Consumer spending drops 26.7 per cent year-on-year in May

  • Spending on essential items rose as warm weather and the VE Day bank holiday drove supermarket growth, with specialist food and drink outlets seeing the biggest increase since restrictions began
  • While non-essential spending fell 36.9 per cent year-on-year, the decline was less severe than last month
  • Brits continue to be optimistic about their household finances, but confidence in the UK economy remains low
  • The Barclaycard report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending

Consumer spending contracted 26.7 per cent year-on-year in May, but positive signs are seen as more sectors adapt to social distancing restrictions to keep their doors open.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew slightly by 0.9 per cent. This was bolstered by a 24.5 per cent rise in supermarket spend – which increased to 27.0 per cent in the week preceding the VE Day weekend as Brits made the most of the sunny bank holiday. The upsurge in supermarket expenditure helped to offset a 49.7 per cent fall in fuel.

Spending on non-essentials decreased by 36.9 per cent year-on-year, with department stores and clothing declining 44.5 per cent and 42.4 per cent respectively. However, this drop was less steep than last month’s, which saw non-essential spend contract by 47.7 per cent, reflecting a slightly more positive outlook for UK retailers ahead of some stores opening on 15 June.

While eating and drinking saw an overall decline of 70.3 per cent year-on-year, there were signs of a recovery as May saw a smaller fall in spending than in April (-79.1 per cent). This coincides with more restaurants, pubs and cafes being able to offer delivery and takeaway services. More than one in ten (14 per cent) Brits are now buying food and drinks from a pub, and 10 per cent are purchasing takeaway coffee.

In an ongoing trend, consumers have remained loyal to local specialist food and drink outlets, such as greengrocers and independent convenience stores, with the category seeing a growth of 42.5 per cent – the highest increase since restrictions were introduced.

While Home Improvement & DIY, a category which includes garden centres, saw a small annual dip of 3.2 per cent, this represented a significant uptick from April which saw a sharp 42.7 drop year-on-year. Encouragingly for these retailers, 27 per cent of Brits are now planning a trip to the garden centre or DIY store, signalling a likely continued upwards trend in spend for this category in the weeks ahead.

Online purchases at specialist retailers – including sports and outdoor outlets – and general retailers was another bright spot this month, rising 96.3 per cent and 85.8 per cent respectively as people bought items to help them exercise and keep fit while gyms remained closed.

While consumer spending is increasing month-on-month across some retail categories, overall confidence in the UK economy remains low – indicating that the road to recovery may be a long one. Just 20 per cent of UK adults feel positive, though those aged 18-34 are noticeably more upbeat than those aged over 35.

More than two thirds of Brits (67 per cent) remain confident in their households, with 37 per cent of those citing having enough savings to support them as a key reason for this positivity.

Esme Harwood, Director at Barclaycard, said: “While the restrictions continue to have a significant impact there are glimmers of hope. We are seeing certain sectors start to increase sales as the climate eases and they adapt. It may take some time to recover from the economic impact of coronavirus but household confidence remains high and there is a strong desire among consumers to support businesses”

“Other encouraging signs are also emerging. After weeks of isolating Brits are understandably keen to enjoy the great outdoors. There’s a positive shift for the cafes, pubs and restaurants beginning to open up again, as well as the retailers who stock essentials for barbecues and other sociallydistanced gatherings.”

  Pure Spend Growth Pure Transaction Growth
OVERALL -26.7% -30.6%
Retail 6.2% -11.5%
Clothing -42.4% -45.9%
Grocery 26.3% -11.8%
Supermarkets 24.5% -13.9%
Food & Drink Specialist 42.5% 2.5%
Household -4.2% -2.4%
Home Improvements & DIY -3.2% -3.3%
Electronics 10.6% 6.8%
Furniture Stores -28.2% -26.2%
General Retailers 27.2% 10.4%
General Retailers & Catalogues 62.3% 45.1%
Department Stores -44.5% -56.3%
Discount Stores 32.9% -10.6%
Specialist Retailers -24.6% -29.8%
Pharmacy, Health & Beauty -42.1% -43.1%
Sports & Outdoor -13.9% -37.3%
Other Specialist Retailers -15.4% -14.4%
Hospitality & Leisure -82.0% -81.6%
Eating & Drinking -70.3% -78.4%
Restaurants -90.2% -89.5%
Bars, Pubs & Clubs -95.4% -97.1%
Takeaways and Fast Food -27.3% -60.6%
Other Food & Drink -79.4% -82.2%
Entertainment -85.5% -88.6%
Hotels, Resorts & Accomodation -89.8% -94.2%
Travel -87.2% -86.0%
Travel Agents -86.6% -85.4%
Airlines -89.4% -90.8%
Other Travel -86.5% -85.8%
Other -39.3% -12.6%
Digital Content & Subscription 48.9% 52.6%
Fuel -49.7% -34.5%
Motoring -66.2% -68.9%
Other Services -33.2% -24.9%
Online -0.1% 27.6%
F2F -45.3% -49.3%

Notes to editors

In the coming months, the Consumer Spending release will be based on a slightly adjusted dataset, following the launch of UK Spend Trends 2.0. The new offering builds on Barclaycards’ strong history of publishing insights about UK consumer spending, and provides an in-depth view into consumer spending across more than 250 industries, customer age demographics as well as online and in-store purchases.

*Established in 2014, Barclaycard issues a monthly press release commenting on consumer spending trends.

Barclaycard sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. The monthly spending data in this press release is based on Barclaycard credit card and Barclays debit card transactions, and is analysed by the Barclays Market and Customer Insights team. It relates to the period 25th April 2020 to 22nd May 2020. It is compared with 27th April 2019 to 24th May 2019.

The consumer confidence survey in this press release was carried out between 22 May and 26 May 2020 by Longitude Research on behalf of Barclaycard. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.

For more information, please contact Polly Ewell at polly.ewell@barclaycard.co.uk or on +44 (0)7882 088 493 or Julia Madden at julia.madden@barclaycard.co.uk or on +44 (0) 7788 359 181.

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit. In the UK we process nearly £1 in every £3 spent using credit and debit cards, and in 2019 we processed over £272bn in transactions globally. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

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About Barclays Market and Customer Insights

Barclays Market and Customer Insights helps businesses keep up to date with spending trends, monitors their market position and enhances their understanding of customer behaviour, based on actual customer spending. Visit insights.uk.barclays/MCI or email contact-MCI@barclays.com.