Consumer spending fell in May for the first time in almost four years according to data from Visa following a period of slowdowns since the start of the year. There is a small ray of sunshine however, spending with online retailers was up 6.9% bucking the trend on the high street where spending dropped by 5.3%. That’s a 12.2% difference in growth from the highstreet to online.
“Retailers of non-essential goods were among the worst hit, with clothing and household goods seeing sharp declines in sales. The experience sectors continued to record some growth, though at much softer rates, suggesting consumers were reining in their discretionary spending.”
– Kevin Jenkins, UK & Ireland Managing Director at Visa
Visa attribute the drop in spending to rising prices and stalling wage growth saying that more of us are starting to feel the squeeze.
With access to vast amounts of spending data from both credit and debit cards, Visa are well placed to judge spending habits and spot trends. Visa strip seasonal blips and inflation from their spending data as well as adjust to take account of the growing trend to spend on plastic rather than pay with cash – something that’s growing with the proliferation of contactless payments.
The UK economy is predicted to stutter with the recent election of a hung Parliament and the subsequent drop in the value of Sterling. Inflation looks to be on the rise and the only silver lining in the financial markets is that suddenly British stocks and shares look pretty good value to overseas investors.
How is your business performing?
How is your business performing – were your sales in May up around 7% based on the same period last year? If they’re higher you’re bucking the trend and your business is in great shape compared to the economy. Of course the best advice is as always which is to expand overseas.
Even if the UK economy was in great shape, consumers in Britain spend more online than any other nation on earth and it’s hard to grow a business in a mature market. Turning to overseas sales is an easier way to increase turnover than purely targeting the UK, but that’s even more true if UK consumer spending continues to contract.
