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Consumer spending dropped 26.7% in May though some retailers showing positive signs

Tom Bottomley
09 June 2020

Consumer spending contracted 26.7% year-on-year in May, but some retailers have shown positive signs as more sectors have adapted to social distancing restrictions to keep their doors open, with non-essential stores still waiting to reopen on 15 June.

The figures from the Barclaycard report, which combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending, showed spending on essential items grew by 0.9%, bolstered by a 24.5% rise in supermarket spend, which increased 27% in the week preceding VE Day.

Spending on non-essentials decreased by 36.9% year-on-year, with department stores and clothing declining 44.5% and 42.4% respectively. That drop was less steep than in April, which saw non-essential spend contract by 47.7%, reflecting a slightly more positive outlook for UK retailers ahead of some stores opening on 15 June.

Online purchases at specialist retailers – including sports and outdoor outlets – rose 95% as people bought items for exercise.

While consumer spending is increasing month-on-month across some retail categories, overall confidence in the UK economy remains low – indicating that the road to recovery may be a long one. Just 20% of UK adults feel positive, though those aged 18-34 are noticeably more upbeat than those aged over 35.

However, more than two thirds of Brits (67%) remain confident in their households, with 37% of those citing having enough savings to support them as a key reason for this positivity.

Esme Harwood, director at Barclaycard, said: “While the restrictions continue to have a significant impact there are glimmers of hope. We are seeing certain sectors start to increase sales as the climate eases and they adapt. It may take some time to recover from the economic impact of coronavirus but household confidence remains high and there is a strong desire among consumers to support businesses.

“Other encouraging signs are also emerging. After weeks of isolating Brits are understandably keen to enjoy the great outdoors. There’s a positive shift for the cafes, pubs and restaurants beginning to open up again, as well as the retailers who stock essentials for barbecues and other socially distanced gatherings.”

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