Barclays Consumer Report: Understanding the UK's Shift to Experience-Based Spending

In the face of escalating living expenses, Britons are recalibrating their spending patterns, emphasising value and experiences over material purchases.

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The Barclays report provides an insightful glimpse into these shifting trends across various sectors, reflecting a nuanced response to the cost of living crisis.

Adjustments in Consumer Expenditure

• Dining and Apparel: There's been a noticeable reduction in expenditures on dining out (6.7% decrease) and clothing purchases (0.5% decline). This trend indicates a conscious reprioritisation of spending.
• Entertainment and Travel: Contrarily, there's a renewed enthusiasm for experiences. This is evidenced by a 7.5% increase in entertainment spending, including high-profile events like the Eurovision in Liverpool and concerts by globally renowned artists. Similarly, spending on cinema outings has increased by 6.3%.
• Digital Entertainment: Investment in in-home entertainment, like streaming services, has grown by 7.3%, partly due to price hikes by service providers.

Coping with Budget Constraints

• Grocery Shopping Shifts: In response to tight budgets, there's a marked trend towards value-range groceries, with discount supermarkets seeing a record 15.5% share of grocery spending.
• 'Insperiences' Trend: A notable rise in 'insperiences' or at-home experiences is evident. Spending on takeaways, fast food, and digital content subscriptions has seen an uptick, reflecting a preference for home-based leisure activities.
• Reductions in DIY and Fuel: Non-essential expenditures, such as on-home improvements (4.7% decrease) and fuel (10.7% decrease), have been curtailed.

Sector-Specific Fluctuations

• Retail Sector's Seasonal Surge: Driven by early Black Friday sales and colder weather, there's been a spike in clothing and department store spending.
• Hospitality and Leisure Dynamics: The hospitality sector saw a modest 5.1% growth in November 2023. The decline in restaurant spending contrasts with the popularity of 'insperiences,' indicating a shift towards more economical entertainment choices.

Consumer Behaviour Insights

• Seeking Deals and Discounts: Consumers are increasingly bargain-hunting, utilising loyalty programs, and exploiting discount codes.
• Persistent Focus on Value: There remains a strong emphasis on finding value in weekly shopping, with many adopting various cost-saving strategies.

Personal Testimonies and Observations:

• Joshua Neish - Head of Hospitality and Leisure, Barclays Corporate Banking, "At-home experiences such as Takeaways and Fast Food and Digital Content & Subscriptions received a spend boost in November as consumers swapped cold night outs for evenings in."
• "The early Black Friday sales and delayed winter weather provided a welcome boost in spend for Clothing retailers and Department Stores, as consumers made the most of promotional sales and updated their winter wardrobes." Karen Jones - Head of Retail and Wholesale, Barclays Corporate Banking

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Hospitality and Tourism Focus

• The hospitality and tourism sectors are experiencing a nuanced transformation. While traditional dining out sees a decline, there's a growing interest in travel and special event attendance.
• The tourism industry, in particular, is benefiting from a phenomenon dubbed 'revenge spending,' where consumers, having missed out on travel during the pandemic, are now eagerly booking holidays. This is reflected in the 10.5% growth in the overall travel sector and a notable 14.0% increase in airline spend in November 2023.
• Hospitality venues like pubs and bars have seen a 5.9% rise in spending, attributed to a mix of price inflation and the appeal of less expensive socialising options compared to restaurants.

Overall Consumer Sentiment

Despite the economic constraints, British consumers demonstrate resilience and adaptability. There's a clear pivot towards prioritising experiences and maximising opportunities for enjoyment and leisure, albeit within a more judicious and value-conscious spending framework. This adaptability underlines a robust consumer market capable of navigating economic challenges with strategic spending choices.