Recent footfall reports showed low interest in shopping during February and now actual consumer spending and retail sales figures are coming out, backing up those reports.
On Tuesday the regular monthly Barclays consumer spending report and the British Retail Consortium-KPMG Retail sales monitor showed that February was the dullest month of the year not just because of the cloudy skies.
Looking first at the Barclays report, which covers a wide range of consumer spending offline and online, it said that spend grew only 1% year on year.
That was lower than the 1.9% growth seen in January and well below the latest CPIH inflation rate of 3.9%.
Admittedly, discretionary spending remained in growth at +2.1%, but it still lagged that inflation figure.
Barclays said that “with warnings of increases in energy prices coming in the weeks ahead, consumers took the opportunity to get their financial priorities in order. As a result, essential spending declined in February”. But in something of a contradiction, it also said that “consumer confidence rose to record highs”.
Confidence in household finances reached the highest level Barclays has seen since it started tracking this measure in 2015, at 75% (up from 70% in January), “bolstered by consumers’ careful money management, even in the face of rising costs”.
Looking more specifically at retail, Barclays said the sector saw marginal growth of 0.6%, but was propped up by a surge in electronics sales, which enjoyed its greatest increase since 2021, up 6.7%.
Clothing transaction numbers rose 2.2% but actual clothing spend was up only 0.4%, suggesting consumers are still very price-conscious.
And regarding specific types of retailers, department stores reflected that trend with transaction numbers up 2.8%, but actual spend only rising 0.6%. And discounters dropped almost 2% on both fronts.
Yet beauty continued to defy the sluggish spending trend with pharmacy, heath & beauty transaction numbers up just 0.2% but spend up 8.9%.
The BRC-KPMG report meanwhile talked of “grey days for fashion sales”. UK Total retail sales increased by 1.1% year on year in February, the same percentage by which they’d grown a year ago and still below inflation.
The Monitor’s assessment of non-food sales were that they were flat year on year in February, admittedly better than a decline of 2.7% in February 2024, but still far from making up the ground that was lost a year ago.
In-store non-food sales actually decreased by 1% this time, but at least online non-food sales rose 1.9%. However, once again, this didn’t make up for the fall of a year ago when such e-sales had dropped 4.1%.
Helen Dickinson, BRC CEO, said: “Retail sales saw more modest growth in February. While sales growth across non-food categories was generally muted, it was propped up by online purchases, particularly in computing and electronics. Jewellery, watches and fragrance sold well thanks to Valentine’s Day, reversing declines seen last year.
“Fashion performed poorly due to the gloomy weather throughout the month, but retailers are hopeful the early March sunshine kickstarts spending on spring and summer wardrobes.”
And Linda Ellett, UK head of consumer, retail & leisure at KPMG, added: “Consumers remain cautious with their spending and many are continuing to prioritise saving, travel and experiences. But occasions and offers are still tempting shoppers into some impulsive spending. Valentine’s, for example, brought a jewellery sales boost to the high street, in what was otherwise a flat month for in-store buying.
“Online shopping and the growth of social commerce has contributed to a lowering of demand for some physical retail stores and boardrooms will continue to keep a close eye on monthly footfall and sales data as 2025 progresses.”
