UK online spend down despite overall spending increase

By

Sandra Halliday

Published
May 8, 2017

The latest Visa/IHS Markit retail data delivered some surprises Monday with news of higher fashion sales in April (but with those sales possibly driven mainly by markdowns) and news that online spending dropped.

Clothing and footwear was up 2.3% year-on-year, the highest rate since October last year. However, the researchers said that this was driven by shoppers taking advantage of midseason sales and encouraged to buy warm weather clothing by generally mild temperatures in much of the UK. But the appeal of those markdowns could have meant full-price sales were hard to come by, denting margins.

And those online sales? It may only have been a 0.1% dip but with UK consumer spending online falling for the first time in three-and-half years last month, it certainly made an impact when Visa/IHS Markit released the information.
The retail sector has become used to online sales rising and rising, with the March increase having been as much as 8.2%. Given that many e-tailers, as well as physical retailers, might have expected their sales to rise in the Easter month, it was something of a shock.

And it was a surprise too given that the stats showed an overall rise in consumer spending. But that rise was weak. At 0.5% it was the slowest growth since Q1 2013 when Britain was still in the middle of its austerity-driven consumer slowdown. Sales had risen 1% in march and Q1 as a whole saw a growth rate of 0.9%.

This time around, a backdrop of general economic uncertainty following the Brexit vote last year is being blamed as the realities of post-vote inflation start to hit.

Visa said ‘face-to-face’ spending in physical stores rose 0.3% during the month, boosted by stronger Easter trading.
In line with he trend towards experiences over products, leisure and hospitality was the best-performing sector, with a 9.2% rise, although recreation and culture, including cinemas and book shops, saw growth of 2.8%, which was weaker than of late.