Retail spending data and consumer purchase attitudes
UK retail spending was down 3% year-on-year from January to March, as we move deeper into the prolonged rise in the cost-of-living, according to a new report from advertising platform, Cardlytics.
The State of Spend report, based on the spending habits of over 20 million UK bank cards, and polling of 2,000 UK consumers shows that year-on-year retail spend declined 3% from January to March 2023. This is in the face of weakening consumer purchasing power as inflation remains high which has meant that around half (49%) of consumers have admitted they have cut back on big ticket purchases, compared to this time last year.
95% of UK adults saw an increase in their regular spending in the last year with the average UK adult predicting they’ll spend an extra £3,000 per year in their regular outgoings, as the cost-of-living crisis shows no signs of abating.
Despite this, January saw a spike in spending, with buyers seeking to cash in on the best deals during the traditional January sales. Retail spending in January was up 27% compared to 2022 – but this was quickly followed by slumps in spending during February and March (down 11% and 24% year-on-year, respectively).
Clothing retailers see spending decline across the board
Spending in luxury and designer stores fell 14% year-on-year in Q1 alongside a 4% drop of £314 in average transaction values, indicating all round reductions in spend.
Fast fashion retailers also saw sales fall year-on-year in the first quarter – with spending levels down 6%. This is despite average transaction values increasing by 2% at £29 per transaction, likely caused by cost increases associated with inflation.
Lucy Whittemore, SVP, UK Advertising, Cardlytics: “It’s been another tough period for retailers, with the continued high cost-of-living significantly impacting consumer confidence. Stores across the board have seen transaction values on the wane and consumers trading down, and this is only set to continue throughout the year.”
Second hand marketplaces see continued growth
With the cost-of-living crisis showing no sign of abating – as well as a continued focus on sustainability from consumers – buyers have been turning to second hand items during the first quarter of this year to both help their wallets and the planet.
While traditional retailers tackle broader reductions in spending, second hand marketplaces like eBay and Depop saw a rise in sales year-on-year (2%), maintaining the significant levels of spending on pre-loved items since their soaring popularity throughout the pandemic.
January to March 2020 saw a massive 562% year-on-year growth in total spend on marketplaces, lighting the blue touch paper on the astronomic growth of second-hand shopping.
We saw another significant increase in 2021 – a 248% growth in total spend during the same time period. Despite growth slowing in 2023, this movement is set to continue with over a third (37%) of adults saying they have bought more from marketplaces as we move deeper into the cost-of-living crisis.
“We’ve seen three years of record-breaking spending levels within second hand marketplaces, which provide the platform for conscious consumers to not only avoid buying new, but also to pick up bargains in the process. Indeed, our research found two in five (39%) buyers now try to shop second hand more often now to help the environment.
“For traditional retailers to continue to drive sales against this tough economic backdrop, they should consider additional ways to incorporate sustainability into their product lines, while also offering rewards, promotions and cashback for shoppers – helping consumers reduce their carbon footprints and cut their spending, while retailers benefit from strengthening relationships with their customers,” Whittemore added.