident in their own finances. While there are bright spots, however, it’s important to note that a sense of caution still remains, with many of us hesitant to change our spending patterns no matter what the next few months may bring.”

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

-1.1%

13.6%

-8.7%

     Family Clothing

1.3%

19.0%

-7.4%

     Shoe Shops

-12.8%

1.0%

-18.2%

     Women’s Clothing

-7.5%

-0.3%

-12.1%

     Men’s Clothing

4.1%

15.8%

-2.5%

Restaurants

7.2%

27.5%

5.5%

Auto Parts & Accessories

-0.5%

12.9%

-4.9%

Cinema, Theatre & Dance

-0.1%

3.1%

-9.0%

Public Houses

7.7%

-12.7%

7.9%

Department Stores

-4.1%

5.3%

-6.6%

DIY Stores

-7.0%

-4.1%

-7.3%

Travel Agents

12.5%

19.3%

4.3%

Airlines

2.4%

2.5%

2.6%

Supermarkets

5.1%

11.4%

4.7%

Petrol

-1.8%

61.0%

-1.8%

Gambling

14.1%

31.4%

-28.9%

Vehicle Sales

-13.1%

-2.5%

-13.3%

Hotels

0.7%

19.4%

-5.1%

Auto Repair Shops

-6.4%

6.3%

-6.8%

Sports Shops

-4.1%

4.2%

-7.5%

Furniture Stores

-0.2%

36.4%

-6.7%

Telecoms

5.5%

8.0%

3.6%

Household Appliances

-19.5%

-37.7%

-7.3%

Jewellers

-4.3%

15.7%

-7.4%

Sports and Games Establishment

-2.1%

6.7%

-7.4%

Garden Centres

-26.4%

-14.2%

-28.6%

Discount Stores

2.0%

16.3%

-1.0%

Gift Shops

1.6%

0.8%

1.9%

Floor Covering Stores

-5.1%

12.6%

-6.8%

Tourist Attractions

-7.6%

7.1%

-19.0%

Amusment Parks

5.1%

22.7%

-0.7%

Aquariums

-25.9%

35.0%

-37.8%

Electronic Stores

-4.6%

0.8%

-7.6%

Cosmetic Stores

6.4%

11.8%

0.5%

Optical Goods

-6.0%

12.0%

-6.9%

Overall

2.0%

11.7%

-1.9%

 

Online share of spend

Clothing

39.4%

Travel Agents

57.8%

 

Average Transaction Value

Overall

-5.0%

Clothing

-0.4%

Airlines

0.3%

Restaurants

-4.4%

Supermarkets

-0.7%

Petrol

-2.0%

 

Number of Transactions

Overall

7.4%

Clothing

-0.7%

Airlines

1.9%

Restaurants

12.1%

Supermarkets

5.8%

Petrol

0.2%

Notes to editors

For more information please contact Linda Yang on +44 (0)2035 555 586 or siyuanlinda.yang@barclaycard.co.uk

The monthly spend data in this release relates to the period 18 February to 24 March 2018. It is compared with 18 February to 24 March 2017.

The quarterly spend data in this release relates to the period 24 Dec 2017 to 24 March 2018. It is compared with 24 December 2016 to 24 March 2017.

The consumer confidence survey was carried out between 22 and 26 March 2018 by Longitude Research on behalf of Barclaycard. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, income group, professional status and family situation.

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit and point-of-sale finance. In 2016 we processed over £250bn in transactions globally. Barclaycard is a pioneer of new forms of payment and is at the forefront of developing viable contactless and mobile payment schemes for today and cutting-edge forms of payment for the future. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

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