UK January spending is weak, clothing dips despite clearance sales

January’s retail and consumer spending was sluggish with fashion not on Britons’ priority lists despite the many discounts on offer, two reports from Barclays and the BRC-KPMG showed on Tuesday.

Because the two reports are based on different criteria — for Barclays it’s consumer spending via payment cards and for the BRC it’s retail sales via all methods — they often paint a slightly different picture. But the overall message is the same — times are tough and shoppers are cautious.

First, Barclays. January’s annual rise in consumer card spending may have been higher than December’s but it was still below inflation as consumers “stayed at home to shelter from the cold weather and save money after a busy festive period”.

Barclays also said that the cold weather — including storms Isha and Jocelyn — meant many shoppers avoided the high street, choosing to browse the January sales online instead.

Its regular survey also found that britons expect to spend slightly more this Valentine’s Day compared to last year (up £6.40), although this is likely due to higher prices rather than a sudden desire to splash out.

So, let’s look at the numbers. Consumer card spending grew 3.1% year-on-year in January – less than the latest CPIH inflation rate of 4.2%, yet higher than December’s growth of 2.3%.

Spending on essential items increased 4.2% but spending on non-essential items increased only 2.6% (consistent with the growth seen in December and November last year, at 2.5% and 2.7%, respectively).

The government may be hailing the fact that inflation is easing, but 43% still consumers say they’re planning to cut down on discretionary spending due to rising household bills, with many tightening their belts after the festive season.

As mentioned, poor weather dented consumer appetites for visiting stores in late December and January and “more shoppers opted to browse the post-Christmas sales from the comfort of their homes”.

On Boxing Day, face-to-face retail spending was actually down 10.9% year-on-year, likely due to the cold weather and the arrival of storms. But this was offset by a 10.7% jump in online retail spending.

Looking at January as a whole, 57.6% of all retail shopping (excluding groceries) was online – the highest share of online spending in this category since February 2022.

And clothing stores saw a 0.6% decline, though this was a slight improvement compared to December’s 2% drop.

Meanwhile, the BRC-KPMG Retail Sales Monitor for the month said UK total retail sales (rather than consumer spending, which is what Barclays focuses on) increased by only 1.2% year-on-year in January.

And the report painted a less rosy picture for online shopping. It said total non-food sales fell 1.8% and specific in-store non-food sales fell a slightly smaller 1.5%, but they dropped 4.2% online.

BRC CEO Helen Dickinson said: “Easing inflation and weak consumer demand led retail sales growth to slow. While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month. The milder temperatures meant clothing sales performed poorly, particularly winter clothing and footwear. It was better news for health and beauty products, which continued to sell extremely well.

And Linda Ellett, UK Head of Consumer Markets, Leisure & Retail at KPMG, added: “It may be a new year, but the hangover of low consumer confidence remains. Health and beauty purchasing continued to drive sales both on the high street and online, whilst sun seekers and consumers with healthy resolutions front of mind, gave a boost to sports and travel equipment sales, which were up over 4% year on year.”