UK shoppers hit pause button on fashion purchases as Brexit looms
The UK’s consumer spending was muted at best during February as shoppers focused on preserving their cash but also on buying essentials ahead of what might turn out to be a difficult EU exit later this month. And that was really bad news for the fashion sector.
The British Retail Consortium (BRC) said total retail sales were up by a tiny 0.5% year-on-year, which is a lot slower than the 2.2% increase that had been seen in January. BRC chief Helen Dickinson blamed uncertainty around Brexit and added that on a like-for-like basis, sales actually fell by 0.1%.
Barclaycard also issued its own consumer spending report, which is a very good reflection of wider spending as it takes in all the transactions that happen via the company’s payment systems, as well as estimating other spending.
It said that spending in February was up only 1.2%, which is the weakest figure since it started its monthly reports back in 2015. And it came up with a very good reason. A survey it conducted show that 18% of respondents have been spending their money on stockpiling food and other essentials in case of Brexit-related shortages.
That's a huge chunk of consumers who aren't even thinking about buying, fashion, beauty and homewares at the moment. So It's no surprise that Barclaycard said non-essential spending rose only 0.8% last month and given that inflation is running at around 2%, even such positive figures represent a fall in real terms.
Meanwhile, fashion spend went down sharply. The amount of money consumers laid out for fashion fell as much as 5.2% (with a 1.3% decline in average transaction value) and the beleaguered department stores sector saw a 5.5% decrease.
Within the fashion figure, family clothing fell as much is 6.8% and shoe shops were down 4.1%. Meanwhile menswear dropped 2.5%, but there was better news for womenswear as it rose 4.8%.
As mentioned, department stores were down sharply and while supermarkets rose 2.5%, given the other figures, it's likely that their increase was accounted for by food rather than fashion.
Sports shops also fell 3.3% last month but jewellers dropped only 0.3%, perhaps boosted by the impact of Valentine's Day. Discount stores were down a catastrophic 11.4%, which is a shock as they usually benefit from consumer caution. Even gift shops, which could also have been expected to benefit from Valentine's Day, dropped by 4%.
Any good news? Well, despite speculation that the lipstick effect is wearing off, cosmetic stores didn't do too badly. They rose 3.5%. Presumably, the idea that beauty gets a boost when consumers are reining-in their spending elsewhere (as make-up is a cheap way for people to treat themselves) is still valid.
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