Overall consumer spending fell another 2% in April, according to Visa’s UK Consumer Spending Index. High street shops took the biggest hit, with a year-on-year fall of 5.4% – the largest decline the index has seen in six years.
A similar fall in consumer spending was also seen in March, but retailers had hoped that high street shopping would bounce back after the “Beast from the East” cold snap.
Visa’s data shows that consumer spending has now declined for 11 of the last 12 months, and we’re currently on track for the worst annual performance since 2012. The figures correlate with official Office of National Statistics data, which has shown a downwards trend for the first quarter of 2018.
The data is somewhat confounding, though. Inflation has started to fall and wages are growing faster than expected, which would usually bolster consumer spending. “It is clear that consumers remain in belt-tightening mode,” said Mark Antipof, chief commercial officer at Visa.
Last week, as it kept the base rate at 0.5%, the Bank of England said the decreased inflation and higher salaries should support increased household spending – or consumers might decide to bolster their savings instead, if they’re not feeling confident in the economy or their own financial situation.
The British high street is clearly having some issues right now. Toys R Us and Maplin have both collapsed this year, and New Look, House of Fraser, and Carpetright are using company voluntary arrangements (CVA) – a type of insolvency – to close unprofitable stores. Poundworld is trying to close a third of its 355 shops. The number of empty stores in town centres is now up to 9.2%, up from 8.9% in January, according to data from BRC-Springboard.
Meanwhile, according to Visa’s spending data, e-commerce fell just 0.1% in April. As we reported last week, there has also been strong spending growth in leisure activities, such as travel and eating out. Over the past few years, there has been a clear trend towards more leisure and online spend – while ambling around the high street and buying stuff is on the decline.
The Sunday Times Rich List, published this weekend, told a similar story. Carol Kane, who cofounded online retailer Boohoo, is now worth £120 million. Michele Harriman-Smith and George Smith, owners of online clothing retailer Children Salon, are worth £143 million. Sir Philip and Lady Green, owners of Topshop and Miss Selfridge, saw their wealth decline by hundreds of millions of pounds. Lord Sainsbury’s fortune fell by £10 million. The Weston family, which owns Selfridges and Primark, saw its net worth slashed by £450 million.
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