Covid-19: Significant boost in non-essential spend recorded in July

A “significant improvement” in non-essential spending took place in July, providing a much needed boost to the retail sector, new figures from Barclaycard, which processes nearly half of  UK credit and debit card transactions, have revealed.

The 4.7% year-on-year decline in this category was a huge improvement on the 22.3% reduction in June. An increase in local shopping was a major contributor in this recovery, with 45% of UK consumers choosing to support nearby businesses and 20% visiting local stores more often.  

Household spending grew significantly in July; in furniture by 46.4% and electronics by 22.7%. And home improvement and DIY proved to be a popular category during the ongoing Covid-19 pandemic, growing by 27.1%.

The warm weather provided a major boost to sports and outdoor stores, which grew by 27.7%, while pharmacy, health and beauty shops increased sales by 4%, which was a big improvement on the 33% reduction recorded in June.

In addition, essential spend grew 3.2% year-on-year in July, which Barclaycard said was largely driven by a 15% rise in supermarket shopping.

These encouraging figures appear to be partly due to consumers becoming more confident about visiting stores, with 37% of UK adults now unconcerned about visiting shops. The recent requirement to wear face coverings was found to reassure 46% of consumers.

More people were also confident about their household finances (72%) and ability to spend on non-essential items (58%) in July. However, trust in the UK economy remains low, at 23% and job security at 43%.

Esme Harwood, director at Barclaycard, commented: “Consumer spending has warmed up alongside the weather, as Brits return to the shops for non-essential items. It’s a welcome development for retailers to see spending up across many sectors in the first full month of data since lockdown restrictions started to ease.

“However, a sense of cautiousness still prevails. While some consumers feel more comfortable returning to shops, others are still wary of taking public transport and travelling outside the UK, with fears and uncertainties lingering about returning to normality too quickly.”