Britons seek low prices, switch to discount stores says Barclaycard
The headlines from the latest Barclaycard consumer spending report may have been all about spending being up by only 1.3% year-on-year in August, but the key piece of information was found further down and that was the increase in spending in discount stores.
This particular retail segment bounded ahead in yet another sign of the weakness of the UK economy and how consumers always turn to retailers offering value when they're nervous about their futures.
Looking at the overall figure, that 1.3% increase wasn't particularly good given that inflation is currently running above that level. Barclaycard said “spending remained subdued across the board, with the exception of pubs and restaurants as Britons made the most of the long summer days.”
But discount stores rose as much as 8% “as shoppers looked to make their money go further, with over half worrying about the impact of rising prices.”
That would have been good news for retailers such as Poundland, which has dived deep into the fashion sector in recent periods and currently has ultra-low-price Pep&Co clothing areas in more than 300 of its UK shops. And it probably also meant that price-conscious retailers such as Primark benefited.
But overall, the fashion sector would have had a tough month with both those offering very low prices and stores further up the price scale likely to have found that fashion was the last thing on people’s minds. Fashion has regularly been one of the most successful departments for John Lewis, for instance. But it said on Tuesday that in the final week of the month, fashion sales were down 5.8%. And in the previous week, they'd fallen 4.4%.
While some companies, including John Lewis, have said that when the sun shines they’re still selling large numbers of summer-specific fashion products, in general it doesn't look to have been a good season.
So what were people buying instead during August? In some cases, the answer is emergency supplies. Barclaycard said that 17% of consumers have been stockpiling everyday items in case of future shortages – rising to a quarter of 18-34 year-olds.
And consumers don't appear to be ready to snap out of their cautious frame of mind any time soon. Barclaycard said that 36% of consumers plan to adapt their buying behaviour to the uncertain times in the months ahead and many say they will visit discount stores more often to balance the household budget. Meanwhile, 33% will be cutting back on treats (which could mean fashion) and the same number will be looking for more discounts online.
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