December consumer spending down 2.3% but online retail sales up 52.2%

Christmas 2020

Consumer spending in the UK declined by 2.3% year-on-year in December – the largest drop since June 2020 – as tighter tiered restrictions came in to force.

While the restrictions led to in-store retail dropping 8.3%, with department stores and clothing seeing declines of 15.2% and 7.3% respectively in-store, online retail sales increased by 52.2% – accounting for almost half (46.8%) of all retail spending in December – as Brits shopped from home, according to the latest data from Barclaycard.

Confidence in the UK economy remains low at 22%, but confidence in household finances has held up at 68%, with almost a quarter (24%) of Brits feeling more confident about spending on non-essential items than they have been for a long time. Of those who are feeling more optimistic, 40% say it is because they have saved more than normal recently.

Sales of clothing online enjoyed significant growth of 34% year-on-year as shoppers turned to online stores for last minute presents and pre-Christmas sales. Specialist retailers, which include jewellers, gift shops and toy shops, also saw a large rise of 61.9% in online sales.

Spending on essential items grew 4.5% year-on-year, with festive food shopping fuelling an 88% rise in online grocery spend.

Needless to say, hospitality was hit hard in December, with steep declines at bars and pubs (-71.4%) and restaurants (-65.4%) as new measures saw many Brits cancel festive social plans, yet airlines and travel agents saw slight improvements due to vaccine optimism.

Raheel Ahmed, Head of Consumer Products at Barclaycard, said: “Changing restrictions continue to have an impact on our spending habits, which was particularly acute across the high street and hospitality sectors in December. As a result of further restrictions, online grocery spend surged and fuel declined as the majority cancelled their plans and stayed home for the holidays.

“Additionally, many still continued to support their local shops where possible, spending more time in their local community. Small businesses have continued to remain agile to these changing consumer habits – with many going online for the first time.

“With the latest government guidance to stay at home and a vaccine roll-out on the horizon, we are all hopeful of a brighter and more prosperous year ahead. Yet for now, the reality of lockdown life remains and it’s once more a hugely challenging time for high street retailers as well as the hospitality, leisure and travel industries.”

Barclaycard sees nearly half of the nation’s credit and debit card transactions.

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