Barclays report: UK Consumer Spending Rebounds in November on Early Christmas Shopping and Black Friday Sales

Barclays report: UK Consumer Spending Rebounds in November on Early Christmas Shopping and Black Friday Sales

(IN BRIEF) Consumer spending in the UK saw a rebound in November, driven by early Christmas shopping and extended Black Friday sales, according to a Barclays report. Consumer card spending grew 2.9% year-on-year, although it was still lower than the latest CPIH inflation rate of 4.7%. Shoppers were encouraged to update their winter wardrobes due to the arrival of cold and wet weather, boosting clothing retailers. However, spending on essential items grew less than in October, partly due to falling fuel prices. Britons expect to spend an average of £105.43 more on Christmas this year, with rising costs and “shrinkflation” contributing to the increase.

(PRESS RELEASE) LONDON, 6-Dec-2023 — /EuropaWire/ — Consumer card spending grew 2.9 per cent year-on-year in November – less than the latest CPIH* inflation rate of 4.7 per cent but higher than October’s 2.6 per cent growth – as Brits’ confidence in their ability to spend on non-essential items (56 per cent) reached its highest level since April. The high street received a welcome boost from month-long Black Friday sales, as well as the late arrival of cold and wet weather, which encouraged shoppers to update their winter wardrobes.

Spending on essential items saw a smaller increase (3.3 per cent) than in October (3.9 per cent), as falling petrol and diesel prices impacted fuel spend (-10.9 per cent). Growth at supermarkets was also lower month-on-month (5.0 per cent vs 5.2 per cent) following the easing of food price inflation and the majority of shoppers (67 per cent) seeking ways to reduce their grocery food bills.

Of these cost-conscious Brits, half (50 per cent) are using vouchers or loyalty points to get money off their shopping, and 49 per cent are choosing budget or own-brand goods over branded items.

Encouragingly, while the proportions of Brits concerned about inflation and food prices remain high (each at 86 per cent), both fell to their lowest levels since December 2021. Similar improvements were also recorded on attitudes towards fuel prices, household bills and interest rates.

‘Shrinkflation’ impacts festive fare

Shoppers expect to fork out an average of £105.43 more on Christmas this year than in 2022. Festive food and drink is expected to be the largest contributor to this increase, rising by an average of £25.87, followed by gifts (+£18.62) and activities (+£11.86).

The extra expenditure is likely due to rising costs and ‘shrinkflation’, with three in five (60 per cent) noticing that some festive items are getting smaller despite costing the same. One in three (36 per cent) has spotted shrinkflation on boxes of chocolates, followed by tins of biscuits (28 per cent), cheese (15 per cent), mince pies (14 per cent) and Christmas cake (13 per cent).

Black Friday boost for retailers

Spending on non-essential items grew 2.7 per cent in November – higher than in October (2.0 per cent) – as the retail sector received a boost from the early start to Black Friday sales and late arrival of seasonally cold weather. Clothing retailers (2.8 per cent) and department stores (5.0 per cent) saw notable increases compared to October (-3.0 per cent and 0.4 per cent respectively), as Brits made the most of promotional sales and updated their winter wardrobes.

The extended sales period impacted activity on Black Friday itself, with Barclays data** showing that transaction volumes were down slightly (-0.6 per cent) compared to the same day in 2022. However, despite its reputation, Black Friday wasn’t the busiest shopping day in November. Transactions on Sunday 26th November (dubbed “Super Sunday”) outpaced Black Friday by 13.5 per cent, demonstrating it is no longer a single-day event.

This comes as six in 10 (59 per cent) say they are actively seeking out deals and discounts more often, due to rising costs. Of this group, over half (56 per cent) are making use of loyalty programmes, while 40 per cent regularly search online for discount codes before making a purchase. More than one in six (16 per cent) even admit to guessing codes such as ‘HELLO10’, in the hope of bagging an unexpected bargain at the check-out.

Seasonal socialising

Restaurants fell further into decline in November (-11.9 per cent compared to -10.3 per cent in October), as over a third (36 per cent) reported that the cold weather and dark evenings have had an impact on their spending patterns. Nearly half (46 per cent) of these Brits are eating out less frequently in favour of cooking meals, while 29 per cent are socialising with friends and family at home instead of going out.

This perhaps explains why “insperiences” (at-home experiences) fared well in November, with spending on takeaways and fast food (6.1 per cent), as well as digital content and subscriptions (5.8 per cent) seeing greater uplifts than in October (5.6 per cent and 4.9 per cent respectively).

‘Revenge spending’ helps travel sector maintain double-digit growth

The travel sector again performed strongly in November, having recorded double-digit growth for 11 of the last 12 months, with sizeable uplifts at both travel agents (9.2 per cent) and airlines (14.0 per cent). This long run of growth has its roots in the pandemic, with a fifth (19 per cent) of consumers planning more holidays in 2024, citing that they’re still catching up on trips missed during lockdowns – a trend otherwise known as ‘revenge spending’.

Esme Harwood, Director at Barclays, said: “Shoppers got into the festive spirit early this year, flocking to the high street to take advantage of month-long Black Friday sales, and unlocking long-awaited retail growth. Consumers were also keen to socialise, but prioritised more economical – and warmer – ways to catch-up with friends and family, choosing cosy nights in with takeaways or enjoying drinks at the pub instead of dining out at restaurants.

“November also marked a turning point for consumer sentiment – confidence in personal finances improved, with Brits starting to feel less concerned about some of 2023’s defining issues, such as inflation, interest rates, and food prices – so there are reasons to be cautiously optimistic as we look ahead to Christmas and the New Year.”

Jack Meaning, Chief UK Economist at Barclays, said: “This data suggests consumers are continuing to spend more but get less for their money, as spending growth remains below inflation. However, the gap is narrowing as the rate of price increases slows, and we expect it to narrow further in the coming months.

“It’s reassuring to see that some of the previous weakness in spending was due to unseasonal weather, as shoppers go out and finally buy that new winter coat and get in the Christmas spirit. But the key question for the UK is what happens after the holiday period – it will take more than a festive bounce to keep consumers spending in 2024.”

Overall growth figures

Notes to editors

*CPIH: Consumer Prices Index including owner occupiers’ housing costs

**Black Friday and “Super Sunday” transaction data is taken from Barclays’ acquiring business – i.e. payments made to businesses who use Barclays card machines / online gateways to accept payments.

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

Across its issuing and acquiring businesses, Barclays sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. This press release is based on consumer card spending data from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions. It relates to the period 22nd October 2022 – 18th November 2022. It is compared with the period 21st October 2023 – 17th November 2023.

The consumer confidence survey in this press release was carried out between 17th and 21st   November 2023 by Opinium Research on behalf of Barclays. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.

About Barclays

Barclays is a British universal bank. We are diversified by business, by different types of customer and client, and geography. Our businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by our service company which provides technology, operations and functional services across the Group. For further information about Barclays, please visit our website home.barclays.

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. For further information, please email contact-MCI@barclays.com.

Media Contacts:

Oliver Palca
oliver.palca@barclaycard.co.uk

Dee Fallon
deirdre.fallon@barclays.com

SOURCE: Barclays