From John Lewis’s advert about a friendly monster to Waitrose telling the heart-warming story of snowed-in pub-goers, Christmas ads are already doing the rounds on the telly. However, it seems as if Britain’s shoppers are yet to get into the holiday spirit. In fact, according to new research from Visa, the financial-services provider, consumer spending in the UK dropped by 2% in October compared to the same month last year.
And this wasn’t the first bleak month for retailers: not only did consumer spending fall faster than at any time over the last four years but October also marked the sixth month in a row where shoppers cut back on their expenses. Clothing retailers were the worst hit as they suffered a 9% year-on-year drop, making it the fastest decline since Visa began its index in 2009. Additionally, the food and drink and the transport and communication sectors respectively saw a 2% and a 6.9% drop compared to last year.
Looking at potential causes for the decline in consumer spending, Visa identified shoppers migrating online as one potential culprit. While the poor performance of high-street retailers resulted in a 5% year-on-year drop in October, e-commerce retailers grew by 2.2% – although this was the slowest growth over the past six months. Additionally, the fall in real wages in recent months combined with the market uncertainty caused by Brexit could also be gnawing on consumers’ confidence. Visa also pointed out that the Bank of England’s decision to raise interest rates to 0.5% could also hurt household spending in the coming months.
Commenting on the research, Mark Antipof, chief officer of commercial at Visa, said: “Retailers will now be pinning their hopes on strong performance around Black Friday and Cyber Monday. November’s data will therefore provide the first real clue on how Christmas is shaping up.”
Being big fans of both Christmas gifts and British retail, we really hope that next month will see consumers regaining their confidence.