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Barclays: December Card Spending Up 2.3% In December

IR_Stone London Christmas light shoppers iStock-1355828207
  • Grocery spending slowed due to decelerating food price inflation and Brits stocking up on festive food and drink earlier than usual
  • Christmas parties boosted pubs and bars, while Glastonbury ticket sales and cinema releases such as ‘Wonka’ spurred entertainment spending
  • The busiest day for Christmas shopping was Friday 22nd December which also saw Barclays set an all-time record for transactions processed per second
  • Travel triumphed as Brits booked 2024 holidays, with 15 per cent planning more getaways than in recent years
  • January’s energy price cap rise led to growing concerns around energy bills, although confidence in overall household finances reached a four-month peak
  • The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending 

Consumer card spending grew 2.3 per cent year-on-year in December – less than the latest CPIH* inflation rate of 4.2 per cent and lower than November’s growth of 2.9 per cent. Retail spending struggled to maintain the momentum it had built up in November through early seasonal discounts, while entertainment and travel thrived as consumers booked experiences and getaways for 2024.

Spending on essential items slowed, rising just 1.8 per cent compared to 3.3 per cent in November, as falling petrol prices continued to impact fuel spending (-12.5 per cent). Meanwhile, the deceleration in food price inflation meant supermarket shopping saw its lowest uplift (2.8 per cent) since September 2022 (2.8 per cent). This could also be due to shoppers already having stocked up on festive food and drink in November, taking advantage of early supermarket discounts and deals.

On the other hand, food and drink specialist stores – including butchers and delicatessens – saw a notable uptick in spending (5.1 per cent), as consumers chose to invest in more premium, seasonal ingredients and to support their local businesses in the run up to Christmas.

Festive cheer for pubs, bars and clubs

Spending on non-essential items rose 2.5 per cent, as festive activities and celebrations boosted the hospitality and leisure sector (up 8.9 per cent).

Christmas parties and gatherings fuelled spending at pubs, bars and clubs (7.9 per cent), while restaurants, though still in decline (-8.8 per cent), had their best month since August. The comparatively smooth running of transport networks certainly helped the sector in December, compared to 2022 when industrial action hampered Christmas plans.

Late Glasto fever fuels entertainment expenditure

The entertainment sector was a particular bright spot, seeing noticeable growth (12.3 per cent) following a -1.7 per cent decline in November. This included shows and concerts, which grew 13.9 per cent, as Brits snapped up tickets for Glastonbury Festival, which were released two weeks later than usual, as well as for Christmas pantomimes and shows. Meanwhile, new blockbuster releases such as ‘Wonka’ and ‘Aquaman and the Lost Kingdom’ boosted cinema spending by 8.0 per cent.

New series spur streaming surge 

Digital content and subscriptions also saw strong growth, rising 11.6 per cent – the category’s highest uplift since August 2021 (13.2 per cent) – due to some streaming platforms increasing their prices and consumers turning to home entertainment during the festive period. This comes as more than two fifths (41 per cent) of Brits said they were looking forward to watching the latest film and TV releases, with titles such as ‘Chicken Run: Dawn of the Nugget’ and the final series of ‘The Crown’ encouraging households to enjoy cosy nights in front of the TV.

Christmas shopping frenzy fizzles yet December 22nd was busiest day of the year

Meanwhile, both clothing and department stores fell back into decline (-2.0 per cent and -0.2 per cent respectively), after witnessing a spike in November. This is likely due to retailers starting their festive promotional activity earlier in 2023, which encouraged Brits to shop for Christmas party outfits and gifts in November rather than December to take advantage of the best deals.

Yet, Friday 22nd December** was especially busy and saw Barclays set an all-time record for transactions processed per-second, as many Brits celebrated finishing work for the year in pubs and bars and sought out last-minute gifts. Retail and food & drink transaction volumes were up 66.8 per cent and 38.1 per cent respectively in comparison to the average day in 2023. Supermarket transactions also peaked on Saturday 23rd, representing a 41.8 per cent increase compared to the year’s daily average.

Travel triumphs

It was another positive month for the travel sector, with airlines (20.2 per cent) and travel agents (12.8 per cent) both enjoying even stronger growth than in November (14.0 per cent and 9.2 per cent respectively), as holidaymakers booked getaways for 2024. One in seven Brits (15 per cent) say they plan to take more holidays in 2024 than in recent years, one in 10 (11 per cent) has been saving up to afford a bigger holiday in 2024, and the same proportion (10 per cent) will be taking advantage of deals in the January sales.

Beach holidays (44 per cent), city breaks (37 per cent), and adventure holidays (12 per cent) are the most popular types of getaways Brits are booking, while the UK (47 per cent), Spain (24 per cent), and Greece (12 per cent) are travellers’ top destinations.

New Year, new goals

Beyond travel, Brits are setting themselves other goals for the year ahead. Nearly one in five (18 per cent) is planning to take part in Dry January, citing being healthier (50 per cent), saving money (42 per cent), and wanting to drink less alcohol (30 per cent) as their main reasons for participating. Dry January participants expect to save an average of £48.90 over the course of the month by cutting back and switching to non-alcoholic alternatives.

Looking at broader financial goals, nearly half of consumers (48 per cent) want to save more money this year, with 12 per cent intending to invest more money in stocks and shares, and 9 per cent looking to make greater contributions to their pension.

Energy costs cause concern, yet consumer confidence climbs

Meanwhile, the energy price cap increase on 1st January is also playing on Brits’ minds, with nearly nine in 10 (87 per cent) concerned about the impact of rising household bills on their personal finances. To save energy costs, over a third (35 per cent) are planning to switch on their lights and heating less frequently, while 28 per cent will be prioritising wearing more layers and using hot water bottles to keep warm this winter.

Reassuringly however, more consumers are feeling confident about their household finances (67 per cent – the highest since August 2023) and ability to live within their means each month (73 per cent – the highest since November 2021), likely as a result of falling inflation and mortgage rates.

Karen Johnson, Head of Retail at Barclays, said: "Hospitality and leisure businesses will be encouraged by December’s strong growth, particularly in the entertainment category, which saw growing demand for live shows, new films and TV series.

“Meanwhile, grocery and retail spending didn’t see as much of an increase as we might have expected during the height of the festive season. This is likely due to many retailers and supermarkets starting discounts and promotional activity earlier than usual, meaning that many Brits had been making the most of these deals and completed most of their Christmas shopping by December.

“While the upcoming energy price cap is weighing on Brits’ minds, the falling rate of inflation offers a glimmer of positivity and it’s encouraging to see the nation’s optimism increase slightly as we head into a new year.”

Jack Meaning, Chief UK Economist at Barclays, said: “We saw inflation fall significantly at the end of 2023, and we expect it to fall further in the opening months of 2024. This puts more spending power in the pockets of UK consumers and should help support them to continue to spend, even against the tough backdrop of weak economic growth.

”It’s also encouraging to see tentative signs of an improving mortgage market; approvals have begun to rise and mortgage rates are continuing to fall. However, it’s worth remembering that many people this year will still be dropping off of fixed-term mortgages onto new deals with higher rates than they had previously, eating away at some of their newly found spending power.” 

Overall growth figures

 

Spend Growth

Transaction Growth

Essential

1.8%

3.7%

Non Essential

2.5%

3.6%

 

 

 

OVERALL

2.3%

3.6%

Retail

0.6%

2.6%

Clothing

-2.0%

0.2%

Grocery

3.1%

4.0%

  • Supermarkets

2.8%

3.1%

  • Food & Drink Specialist

5.1%

9.6%

Household

-6.5%

0.9%

  • Home Improvements & DIY

-8.5%

-4.0%

  • Electronics

-5.1%

7.5%

  • Furniture Stores

-4.7%

0.1%

General Retailers

3.0%

3.4%

  • General Retailers & Catalogues

6.3%

7.9%

  • Department Stores

-0.2%

3.7%

  • Discount Stores

-10.2%

-12.7%

Specialist Retailers

-0.8%

-2.5%

  • Pharmacy, Health & Beauty

3.8%

-1.3%

  • Sports & Outdoor

-6.2%

-9.7%

  • Other Specialist Retailers

-1.8%

-1.8%

Hospitality & Leisure

8.9%

5.7%

Digital Content & Subscription

11.6%

7.3%

Eating & Drinking

5.7%

2.1%

  • Restaurants

-8.8%

-13.1%

  • Bars, Pubs & Clubs

7.9%

4.7%

  • Takeaways and Fast Food

3.0%

1.0%

  • Other Food & Drink

10.5%

3.4%

Entertainment

12.3%

12.8%

Hotels, Resorts & Accommodation

4.5%

3.6%

Travel

14.1%

13.7%

  • Travel Agents

12.8%

18.7%

  • Airlines

20.2%

25.9%

  • Public Transport

13.0%

11.7%

  • Other Travel

11.5%

16.7%

Other

-0.4%

2.5%

Fuel

-12.5%

-4.8%

Motoring

-2.8%

1.5%

Other Services

10.4%

14.4%

Insperiences

5.4%

3.4%

 

 

 

Online

4.9%

7.5%

Face-to-Face

0.3%

2.0%

Source : Barclays

Image : IR_Stone / iStockphoto.com (1355828207)

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09 January 2024

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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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