UK Consumer Spending Report

December 2020

Barclays UK Consumer Spend Report gives you a unique and up to date picture of the nation’s spending habits based on the actual transactions, bringing it to life so you can take action and shape your strategy. 

Our latest report looks at UK Consumer spending patterns to the period 21 November to 24 December 2020.

Highlights this month:

• As the tiered restrictions have tightened across the UK, December saw a 2.3% decline in year-on-year spending growth, the largest drop since July 2020
• Non-essential spending fell 4.9%, the biggest drop since June 2020, while essential spending rose 4.5% as people shopped for Christmas, driving up grocery and supermarket purchasing
• The hospitality sector was hit hard due to people cancelling festive social plans, although travel agents and airlines saw a slight uplift, perhaps suggesting greater optimism around the vaccine roll out
• The tighter restrictions saw in-store retail fall by 8.3% but, in contrast, online retail spending rose by 52.2% as consumers increasingly shopped at home.
  

Big picture spend update

The healthy 4.5% year-on-year increase in essential spending was strongly supported by a 14.7% growth in overall supermarket shopping. Notably there was a significant 88.0% boost in online grocery purchasing as consumers increasingly stayed at home, severely hampering the high street. Tellingly, fuel spend declined by 20.7% year-on-year as tightened restrictions led many consumers to reassess and cancel their travel and plans to visit family over the festive season.

Non-essential spending experienced its largest decline since June 2020, falling by 4.9% year-on-year, as non-essential high street stores as well as pubs and restaurants were closed due to tighter restrictions in many parts of the country. Food and drink specialist stores have performed strongly and were somewhat of an exception as a category that grew strongly both online and in-store. Overall, consumers increasingly turned to online purchasing, which benefited from a 22.6% increase.

Category snapshot: what are UK consumers spending on?

Retail spending enjoyed a buoyant month overall, with the emphasis strongly shifting to online purchasing. In addition to a major surge in online grocery spending, other highlights included a 61.9% increase in internet shopping with specialist retailers, which includes gift shops, jewellers and toy shops, and a 34.0% rise in internet clothes shopping as consumers looked to online stores to buy last-minute presents and benefit from pre-Christmas sales. With tougher restrictions in place, the high street suffered, as department stores and clothing shops experienced falls of 15.2% and 7.3% respectively.

But there were bright spots too, with discount stores and furniture stores up by 21.5% and 11.6% year-on-year respectively and locally based specialist food and drink retailers enjoying a 43.7% boost. While, travel spend dropped 63.8%, there were also signs of improvement. Airlines saw a lower decline of 58.1% compared to 73.6% in November. Travel agents also experienced a smaller drop in year-on-year spend at 72.3%, with one in five people saying they’re making plans for a holiday in 2021¹,perhaps reflecting optimism for a recovery. Affected by tighter restrictions and cancelled festive plans, hospitality and leisure spend fell 50.0%, with bars and clubs declining by 71.4% and restaurants by 65.4%.

¹Barclaycard Consumer Confidence Survey, December 2020

Channel snapshot: how are UK consumers spending?

Online spending in December, which benefited from a 22.6% year-on-year uplift, claimed almost half of total spending at 49.0%. Eating and drinking and digital content and subscriptions significantly helped to boost online purchasing, with year-on-year growth of 81.0% and 41.4% respectively, as people made the most of staying in with new TV series, games consoles and takeaway meals.

For most categories, the share of spend online remained broadly similar to those in November, when most of the non-essential shops were closed, which perhaps indicates that reopening stores came too late for retailers to see a surge of in-person sales. In marked contrast, in-store spending fell by 18.3%, a similar decline to the 18.4% in November, as shopping at physical stores endured yet another challenging month, reflecting the greater social restrictions impacting face-to-face shopping.