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  1. Analysis
July 30, 2021

UK shoppers release pent-up demand as Covid restrictions ease

By Mohamed Dabo

UK retail sales soared in May as the further easing of lockdown restrictions helped to drive spending. Mohamed Dabo reports

Intro: Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 11.4% compared to May 2019 – the sharpest increase since before the onset of the pandemic.

Spending on essentials was bolstered by supermarket shopping (up 17.7%) and face-to-face spending at local food and drink specialist retailers, such as butchers, off-licenses and independent convenience stores, which rose by 69.3% – a sign that Brits are continuing to support local businesses, even as restrictions relax.

The wet weather in early May was not enough to deter consumers from returning to shops, with overall spending on non-essential items rising 5.8% compared to the same period in 2019, while face-to-face spending at non-essential retailers grew 8.0%.

As shoppers updated their wardrobes for post-lockdown socialising, there were increases at clothing (8.5%) and department stores (8.6%).  While in-store clothes shopping was still down on the same period in 2019 (-6.1%), this was a significantly smaller decline than last month (-46.9%).

Image-conscious Brits also spent more on beauty products and treatments, with pharmacy, health and beauty stores (including nail salons and hairdressers) seeing a 17.8% rise – a significant improvement on the growth recorded last month (3.7%).

Specialist retailers are turning the corner

Other specialist retailers, such as gift shops, toy shops and jewellers, enjoyed growth of 27.2%– over four times higher than last month’s increase (6.4%) – perhaps a sign that consumers are buying more presents for reunions and celebrations such as weddings, birthdays and baby showers.

This comes as nearly seven in 10 (68%) say they are comfortable spending time with friends and family outdoors, and six in 10 (61%) say they are comfortable doing so indoors.

Brits braved the rain to get out and about this month, with spending on entertainment – including family days out, theme parks, cinema tickets and gym memberships – showing noticeable improvement, with a significantly smaller decline (-28.6%) than in April (-50.6%).

Spending at sports and outdoor retailers showed strong growth as consumers embraced more active lifestyles in May, with a 47.0% uplift in the category versus 26.2% growth last month.

Tentative recovery in the hospitality and leisure sectors

Hospitality outlets showed signs of recovery as more industry-wide restrictions were lifted, most notably the change to indoor dining restrictions on 17 May.

While restaurants as well as bars and pubs saw respective declines of 53.2% and 19.4% for the month overall, these were marked improvements on the 74.4% and 67.2% contractions in April.

In fact, spending on bars and pubs saw a 1.4% growth among 16-24-year-olds, as younger consumers returned to socialising at the earliest possible opportunity.

More holidaymakers either embarked on or booked staycations in May, with resorts and accommodation showing strong growth of 25.5%.

Perhaps due to the vaccine rollout, older consumers shelled out the most on staycations, with spend from those aged 50-64 up 40.5%, compared to a 13.1% decline among 16-24-year-olds.

This comes as one in five (20%) say they’ve already made plans to go on a staycation in the weeks following 21st June, and around the same proportion (18%) intend to go on more holidays in the UK, even after international travel restrictions have been lifted.

Travel and tourism not yet seeing a rebound

However, despite international travel being allowed to restart, travel agents and airlines continue to be hit hard by the traffic light system restrictions, seeing declines of 76.5% and 74.2% respectively – only marginal improvements on the 82.4% and 82.1% drops last month.

In fact, just 28% of Brits say they are comfortable travelling to countries currently on the green list, though this rises to over a third (36%) among 18-24-year-olds.

Consumer confidence in the economy and household finances remains noticeably higher than this time last year, holding up at 35% and 72% respectively, compared to 20% and 67% in May 2020.

Raheel Ahmed, head of Consumer Products at Barclaycard, says: “May was a positive month for a range of categories, with the nation clearly determined to show support for retailers and local businesses.

“As friends and families reunited after months apart, it is reassuring to see signs of recovery for the entertainment and hospitality industries, both of which have faced significant challenges over the past year.

“While international holidays continue to be hampered by restrictions, staycations in the UK are providing a welcome boost to the travel sector, as May saw more holidaymakers, particularly in the older age groups, book or embark on trips. With summer – and hopefully more of this warmer weather – on the way, we hope to see these positive trends continue as Brits make the most of their newfound freedoms.”

 

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