Lockdown sees UK consumer spend hit by the largest decline since June 2020
Pre-Christmas consumer spending slumped 2.3% year-on-year in December – the largest decline recorded since June 2020 – as lockdown restrictions conspired to dampen spirits at a crucial time for the retail and hospitality sectors.

UK consumer spend is in decline, according to Barclaycard
The slowdown is documented by Barclaycard and comes despite a surge in spending on essential items, which grew 4.5% year-on-year as people stocked up for the holidays, boosted by a 14.7% jump in supermarket spending and a commensurate 88% jump in online grocery spend.
On the other hand spending on fuel sank 20.7% as movement restrictions prevented most from visiting their loved ones.
A breakdown of where consumers are spending
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Non-essential spending dropped 4.9% as wary Britons tightened the purse strings in the face of economic uncertainty, the greatest decline since June when the contraction hit 22.3%.
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Unsurprisingly in-store spend declined 8.3% as shoppers were either unwilling or unable to venture beyond their homes without good reason, with online retail picking up the slack among last-minute shoppers – jumping by an impressive 52.2% to account for 46.8% of all retail spending in December.
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Riding the online wave were specialist retailers including toy shops, jewelers and gift shops, all of whom saw their collective digital growth stand at 61.9%, outpacing the clothing sector on 34% growth.
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With entertainment options limited to sales of box sets, downloadable video games and takeaways also boomed with the food and drink market jumping 81% and digital content and subscriptions rising 41.4%.
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Local retailers also enjoyed an uptick in trade with constraints on movement and a public determination to support family businesses by 54% contributing to a 43.7% rise in trade among independent butchers, bakers and off-licenses.
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Christmas cheer was in short supply among larger brick-and-mortar outlets however, with department stores and clothing outlets enduring falls of 15.2% and 7.3% respectively.
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Bars and pubs meanwhile suffered a 71.4% decline while restaurants slid 65.4% in the wake of canceled social events.
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Travel predictably bore the brunt of restrictions after shrinking 63.8% but airlines saw a relative improvement in their rate of contraction, declining by 58.1% versus the previous month's decline of 73.6%.
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Travel agents also reported a smaller drop of just 72.3% as cabin fever led 22% of Britons to begin making preparations for postponed holidays in 2021.
Why it matters
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Confidence in the UK economy remains in short supply with just 22% optimistic about the country's prospects, a staggering 20% drop on the same time last year.
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On a micro-scale confidence in individual households has held up surprisingly well, with 68% comfortable in their financial position and 24% feeling more confident in increasing discretionary spend, driven by saving generated elsewhere as a result of lifestyle changes.
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All this has knock-on consequences for ad spend, which remains intrinsically tied to broader consumer sentiment – as demonstrated by a dramatic third quarter plunge precipitated by households battening down the hatches.
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Raheel Ahmed, head of consumer products at Barclaycard sees light at the end of the tunnel, saying: “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.
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“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.”
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