UK fashion and beauty spend trailed inflation in December
We’re starting to get a clearer picture of just how UK spending played out last month with two reports on Tuesday showing that fashion and beauty spend was muted and even where sales rose, they didn't keep up with price inflation.
Barclays said that total consumer card spending (which doesn’t only include retail) grew 4.4% in December, which was better than November, but still well below the rate of inflation.
And figures for specific retail spending echoed that trend with the British Retail Consortium, saying non-food retail spend rose 3.2%.
Looking more closely at the Barclays figures, it's clear that 4.4% – although not bad – didn't go anywhere near to meeting the 9.3% rise in consumer price inflation.
And a lot of the spending was accounted for by the fact consumers were obviously prioritising necessities with spending on utilities, rising a massive 40.6% as a cold snap meant people turning up the heating.
That said, holiday bookings also rose, which should be good news for the fashion and beauty sectors further down the line as people invest in new clothes and beauty products for their trips away.
Overall last month, spending on non-essential items grew 4.1%, which was the biggest increase since July. But this included spending in pubs, bars, clubs, and restaurants. While clothing spend rose, it was up only 1.5%, better than the 3% decline in the previous month, but hardly enough to make it a stellar Christmas season for fashion retailers. The same can be said of department stores where spending rose 2.8%, compared to a 1.5% decline in November.
Sports and outdoor retailers saw their largest increase (3.5%) since March 2022 – a possible sign that Britons were purchasing gym wear and equipment in the winter sales for plans to kickstart a health and fitness regime in the New Year. But again, that figure didn’t match inflation.
Meanwhile, the BRC-KPMG Retail Sales Monitor showed total specific retail sales in December increasing 6.9% (and 6.5% like-for-like). That was better than the 2.1% rise in December 2021, but given that inflation was much lower back then, while last month it was heading close to double digits, the 'better' performance may not be quite as good as it first appears.
The Monitor didn't break out figures for individual category performance, but its did show which ones rose or fell the most on a total and like-for-like basis last month.
Footwear was the second highest riser of all product categories with health & beauty in third place (unsurprising given that beauty is a huge gift category). Clothing rose, but was only in seventh place, while jewellery & watches was in eighth place, which is perhaps more surprising given the importance of this category for gifting.
Online, footwear was only in fourth place, while health & beauty in sixth place actually dipped, as did clothing in seventh place.
Paul Martin, UK Head of Retail at KPMG, said: “Whilst the numbers for sales growth in December look healthy, with sales values up by nearly 7% on last year, this is largely due to goods costing more and masks the fact that the volume of goods that people are buying is significantly down on this time last year.”
And Helen Dickinson, BRC Chief Executive, added: “After an exceptionally challenging year, which saw inflation climb and consumer confidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer. Many consumers braved the cold snap and the strikes to ensure friends and families got the gifts they wanted, with energy-saving products, warm clothing and boots all selling well. Nonetheless, despite the stronger sales, growth remained below inflation, making December the ninth consecutive month of falling volumes.
“Retail faces further headwinds in 2023. Cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs.”
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