It’s coming home!
Consumer spending was up 5.1% in June 2018 as World Cup fever boosted retail spending
Barclaycard, who process nearly half of the UK’s card transactions, have released their consumer spending reporting for June 2018.
Here are some highlights:
- Consumer spending was up 5.1% year-on-year overall.
- Entertainment spending saw its largest growth since last summer.
- 42% of consumers say that they want to support the local high street more as a result of high profile store closures.
- Unsurprisingly on the day of England’s 2018 World Cup debut pub spending was up a massive 33% compared to the same day last year, something I am sure we will see in July too. There is a real sense of optimism as England progress through the World Cup stages.
The non-essential rise
Consumer spending continues to grow – maintaining the high level we have seen since May. Much of this is down to consumers favouring to spend money on experiences, especially as the weather has improved.
Overall non-essential spending was up 5.5%, which is the best performance since October 2016, and it is Entertainment which is particularly impressive; up 11.3% – the largest jump since July 2017. Within this area:
- Cinema spending increased by a whopping 20%.
- Restaurants were up 9.7%.
- Pub expenditure was up 9.9% – helped by the 33% match day increase mentioned above.
- Holiday’s are being booked – with travel agencies and airlines experiencing 14.1% and 15.2% growth respectively.
Spending on essentials was stable and provided a 3.2% increase. However, this number is being inflated by higher prices at petrol stations.
Supermarkets struggled to make many gains – with spending growing by just 0.8%, the lowest increase since March 2017. This makes sense given that people have been out for dinner and in the pub more during June. However, I am expecting an increase in this area during July as a result the World Cup.
Weather plays a significant part of our spending habits. Examples of this can be seen in previous months. During March growth stuttered due to adverse weather caused by the ‘beast from the east’, and last month saw unseasonably warm weather which helped increase growth.
June 2018 was no different, as the hot weather towards the end of the month helped boost sales in garden centres which grew by 10.5%. A third of Brits have also spent more than normal so far this summer, as they plan more activities to make the most of the sunshine.
You get a real sense of optimism when reading these numbers and 65% of consumers now feel confident about their household finances. This is the highest it has been for over 12 months.
However, we also continue to see headlines about high profile high street closures such as Marks and Spencer, Maplins, House of Fraser, Toys R’ Us, and Mothercare – and as a result 42% of the public expressed a willingness to support the high street more in the wake of these news stories. In my opinion it remains to be seen whether this sentiment translates to action. Certainly retailers shouldn’t rely on this and should take action to win and retain new business in these difficult times, especially as 4 in 10 people will hold off on large ticket items until the ‘economy settles’ down.
How did our customers fare?
|Year on Year Change|
|Auto Parts & Accessories||6.40%||24.50%||0.10%|
|Floor Covering Stores||-1.50%||9.50%||-2.70%|
Growth has improved in many of these areas. The aforementioned ‘garden centres’ have grown significantly including ‘in-store’, which is great to see. Furniture sales and DIY stores have also fared well in June 2018. Interestingly electronic stores decreased, however, I expect this to change next month when World Cup fever translates to big TV sales.
What next for businesses?
Take a look at reports like these (here is the Barclaycard report) and understand how your business compares to the averages. How are you responding the the changes in the weather and capitalising? Remember to review other data sources (including your own sales data) get the broadest possible view and to better understand your addressable market.
One thing is for sure – if Gareth Southgate’s England team win the World Cup, then the economy will get a significant boost, and when I report on July I’d expect to see some records being broken!
Come on England!!