Consumer spend sees sharpest decline since May 2020 as lockdown 3.0 takes hold

Consumer spending has suffered its largest drop since May 2020, slumping 16.3% in January due to a national lockdown that badly hit retail, hospitality and travel. On the bright side, data compiled by Barclaycard shows that spending on essential items such as groceries rose 3.9%, bolstered by a 17% rise in overall supermarket expenditure, with online supermarket spend surging 126.8% on the back of a home delivery boom.

Spending on non-essentials has slumped to 24.2%

Consumer spend on non-essentials plummets

• Discretionary spending nosedived at the start of the year as the imposition of another national lockdown saw spending on non-essentials slump 24.2%, according to Barclaycard.

• With the nation cooped-up for another month at home, spending on takeaways reached another record high, up 32.6%, while online retail also benefitted, recording a 73.2% rise.

• Supermarkets hoovered up the lion’s share of growth, rising 126.8% on the back of runaway demand for home deliveries. This is now feeding through to logistical challenges with 37% reporting problems in finding a delivery slot.

• Online supermarket spend by the over-65s provided the fastest growth among all sectors and age groups, with necessity prompting a huge 332.5% rise in purchases among this cohort versus last year.

• Realisation that older and more vulnerable groups are most reliant on home deliveries prompted 57% of those quizzed to report that they would make extra effort to visit supermarkets in-person to avoid impacting transit capacity.

• Unsurprisingly, fuel sales took a hit, dropping 32.3% – the sharpest fall since June – as pump prices reflect dwindling demand for transport.

• Among the steepest declines weathered by the high street were department store sales (down 36.8%); health and beauty (down 27.2%) and clothing which fell 25%.

• The hospitality sector continues to endure a torrid time of it with Britain’s bars and restaurants collapsing by 93.7% and 84.2% respectively.

• Strict enforcement of travel restrictions around the nation’s borders also fed through to a predictable decline in winter holidays, with travel agents and airlines dropping 87.2% and 81.6% respectively.

Digital gets an (unsurprising) boost

• There are no prizes for guessing that digital emerged as the chief beneficiary of these trends, with spending on digital content and subscriptions rising 38.3% while electronics increased 14.7%.

• Takeaways and fast food proved to be a lifesaver for many, fueling a 32.6% rise in demand. This insatiable appetite for convenience also contributed to a 92.1% rise among specialist online food and drink retailers.

• Rising demand also trickled down to established high street butchers, bakers and greengrocers, which were handed a 40.5% boost by conscientious shoppers wishing to lend a helping hand to local businesses.

• Online retail was up 73.2% to account for 54.9% of all retail spend in January, with specialist retailers providing stationery, sports equipment and outdoor clothing posting particularly strong growth of 87.7%.

• The continued daily diet of bad news is taking its toll on sentiment with a mere 40% of Britons expressing confidence in their job security, a 10% drop from last January and the lowest level recorded in over a year.

• In terms of household finances, confidence is in greater supply with 67% expressing a positive outlook on the affordability of monthly bills, dropping to 55% among 18- to 34-year-olds and hitting 78% among the over-55s.

• Raheel Ahmed, head of consumer products at Barclaycard, said: “... we have seen a surge in many online categories as the demand for home deliveries continues to rise. From meal kits and subscription services to online grocery shopping, Brits have continued habits they formed in the first lockdown, with a record high seen in spending on takeaways and fast food.

• “While confidence in job security has reached its lowest point in over a year, the ongoing vaccine rollout means that Brits believe there is hope on the horizon, and we all look forward to being reunited with much-missed family and friends later in the year.”

• Consumer spending wags the tail of advertising resources, with today’s bleak picture expected to brighten in the coming months along with the weather as the impact of the vaccine roll-out feeds through to improved consumer sentiment and advertiser enthusiasm with it.

• In the meantime, The Drum has devised a handy guide instructing agencies how to make it through lockdown 3.0 and emerge in one piece on the other side.