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Consumer spending grew 0.2% year-on-year in August – the first uplift since February 2020, according to Barclaycard. The payment provider found that spending on essential items grew 5.1% year-on-year, as supermarket shopping surged 14.9%. Despite this confidence in the UK economy slumped to the lowest on record, at just 19%.

The Drum dives behind the figures to reveal what they say about current consumer mindsets.

The bright spots:

  • A supermarket surge of 14.9% shows consumer willingness to spend, spend, spend where necessary.

  • Non-essential spending has begun to stabilise, contracting by just 1.6% – the smallest fall recorded since the crisis began.

  • Clothing sales jumped 0.3%, the first positive movement since March last year, as sales tempted wary shoppers out of hibernation.

  • Department store sales also improved, registering the smallest drop so far at -3.6%.

  • Lower pump prices saw fuel spend sink 13.3% but drove an increase in the volume of transactions to just 2.4% below the equivalent amount last year – driven by a return to work and staycation boom.

  • People drowning their sorrows saw pubs and bars emerge from stasis with patrons toasting the end of lockdown sending year-on-year growth in transactions up 9.3%.

  • Holidaymakers looking closer to home to get away from it all saw the leisure sector spare its losses with a 19.1% year-on-year decline – a significant improvement on July’s 29.9% fall.

  • Confidence in individual household finances held up comparatively well at 68%, aided in no small part by savings elsewhere as travel and entertainment spend collapsed.

 

The online shift accelerates:

  • Months of lockdown have accelerated pre-existing trends toward online shopping, principally groceries which jumped an impressive 102.7% year-on-year.

  • Online clothing meanwhile also emerged as a chief beneficiary of changing habits, notching up a 24.3% increase.

  • Stuck-at-home Brits also sought solace in takeaways and fast food which smashed records to post a 20.7% increase.

  • Meal subscription services also rode a mini-boom, increasing by 65.8% as stay-at-home households contract out their meals.

 

Confidence slumps to an all-time low:

  • Confidence is in short supply nationwide with a paltry 19% optimistic about what the future will bring, the lowest proportion yet recorded by the Barclaycard index.

  • Unsurprisingly, with international travel restrictions and quarantine rules remaining in force, the broader travel sector meanwhile declined by a precipitous 61% compared to August last year.

 

What this all means for marketers:

  • The retail sector is going to remain stuck in the doldrums for the foreseeable future despite some grounds for optimism – spelling inevitable headwinds for advertising spend.

  • Raheel Ahmed, head of consumer product at Barclaycard warns that “challenging times still lie ahead in certain sectors“.

  • Ahmed cautions: “Months of lockdown has helped accelerate the trend towards digital, with surges in areas such as the online ordering of takeaways and buying groceries online, meaning the road to recovery may still be a long one for brick-and-mortar stores.”

  • While retailers may draw consolation from the fact that armageddon has been averted, the withdrawal of government support packages such as the Eat Out to Help Out Scheme and the furlough programme spell further trouble ahead.

  • Spelling out the challenges, Ahmed concludes: “…we will see the resilience of businesses truly tested as we head into autumn.”