Consumer spending dropped 7.2% in March compared with the same period in 2019 as an extended lockdown dragged on, according to Barclaycard.
The payment provider observed that despite the dip, retail spend grew 17.9% overall, courtesy of the rise and rise of e-commerce.
Boding well for future surveys, spending on hotels, resorts and accommodation, as well as entertainment, all showed the first green shoots of recovery as British consumers dust off their wallets in anticipation of restored freedoms.
An insight into the mindset of UK consumers
Barclaycard facilitates close to half of all UK credit and debit card transactions in the UK, placing it in an unrivaled position to chart the ebb and flow of consumer spending in real-time.
In its latest report, it found that spending on essential items grew 7.7% in March versus the same month in 2019 – the sharpest uptick in growth to be recorded so far this year.
Leading the charge were specialist food and drink stores such as independent butchers and food box providers, which collectively grew 71.4% as people prioritized convenience and proximity for their weekly shop.
Against this backdrop, supermarket spend jumped 21.9%, with online grocery spend accelerating by a whopping 116.5% as home deliveries picked up the strain of a shuttered high street.
On the other side of the coin, non-essential spending was down 14.5% versus 2019, although this represented a modest improvement on the situation as recorded in January and February, which fell 20.8% and 18.3% respectively.
Clothing was also hit hard, contracting 28.6% since 2019, constituting the largest two-year drop since May 2020. Hospitality also endured yet another torrid period with an 83.1% decline in restaurant spend beaten only by a 94.8% decline for bars and pubs.
Commenting on the data, Raheel Ahmed, head of consumer products at Barclaycard, said: “With springtime finally here and restrictions starting to ease, it’s encouraging to see a renewed sense of optimism across much of the UK.
“While it remains a very challenging environment for high street and hospitality outlets, the fact that many consumers are making plans for the future is a positive sign, and we hope to see this pent-up demand lead to growth in more categories as life after lockdown starts to resume.”
E-commerce’s moment in the sun continues
It’s not all doom and gloom, however, with retail spending as a whole conspiring to rise 17.9% on the back of an unprecedented surge in e-commerce. Online retail transactions leaped 84.7% in comparison to 2019 to account for over half ( 51.6%) of all retail spend in March.
Drilling down further into the figures, online market places and catalog shops outperformed even this stratospheric benchmark, jumping 110%, while specialist stores such as florists and jewelry stores landed not far behind on 95.7%.
Consumer confidence – a gauge to help marketers
The resilience of consumer spending is all the more remarkable given that confidence in UK plc remains stagnant at 28%, with 61% expecting lockdown easing to be a short-lived affair with a further lockdown likely before the year is out.
Despite such headwinds, the number of British consumers confident in their finances jumped from 68% to 72% in March, with 61% expressing confidence in their ability to procure non-essential items.
This represents the highest level of confidence in discretionary spending since the onset of the pandemic and can be set against 47% feeling secure in their jobs.
With restrictions easing this week across markets, The Drum took the opportunity to ask agencies what demands they were seeing from clients, uncovering a broad consensus around a desire to remain relevant in a fast-evolving consumer landscape.