A quarter of consumers plan to spend less on new clothes amid cost-of-living crisis
Consumer card spending grew 4.7% in August compared to the same period in 2021, however clothing retailers saw a -1.9% year-on-year decline in sales, and a drop of -10.7% compared to July 2022, as one in four (24%) of Brits say they are reducing spend on new clothes and accessories.
As the cost-of-living continues to bite, department stores saw a -4.3% fall in sales year-on-year in August, and a -7.7% drop compared to July 2022, while pharmacy, health and beauty store sales saw a month-on-month decline of -3.5%, according to the latest consumer spending data from Barclaycard.
Some 37% of shoppers are now buying from charity shops and 31% are using second-hand clothing websites to buy or sell items.
Overall card spending declined -1.9% in August compared to July 2022, with consumers becoming more selective about their discretionary purchases to ensure they can afford rising household bills.
Spending on non-essential items grew 3.6% year-on-year in August, the lowest growth since February 2021.
Spending on essential items rose 7.2% year-on-year in August, the highest increase since December 2021 (8.9%), driven by supermarket shopping as prices continue to climb.
Average spending on utilities per customer grew 45.2% year-on-year, higher than last month’s growth of 43.9% - with more than nine in 10 (93%) of consumers feeling concerned about rising household bills.
Spend on fuel rose 23.9%, its lowest growth in 12 months, owing to a slight decline in petrol and diesel prices and drivers opting to reduce vehicle use to save money. More than one in 10 (13%) of workers are now choosing to walk or cycle to work instead of driving due to rising fuel costs, and one in 10 (11%) have started to commute by public transport.
However, the hot weather in August saw Brits flock to pubs and set off on staycations, with pubs, bars and clubs and hotels, resorts, and accommodation up month-on-month.
Restaurants and bars saw a 6.6% month-on-month rise in sales, while pubs and clubs enjoyed a jump of 8.4%, as Brits enjoyed socialising in beer gardens and dined al-fresco to make the most of the sunny weather.
The domestic travel sector also performed strongly, with summer staycations boosting hotels, resorts and accommodation by 4.1% month-on-month. However, international travel has been more heavily impacted by rising costs, with travel agents and airlines declining -5% and -2.6% respectively, possibly due to holidaymakers booking breaks earlier in the year and those booking last-minute trips choosing to cut back on getaways abroad.
Brits’ confidence in their ability to spend on non-essential items has fallen to 48%, noticeably lower than July 2022 (54%) and August 2021 (63%). Optimism in the UK economy has also declined to 21%, down from 26% last month and 37% in August 2021; its lowest since August 2020 (19%).
The energy price increase in October is also weighing on consumers’ minds, with 32% planning to cut down on discretionary spending to afford energy bills during the autumn and winter and 21% reporting they can no longer afford small luxuries as a ‘pick-me-up’.
Many feel the worst is yet to come, as 82% believe the cost-of-living will continue to rise, while 20% cite increasing costs as having a negative impact on their mental health.
José Carvalho, Head of Consumer Products at Barclaycard, said: “The cost-of-living is clearly leading Brits to cut-back on some non-essential purchases to ensure they can afford the increasing costs of their weekly grocery shop and household utility bills. Yet, despite these inflationary pressures, consumers have still been keen to enjoy the summer weather by eating and drinking out and going on staycations with friends and family.
“However, an energy price rise on the horizon means the majority are understandably very concerned about whether their finances can stretch far enough to afford rising household bills. Many Brits plan to continue cutting back on their discretionary spending during the autumn and winter, while adopting a resourceful approach to saving money in order to weather a challenging period ahead.”
Despite the challenging outlook and ongoing headwinds, 60% of consumers remain confident in their household finances, albeit down on last month’s 66%. This relative stability may be owing to changes many have made to their spending behaviour to offset rising costs (26%) in preparation for the months ahead.
Barclaycard sees nearly half of the nation’s credit and debit card transactions, and the Barclaycard report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending.