Consumers took to autumn in buoyant fashion, spending more on everything from clothing to cinema trips and airline tickets to a round in the pub last month, as a double-whammy of increasing wages and falling prices combined to lift households’ fortunes.
Hospitality and leisure:
The data for hospitality and leisure shows that:
- Customers treated themselves to drinks and meals out, with spend in Pubs and Restaurants increasing considerably against last year:
- Pubs bore witness to the highest growth seen so far in 2015, up 15.6%. This was also the largest figure seen since March of last year
- Restaurants kept up the impressive double-digit growth seen throughout the year, up 14.4%
- Continuing the trend seen throughout 2015 so far, Online spend performed very well in October. The majority of categories saw increases in spend year on year:
- Online Restaurant spend maintained momentum, up 43.0%.
- As with overall Travel Agents spend, impressive online Hotel spend growth of 21.8% showed that consumers were not averse to spending on holidays in October
- Releases of The Martian and The Walk help drive Cinema / Theatre spend up by 26.7%.
Retail spending
Retail spending recovered from a late-summer lull to grow 4.1 per cent year-on-year in October, according to the latest data from Barclaycard. But the headline number masked a clear distinction between spending on essential and non-essential items.
Essential spending fell by 3.1 per cent, its worst performance since March 2014, with in-store supermarket spending falling by 1.4 per cent, whereas online spend grew by 8 per cent – the lowest level this year and down a third on the 12.2 per cent average for 2015.
Falling prices
Households continue to benefit from a double-whammy of falling prices and rising wages. September’s inflation rate was pulled down by lower food prices, which dropped 2.5 per cent in the prior twelve months as supermarket price wars affected the grocery industry, according to the Office for National Statistics. This, combined with falling petrol prices – diesel is at its lowest level since December 2009 – has acted as a ‘de facto tax cut’ for households.
Consumers have used this windfall on discretionary items such as furniture, travel and clothing. ‘Non-essential’ spending increased by a tenth to 6.6 per cent in the month – from 5.8 per cent in September, and is higher than at any point in 2014.
Non-essential transactions
Growth in the number of ‘non-essential’ retail transactions, which act as a solid indicator of how much people are buying, hit 11.9 per cent year-on-year in October – the joint-highest level so far this year. These transactions are up 10.7 per cent so far this year, eclipsing the 8.3 per cent they grew by in 2014.
Barclaycard consumer research found that nearly a third (30 per cent) of consumers say they are better off now than they were expecting to be a year ago and that around three in five (58 per cent; up from 56 per cent in Q2) are confident in their ability to spend more on discretionary items.
It also found that, despite the improving economy, consumers have retained their value-conscious streak and are still seeking out the best prices before they commit to spending money.
Chris Wood, Chief Operating Officer at Barclaycard said:
“Retail spending performed strongly in October as further growth in employment and wages was met by falling food and petrol prices. With consumer confidence also at high levels, shoppers feel better off and more able to spend more on discretionary purchases.
“In what seems to be a legacy from the economic downturn, however, consumers are still very focused on getting value for money. As people start to think about their Christmas shopping, this should serve as a warning to retailers. Our data tells us very clearly that the successful retailers this Christmas will be those who sell the right products at the best price.”
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