UK consumer spending dipped in October after having risen for two months, with an e-commerce rebound propping up a two per cent fall in face-to-face sales.
Expenditure has fallen in six of 10 months so far this year, adding to a cocktail of concerns for bricks-and-mortar retailers, according to Visa UK Consumer Spending Index data compiled by IHS Markit.
Adolfo Laurenti, Visa’s European principal economist, said: “A dip in October spending, particularly pronounced for face-to-face expenditure, dispels the sense of optimism that a few months of small gains had generated during the summer.”
Spending on clothing and footwear fell during the month, with only slight gains felt across food and hospitality sectors – failing to build on positive summer results that have pinned on hot weather and the football world cup. Consumers also spent less on recreation, culture, transport and communication.
Overall spending dropped by 0.2 per cent, as face-to-face sales slipped but two per cent. E-commerce managed a 2.6 per cent lift, which analysts said resulted from a shift to online buying ahead of the Black Friday shopping period next week.
Annabel Fiddes, lead economist at IHS Markit, said “the overall picture suggests a relatively disappointing performance in terms of household spending in the year to date”.
“Notably, expenditure has only risen in four months of 2018 so far,” she added.
Pressure from e-commerce giants such as Amazon has increased pressure on traditional high street retailers, which have seen their margins squeezed by inflating rent and wage costs.
Last week, data from professional services giant Pricewaterhousecoopers found that 2,500 stores disappeared from the high street during the first half of 2018. In an effort to stem the tide of closures, chancellor Philip Hammond plans to inject a £1.5bn investment stimulus into Britain’s struggling shops, which includes cutting business rates for smaller retailers.
Slipping footfall and sales have already taken several high-profile victims: clothing retailers New Look and Debenhams are shutting stores, and bulwark department stores Marks and Spencer and John Lewis have both disappointed shareholders.
“No doubt this disappointing reading will cause some concern for high street retailers as we head into the key Christmas shopping period,” Laurenti added.