A recent report suggests that the upcoming «golden quarter» in the UK may not shine as brightly as in previous years, with retail spending showing a decline leading up to the crucial three-month shopping season.
Fashion retailers, department stores, and online fashion brands have reported year-on-year declines, but the secondhand marketplaces and makeup stores are thriving as consumers tighten their purse strings.
These findings are based on data from the advertising platform Cardlytics. When comparing spending in the period leading up to the «golden quarter» this year with the same period from the previous year, the report reveals a 4% decrease in retail spending by value and a 1% drop in the number of transactions.
It’s essential to note that various sources may produce different spending reports. Nevertheless, Cardlytics suggests that these figures reflect the challenges retailers face after over a year of economic constraints and rising inflation.
With 58% of consumers experiencing increased retail spending due to inflation in the past year, 26% are planning to reduce their spending on Christmas presents for friends and family. In response to rising costs, 28% of UK adults are utilizing more loyalty and reward schemes, while 26% are actively seeking discount codes online before making purchases. Additionally, 25% are opting for more affordable clothing and homeware brands.
The fashion sector is taking a hit as consumers cut back on non-essential purchases. Value spend in this category has fallen by 11%, and transaction numbers are down by 13%. Online fast fashion retailers have seen an even steeper decline, with a 29% drop in spending and a 31% decrease in transaction numbers, signaling a more significant downturn than some monthly retail reports have indicated.
Despite discussions of a revival in physical stores, Cardlytics reports that spending at department stores dropped by 18% between July and September, and the number of visits fell by 22%.
What about the luxury market, typically less affected during tough times? While the number of transactions for high-end labels increased by 34% year on year, the average transaction value has fallen by 25%, and overall spending has grown by just 1%. Wealthier consumers are still investing in premium fashion brands, but they’re opting for less expensive items.
In any economic downturn, there are always beneficiaries. Secondhand marketplaces continue to see growth, with spending and volumes increasing by 6% year on year. Approximately 20% of consumers have chosen to buy more secondhand items, scaling back on designer or luxury brands for reasons of suitability or thrift.
The «lipstick effect» appears to be alive and well, as consumers continue to indulge in small items that boost their mood. Makeup stores have witnessed a 12% increase in spending, and the number of transactions has surged by 26%.
