In 2023, economic challenges prompted Britons to tighten their budgets, impacting various sectors. Notably, the fashion industry experienced a significant decline in payment card spending, surpassing reductions in dining out and home improvements, according to Barclays’ annual report.
Clothing and accessories emerged as a notable casualty, with a 0.5% YoY decline in card spending. Rising costs and unpredictable weather posed challenges for clothing stores, contributing to a challenging year. Unseasonal weather in May, July, and October led consumers to postpone seasonal clothing purchases.
The overall landscape saw a modest 4.1% YoY increase in consumer card spending, markedly lower than the 10.6% growth seen in 2022. Essential item spending also grew by 3.9% in 2023, compared to a 6.3% rise the previous year, mainly due to a 10.7% drop in fuel spending.
In contrast, the beauty industry experienced a positive trend, driven by the ‘lipstick effect.’ Health & beauty and pharmacy retailers enjoyed a 5.6% spending uplift as consumers opted for small indulgences like cosmetics and self-care products during economic uncertainty.
Barclays suggests that this boost may be attributed to pre-holiday purchases and increased demand for makeup and skincare. Looking forward, Jack Meaning, Chief UK Economist at Barclays, anticipates a challenging 2024 but expects positive developments. The Bank of England’s anticipated interest rate easing mid-year and a slowing pace of price rises could contribute to improved spending power.
In summary, while fashion faced challenges in 2023, shifts in consumer behavior and economic adjustments may pave the way for a more positive outlook in the coming year.
