Consumers cut clothing spend in February, but jewellery, beauty get Valentine's boost
UK consumer and retail spending last month was OK, but not brilliant as Valentine's Day provided a boost for jewellery and beauty, but non-essentials largely remained off the priority list.
Looking specifically at retail spend, the British Retail Consortium (BRC) and KPMG said spending in store chains rose 5.2% year on year, which was below the 6.7% rise in February 2022, although that’s perhaps unsurprising given that comparisons last year against 2021 had been much easier.
Sales did manage to rise more than the 4.2% seen in January. But like-for-like retail sales increased only 4.9% in February.
The sting in the tail is that those figures aren’t adjusted for inflation and given that both the headline figure and shop price inflation remain high, the overall picture looks less pretty. The value of sales may have risen due to price rises, but volumes were down.
The report also said that non-food sales increased 3.2% in total and 2.7% like-for-like in the three-months to February. Given that this three-month period included, what should be a busy month (that is, December), as well as the key clearance sale month (January), that's far from a great outcome for the non-food sector and is clear evidence of consumers, focusing on essentials on an ongoing basis.
There was also evidence of the continuing recovery of physical stores compare to online. Over the three months to February, in-store non-food sales increased 8.1% in total and 7.3% like-for-like. That may be below the 12-month average growth of 10.8%, but it was much better than the 3.1% decline of online non-food sales in February. The penetration rate – that is, the proportion of non-food items bought online – fell to 38.5% last month from 40.3% a year earlier.
The BRC said that health & beauty and jewellery & watches sales continued to rise in February (both categories perhaps receiving a Valentine’s boost with perfume and jewellery being seasonal favourites), while footwear was also up. But clothing fell. It didn’t give specific figures for the rises and falls.
Meanwhile, separate data from Barclays showed overall consumer spending on payment cards (rather than retail sales specifically) rose by 5.9% year on year in February, again boosted by Valentine’s Day.
But there was a similar weak underlying picture as consumers focused on essentials. That led to people buying cheaper versions of their favourite products, shopping at discount stores and delaying Easter-linked spending. In fact, 30% of shoppers are planning to cut back on Easter spend overall.
As essentials prices remained high and heating was turned up, some 58% of people cut down on discretionary purchases, with Barclays saying spending on non-essential items saw a markedly smaller year-on-year uplift (5.5%) than in January (10.4%).
The clothing category has fared reasonably well in recent months but the report said card spend on clothing was down 1.2%, although this could also have been affected by the fact that this time last year it received an artificial boost by the end of pandemic restrictions.
However, even that crumb of comfort can’t disguise the fact that the data shows 65% of the shoppers who are cutting back on discretionary purchases are reining in spending on new clothing and accessories.
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