2020: The year consumer spending changed
Less on holidays and days out… More on essentials and staying in… From investing in our homes to supporting local businesses, here we reflect on last year’s biggest consumer spend trends
As we welcome in the new year, we look back on 2020 - a year where we saw some fundamental changes in our attitudes to spending and the relationship we have with money. This brought a host of new consumer trends, some of which may be here to stay.
There’s no doubt that the landscape was turbulent at times last year, with areas like travel, hospitality and high street retailers in particular facing some serious challenges. And yet, in many cases it seems we were simply spending differently. Spend data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, reveals that consumer spending dropped 7.1 per cent overall in 2020 as restrictions and changes in consumer habits had an impact, yet some areas actually saw growth due to these shifting trends.
Here we explore some of the biggest consumer trends from 2020.
We spent more on essentials
Let’s start with the basics. Fuelled by astonishing growth in e-commerce, data from Barclaycard reveals that spending on essential items rose by 4.1 per cent year-on-year in 2020. This was largely driven by supermarket shopping, which saw an overall growth of 15.7 per cent, as people stayed at home and spent 70.3 per cent more on online grocery shopping as the demand for delivery services increased.
We spent more carefully…
At least in certain areas. Spending on non-essential items contracted 11.3 per cent throughout the year, as UK government restrictions had a significant impact on high street retailers and the hospitality sector. This was especially apparent for department stores, which fell by 17.2 per cent, and clothing, which contracted by 15.6 per cent year-on-year. However, there were some bright spots for non-essential retail. Spending at general retailers and catalogues grew by 40.7 per cent and overall, online general retailers saw growth of 52.5 per cent, while physical discount stores saw a 25.4 per cent uplift as more shoppers sought value for money in the purchases they made.
We spent at home
While the UK government’s ‘Eat Out to Help Out’ initiative last summer provided a boost to restaurants after the first national lockdown, restrictive measures throughout the year saw overall spending fall 47.0 per cent. Bars and pubs were inevitably also impacted by social distancing restrictions, seeing an overall drop of 36.7 per cent. Many consumers opted to enjoy food and drink at home instead, causing businesses in the hospitality sector as well as many others to pivot their offerings, upgrading their digital platforms and doing whatever was required to keep serving customers at home.
The rise of the 'insperience economy' saw digital services and subscriptions boom as Brits spent more time at home. Boxsets and games consoles increased in popularity with spending on digital subscriptions and electronics seeing growth of 31.5 per cent and 10.8 per cent respectively. Meanwhile, spending on ordering takeaways online surged 49.1 per cent and those offering services such as meal subscriptions grew by 62.4 per cent, as fresh, hassle-free dinner options became a mainstay in many households.
We spent more consciously
A key positive outcome of 2020 was that support for independent businesses flourished, as many of us chose to shop locally. Specialist food and drink stores – which includes off licences, butchers and bakeries – saw an overall uplift of 28.6 per cent year-on-year. This is supported by Barclaycard’s consumer confidence research, which revealed that over half (57 per cent) of Brits said they wanted to increase their support of nearby businesses as a result of lockdown restrictions
We improved our homes
Many also took the opportunity to spruce up their indoor and outdoor living spaces. After non-essential shops opened in June, spending at home improvement and DIY stores surged, driving an overall growth of 9.8 per cent year-on-year. Furniture stores also enjoyed an overall uplift of 5.3 per cent, as shoppers invested in big-ticket purchases and cleared shelves of fence paint and Christmas lights.
We treasured our treats and escapes
August and September saw more holidaymakers embark on staycations over trips abroad, with UK hotels, resorts and accommodation seeing their smallest declines since the first national lockdown, at 19.1 per cent and 18.1 per cent respectively – a noticeable improvement on May (-89.8 per cent). However, overall travel – including airlines and travel agents – declined by 61.1 per cent in August and 63.1 per cent in September, showing the impact of international travel restrictions and quarantine guidelines on the sector.
Sports and outdoor retailers enjoyed significant growth in 2020, rising 7.2 per cent overall, with the closure of gyms encouraging many to purchase workout equipment and seek new ways to exercise inside and outdoors. Support for florists has also bloomed with purchases up 22.7 per cent as we treated ourselves and showed friends and family from afar they were missed. Many also took up new hobbies and crafts (9.8 per cent rise) and added new companions to their households, with vets and pets seeing a 10.7 per cent uplift in 2020.
From digital growth to more conscious shopping, there were some more positive attributes about last year. Overall, 2020 accelerated many trends – online shopping has seen huge growth, working from home has meant many are shopping more locally and also enjoying experiences within the home. We have seen many businesses become more agile and adapt, as have consumers. It will be interesting to see which of these trends and changes are here to stay for 2021.