The rise and fall of consumer confidence

The rise and fall of consumer confidence

Whether you’re splashing out or tightening the purse strings, we’re willing to bet you hadn’t thought your mood could affect the health of the economy – yet that’s exactly what we mean when we talk about ‘consumer confidence’. Okay, maybe not just your mood, but the collective mood of the nation. Our feelings about current and future financial conditions are actually a very important factor in exploring the overall state of the economy.

Since 2012, Barclaycard has been tracking the spending habits of our UK consumers. Whether it’s the summer splurge or festive frivolity, you might be surprised by some of the factors which affect how and when we spend.

Summer shopping sprees

We all feel a little happier when the sun is shining and it won’t surprise you to know that the weather has been found to have an influence on consumer behaviour.[1] Not only can the forecast affect our emotional state, but it can also drive our buying decisions and even dictate how much we are willing to spend; and we’re not just talking last-minute umbrella purchases or a mad dash to the ice cream van.

It seems that when the skies are blue, consumers tend to loosen the purse strings. It doesn’t take too many balmy and sleepless nights before we realise we own more boots and scarves than bikinis and sunhats. In summer 2017 alone, clothing spend in-store and online shot up by 5.7%. But in June 2016, the nation experienced heavy rain and thunderstorms – deterring shoppers with in-store clothing spend down 3.6%[2].

When it comes to sundown, we’ve previously reported on the surge in the ‘vampire economy’, a term used to describe the flux of people shopping at all hours of the night. In the hunt for online bedtime bargains, Brits spent £154 billion using credit and debit cards in 2016[3].  

Winter is coming

When the clocks go back and the nights draw in, online spending nearly doubles, with a third of Brits making late-night purchases. Takeaways account for some of that growth, with 22% of people seeking warming comfort food, driven by the popularity of on-demand delivery services such as Deliveroo and Hungry House.

We’ve established that colder weather tends to keep shoppers off the high street; department store sales dipped by 3.2% in early 2017, but a drop in temperature certainly doesn’t mean a drop in spending overall.

Savvy savings

Whether we subscribe to it or not, retail therapy is very much a part of British culture. Our penchant for cut-price goods could explain how the American import Black Friday has become one of the nation’s most anticipated shopping events of the year.

When it first hit our high streets in 2014, we saw frenzied media coverage of battling bargain hunters queuing in the early hours to get their hands on discounted vacuum cleaners or large screen TVs.

‘Lack Friday?’

Retailers geared up with more staff and extra security measures for Black Friday that year – Tesco even opened some stores at 5am – yet were then left surprised as shoppers chose to avoid the bustle in favour of bargain hunting from the comfort of their own homes. Put simply, shoppers skipped the queues and went online, boosting internet sales by a whopping 15%.

Positivity in politics

From hung parliaments to Brexit negotiations, we’re living in a time of political uncertainty. That ambiguity impacts people’s views around how cautious they should be with their money.

Heading into the summer of 2015, 45% of consumers expressed a ‘rosy’ outlook. Yet despite the nation’s confident mindset, 56% of consumers confessed to worrying how the election result would affect their personal and household spending.

There was no clear winner in the general election, but Theresa May did manage to form a Government. This had a positive impact with more than half of people feeling buoyed in their confidence in the UK’s economy. Falling prices and more stability meant that we felt happier to spend on ourselves. After a distinct feeling of being “cautious for a long time”, consumers let their hair down again; spending on entertainment shot up by 11.9%.

Keeping that stiff upper lip

Consumer confidence can fall just as easily as it rises and the latest Barclaycard consumer spending data shows that 42% of people think that the economy will deteriorate to some extent during 2018. Higher inflation and sluggish wage growth are expected to put pressure on disposable incomes[4].

While we can’t predict the resilience of the economy, we know that Brits have shown that they are more than capable of altering their spending habits when required. Keep checking back for our spend reports to stay up to date on the latest trends.


[2] Barclaycard Q2 Consumer Spend Report 2016, p. 3

[3] Barclaycard Q2 Consumer Spend Report 2016, p. 2