• Consumer spending falls 6% in March
• Supermarkets, streaming and DIY stores soar, while travel and retail plummets
• Consumer confidence falls to lowest on record
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest Barclaycard consumer spending figures:
“In March Brits spent the month stockpiling toilet roll and pasta and sitting on their sofa watching TV. Consumer spending fell by 6% in the month, but the figures paint a picture of two halves, with soaring spending at supermarkets as people stocked up on food ahead of and during the Coronavirus lockdown, and travel plummeted.
“While supermarkets profited they weren’t alone, with DIY shops also seeing a spike in sales, as have smaller food and drink shops, including off licences. In the week before the lockdown gift shops and florists also saw a spike in sales, in preparation for a remote Mother’s Day. There’s also been a rise in digital subscription services, as we all spend more time sitting on the sofa watching TV and frazzled parents try to entertain their children while they work.
“However, almost all other businesses have stuttered, with department stores and restaurants and bars among the largest drops in spending as people initially stayed away from the high-street and then these businesses closed. Travel was the hardest hit sector as the industry ground to a halt, with travel agents seeing a near 50% drop in spending, airlines seeing a 42% fall and hotels seeing a 35% cut – we’d expect to see these figures increase in April as more flights were stopped and global travel bans remain in place.
“Behind the headline figures there will be a divergence, with those shops that have a good online presence and also sell some household essentials getting a boost from people being in their homes more and relying on deliveries, while those retailers who haven’t pivoted to online facing a real struggle.
“In February consumer confidence was high, with 42% of UK adults feeling positive, up from 32% 12 months ago. However, the economic fallout, looming recession and personal cost of Corona-virus means this has now plummeted to 25% - the lowest on record for the survey. That said, people actually feel buoyed by their own personal finances, despite worries about job security, as they are saving money while in lockdown.
“With no sign of the lockdown ending soon we’d expect April’s figures to paint an even bleaker picture for some retailers and travel companies, while the supermarket spending may tail off slightly as the panic of stockpiling now appears to have died down. Judging by the wait times on deliveries online orders are continuing to boom, with retailers and DIY stores being inundated with customers.”
