Consumer spending declined 2.3% year-on-year in December – the largest decline since June 2020.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 4.5% year-on-year as Brits stocked up for the festivities.
Furniture stores saw sales rise 11.6%, while department stores experienced a decline of 15.2%.
As the year of 2020, there was a boom in home improvements as spending in this category saw an overall growth of 9.8% year-on-year. Furniture stores also enjoyed an overall uplift of 5.3%, as shoppers invested in big-ticket purchases.
Back to December, spending on non-essential items dropped 4.9% – the largest decline since June 2020 (-22.3%) as the growing spread of coronavirus led to more Brits staying at home and unable to visit physical retail stores.
While in-store retail spending fell 8.3%, the significant shift to online shopping continued, with online retail rising by 52.2% and accounting for almost half (46.8%) of all retail spending in December.
The continued restrictions across the UK mean that Brits’ confidence in the UK economy remains low at 22% – almost 20% lower than at the same time last year.
However, consumer confidence in household finances has held up at 68%, with almost a quarter (24%) of the nation 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.
Raheel Ahmed, Head of Consumer Products, 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, with restaurants, pubs and bars hardest hit during a low-key festive season in the majority of the UK. 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. From dog walking services to subscriptions of weekly meal kits, small businesses are exploring new ways to reach their customer base.
“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.”