Fashion spending saw a significant increase in the past month, with footwear emerging as the standout category. This news comes amidst mixed reports on consumer spending and retail sales. Both the Barclaycard and British Retail Consortium (BRC) monthly reports present a combination of weaknesses and strengths within the industry.

Starting with the BRC-KPMG retail sales monitor, the figures reveal a positive trend. Total sales in January witnessed an 11.9% rise compared to a 1.3% decline during the same period last year, which was heavily influenced by lockdown measures. When considering a two-year basis, total retail sales grew by 7.5%, with like-for-like sales increasing by 8.1% year-on-year. These figures suggest that inflation has played a role in driving overall sales growth. In the fashion category, footwear stood out as the most resilient segment, along with robust performances from clothing, jewellery, watches, household appliances, electronics, and homewares. However, food sales did not perform as well.

Despite the recovery of physical stores, online sales showed resilience. In January, online non-food sales dropped by 24.2% compared to an 83% growth in the same period last year. However, it is crucial to consider that this decline was expected due to the previous lockdown. On a two-year basis, online sales increased by 31.8%, indicating the increasing significance of online channels for consumers.

Helen Dickinson, the chief executive of the BRC, expressed encouragement at the strong sales figures for January, even when accounting for inflation. However, Paul Martin from KPMG reminded us to consider the context of last year’s lockdown when evaluating the unusually robust performance for a traditionally slower month.

Turning to the Barclaycard report, it presents a different perspective. While sales still experienced growth in January, the rate of growth was slower compared to previous periods. Consumer card spending increased by 7.4% year-on-year, marking the smallest rise since April 2021. Inflation, Plan B restrictions, and rising energy costs are cited as factors dampening consumer enthusiasm. With more people working from home and reducing social interactions, face-to-face retail spending (excluding grocery essentials) declined by 8.5%. The increase in clothing spending was only 4.9%, significantly lower than the 8.8% increase in the previous month. Sports and outdoor retailers also witnessed a slowdown, with a 14.5% uplift compared to the 22% increase in December.

While challenges are expected to persist in the coming months, Barclaycard suggests that the impact may be mitigated by upcoming events such as Valentine’s Day, growing inbound tourism, and a desire for activities and experiences to uplift spirits during the winter months. The decline of 6.3% in the hospitality and leisure sectors could explain why people were less inclined to shop for new clothes. However, spending among younger consumers remained stable, possibly due to reduced concerns about catching Covid-19 during socializing and shopping.

It is important to note that consumers have expressed significant concerns about inflation, which is impacting their household finances and discretionary spending.

Useful links:
1. BRC report on UK retail sales in January
2. Barclaycard’s discretionary spend report for December 2021