Outlook slightly more positive, but households continue to cut back
Coronavirus is still putting the squeeze on consumer spending, but small signs of recovery may hearten retailers ahead of stores reopening on 15 June.
New figures reveal falls in non-essential spending, while supermarket spend continues to grow.
The research from Barclaycard shows that spending on non-essentials in May fell 36.9% year-on-year. However, the decline was less severe than in April, which saw a drop of 47.7%. Department store spending fell by 44.5% in May and spending on clothing fell by 42.4%.
Fuel spend too, fell by 49.7%, with an overall consumer spending fall of 26.7%.
But at the same time, spending on essential items was up by 0.9%. Supermarket spending rose by 24.5%, increasing to 27% in the week before VE Day weekend, and local specialist food and drink stores are also buoyant with growth of 42.5%.
The food and drink sector too is showing slight signs of recovery: 14% of Brits are now enjoying food and drink from the pub, as pubs, restaurants and cafes offer takeaways and deliveries. And people are looking forward to going to the garden centre or DIY store, with 27% planning a visit.
People exercising at home is paying off for some online retailers. Despite the decline in sales of non-essentials offline, online sales at specialist retailers – including those selling sports and outdoor items – rose by 96.3%, while spending at general online retailers was up by 85.8%.
The figures echo the findings of comparethemarket.com’s Financial Confidence Tracker, which shows the squeeze on households.
“A sharp year-on-year drop in consumer spending and non-essential purchases is to be expected as people stay at home and become more cost conscious during the pandemic,” says John Crossley, head of money at comparethemarket.com.
“With household budgets feeling the squeeze and consumer sentiment low, individuals are taking more care over how much they spend and where. Our Household Financial Confidence Tracker shows that nearly one in five (17%) households are not confident that they will be able to keep on top of payments over the coming weeks – a figure which rises to 24% for families with children living at home.**
“Among this group, more than one in 10 (11%***) have had to ask for a freeze on credit card bills and/or personal loan payments. With the FCA in talks to potentially extend payment holidays on credit cards and other unsecured debts, this could be much-needed relief for those who need it.”
**Household Financial Confidence Tracker Week 7
*** Household Financial Confidence Tracker Week 6