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