Lockdown sees UK consumer spend hit by the largest decline since June 2020

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

• 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%.

• 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.

• 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.

• 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%.

• 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.

• 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.

• Bars and pubs meanwhile suffered a 71.4% decline while restaurants slid 65.4% in the wake of canceled social events.

• 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%.

• 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

• 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.

• 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.

• 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.

• 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.

• “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.”