Fashion spend suffers in January, but at least beauty rises
UK consumer spending was up in January but that was really no help to the fashion sector. The fact is that it was all about supermarket spending. Shoppers buying more meat-free products in Veganuary won’t help the average shoe store or jeans store when the quarterly rent bill needs to be paid in March.
The latest Barclaycard monthly consumer spending report on Tuesday said that consumer spend was up 2.9% last month, which was ahead of inflation and reversed a modest dip in December.
But with supermarket spend up an impressive 6.8% (the highest growth since April 2017), it’s no surprise that other retailers “continued to struggle, with clothing and department store expenditure in [a] fourth month of consecutive decline.”
And there was more bad news given the debate around whether early discounts help or harm the sector as over half of UK adults say the January clearance sales are less important to them than they once were. Ouch.
Barclaycard, which processes nearly nearly half of the UK's credit and debit card transactions, said 'non-essential expenditure’ saw an increase of just 1.7%, and fashion clearly suffered.
The company said that “one of the reasons for this could be a change in sale shopping habits” with 52% of UK adults saying the January sales are less important to them than they were two or three years ago. And 24% are losing interest because retailers now offer discounts throughout the year.
Not that this knowing this necessarily help retailers - after all, they’re not offering year-round discounts simply because they hate selling goods at full price. Working out how to excite consumer interest without that all-important 20%, 30% even 50%-off tag can be hard, say, in early February.
Barclaycard said that 70% of consumers say they’ve “become much more careful to seek out value for money in the purchases they make” while 54% are worried that a rise in the price of everyday items will impact their spending power in the near future. Taking the wider picture, with Brexit still a giant question mark over the UK economy, consumer confidence in the economy has dropped to 30%.
Looking in more detail at the company’s year-on-year spending figures, it said clothing shops saw spending in value terms falling by 3%. Within that, family clothing was down 3.5%, shoe shops fell 1.3%, womenswear shops 3.3%, and menswear 4%. Meanwhile department stores were down a very worrying 6.3%, sports shops 4.3%, and jewellers 8.1%. Any good news? At least cosmetics shops rose 10.3% and while the average transaction value was down 1.6% for clothing, at least the number of transactions rose 0.7%.
But that was cold comfort and it wasn’t helped by the latest British Retail Consortium (BRC) spending report that said its members saw total sales up by an annual 2.2% last month, helped by higher spending on food and New Year discounts, so no real encouragement for the fashion sector there either.
"While retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished," BRC chief executive Helen Dickinson said. "Furthermore, the risk of a disruptive no-deal Brexit could see these fortunes reversed."
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