UK spending picks up in stores and even fashion is slightly higher

By

Sandra Halliday

Published
Jul 16, 2018

The changes in shopper behaviour that have characterised the last few years for the UK retail sector were very obvious in June. As one report showed that footfall to stores continued to drop, another regular monthly report showed that actual spending in physical locations rose. Not only that, the rise outstripped e-commerce spending for the second consecutive month.

So what's going on? The report in question is Visa’s UK Consumer Spending index, which is a pretty reliable barometer as Visa spending accounts for one-third of all UK spend. The company also works with IHS Markit to come up with an overall figure that includes cash and money spent on other company’s cards.

The result of all this was that Visa said consumer spending rose 0.7% year-on-year in June, slightly less than the 0.9% seen during May, but nonetheless marking the first back-to-back monthly increase in spend since early 2017.

Clothing and footwear managed a 0.3% increase. That wasn't as good as the 0.7% rise during May, but given that April had seen a 3.4% fall, it was undeniably good news. It was perhaps less good news for the miscellaneous goods and services category though. This category includes beauty products and sales here fell 0.4%, so much worse than 3.9% increase seen during May.

OVERALL SPENDING

Across all categories, both e-commerce and face-to-face spending was up, and while face-to-face’s 1.1% rise was lower than the 1.5% seen in the previous month, the two periods combined added up to the strongest performance since early 2016.

As mentioned, e-commerce spending was up as well, although at 0.4% it too was lower than the May figure of 0.8%. It all suggests a slightly more muted consumer spending environment during June, which is perhaps no surprise given the unprecedented heatwave in Britain and major sporting events such as the World Cup and Wimbledon.

Mark Antipof, Chief Commercial Officer at Visa, said the figures are encouraging and also called out the increase at physical stores: “It is noteworthy that face-to-face spending outpaced e-commerce spending for the second month in a row. We have to go back to mid-2012 to find a similar trend. There has been a lot of talk around the difficulties facing the UK’s retailers recently, however the June data shows that UK shoppers still value the face-to-face experiences available on their high streets.” 

But Annabel Fiddes, principal Economist at IHS Markit, said there's no guarantee that this is a sign of an ongoing upward trend of unusually sunny weather and the feelgood factor of the World Cup.

That view could be supported by the fact that destinations such as hotels, restaurants and bars saw the strongest spending increases and that food and drink retailers were also buoyant.