A STRONGER
A more positive feeling amongst Cautiously Optimistic consumers about their financial situation is driving a moderate recovery in spending, according to the first Barclaycard ‘Where’s Britain Spending?’ quarterly report. Based on actual spending rather than
supposition it is clear that we are entering into an era in which virtually all socio- economic groups place achieving good value for their money very high on the agenda. Tis trend is likely to over to the Christmas spend and into the New Year. Most retailers can expect sales levels to enjoy a filip over the Christmas period but this data and research from Barclaycard points to the need for all retailers, whether direct, multichannel, or bricks & mortar, to emphasise quality and value and to create compelling offers. Here’s why: Growth in spending of 4.2 per cent in
the third quarter of the year is matched by a new confidence barometer which finds that almost two-thirds (64 per cent) of consumers say they are confident in their ability to live within their means each month, and over half (57 per cent) say they feel confident about their financial situation. Following its sharp fall on the back of the economic downturn, consumer spending has shown tentative signs of a recovery over the past eighteen months, but this picked up significantly in the third quarter of the year, when spending growth reached a four- year high. Uncertainty around the economy,
however, and fears over the cost of living are holding back a full-blown spending recovery. Six out of ten consumers feel that, compared with three months ago, they get less for the money they spend because
Issue Number 222 Nov/Dec 2014
of the effect of rising prices, while almost two-thirds say that since the economic downturn they have become more careful to seek out value for money from their spending. Tese concerns have created a ‘new normal’ amongst shoppers who now habitually search for value-for-money in everything they buy, and in doing so have swapped the traditional weekly shop with more frequent visits to the shops where they only buy what they immediately need. As a result, the amount they’re spending per visit is actually falling. According to the Barclaycard report,
the average amount spent per transaction on food and drink fell 6.2 per cent in Q3. Worryingly for retailers, this mentality looks set to continue, with over two thirds (69 per cent) admitting that value for money will remain a key factor, even if the economy recovers. Two thirds (65 per cent) of consumers expect to see the cost of public transport rise and one in six (61 per cent) expect similar increases for groceries and petrol. Yet, the headline rate of inflation has seen costs drop in all these categories. However, this perception doesn’t always match reality. Te headline rate of inflation has fallen in recent months, and the cost of many items, including petrol (which has reached a three-year low), and some groceries, is down as supermarkets engage in a sustained price war. Tose on higher incomes are driving spend on more costly items, with over half (54 per cent) of those earning over £45,000 regularly spending on treats and indulgent purchases. In comparison, consumers earning less than £15,000 are the least likely to say that they will increase their level of spending over the next three months, at just 37 per cent. Barclaycard has identified four main
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CHRISTMAS EXPECTED but the search for value is heightened
• Consumer spending grew 4.2 per cent in the third quarter of the year – the biggest rise since 2011 – as a majority (57 per cent) now say they feel confident about their financial situation
• Worries over the cost of living remain and are holding back full-blown recovery as price rises continue to outpace muted wage growth
• Shopping behaviour is characterised by the search for value, as seen in the rise of discount supermarkets and a fall in Average Transaction Values continues on page 6 >
Inside:
Expanding horizons: where to next for British brands
10 quick tips to a higher performing website
Location, Location, Location
fabulous festive season & an outstanding 2015
Wishing all readers a
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