The Beast from the East exacerbated the crisis on the High Street in March as shoppers stayed away from stores and household spending declined to its weakest level in over five years, two new reports suggest.
Consumer spending fell by 1.4 per cent in the first three months of the year, the largest quarterly fall since the last three months of 2012. In March alone, the decline accelerated from 1 per cent in February to 2.1 per cent, figures from Visa show.
The recent spate of cold weather kept shoppers away from the high street, with face-to-face spending down by 3 per cent compared to last year and Britons mostly cutting down on purchases of new clothes and spending on leisure activities.
Spending decline: The recent spate of cold weather kept shoppers away from the high street
Separate figures by the British Retail Consortium paint a similar picture as they show that shopper footfall fell by 6 per cent last month, the steepest year-on-year drop since the end of 2010 and well above the average 1.4 per cent drop seen over the last year.
However, Visa stressed that the cold weather only exacerbated an already marked decline triggered by falling consumer confidence and other economic factors, as Britons generally have less spare cash as inflation rises and wages stagnate.
An indication of this comes from the fact that even online spending declined last month, by 1.2 per cent, marking the first fall in 10 months and the fastest rate of decline in six years, according to the Visa report.
Mark Antipof, chief commercial officer at Visa, said: ‘The negative impact that the Beast from the East had on UK economic activity last month has been widely reported, but this doesn’t entirely explain March’s lacklustre consumer spending.
‘We are in the midst of a dip in consumer confidence and this – coupled with other economic factors – is causing shoppers to continue to restrain themselves.
‘High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for the first time in 10 months, and by its fastest rate since 2012.
‘That said, it is too early to read a great deal into this year-on-year decline, which should be viewed in the context of high growth rates in early 2017.’
Food and drink was the best-performing category for spending growth in March, Visa has said
Shoppers cut spending on transport, leisure activities and clothes – the latter declining at the quickest pace in five months – but increased spending on food and drinks, partly because of Easter, Visa said.
Hotels, restaurants and bars were another bright spot, with a 4.2 per cent annual increase in consumer expenditure in this category.
The index uses spending on Visa cards as a base and the figures are adjusted to reflect all consumer spending, not just that on cards.
Separate research from the BRC reinforces this picture, as no region in the UK saw an increase in shoppers’ footfall, with high street shops suffering the most.
Greater London saw the biggest decline in footfall at 7.5 per cent, followed by the South East, East (minus 6.5 per cent) and the East Midlands (minus 5.6 per cent), according to the BRC-Springboard Footfall and Vacancies Monitor.
Growth fell in all shopping destinations, with the high street seeing a decline of 8.6 per cent, shopping centres down 4.8 per cent and retail parks down 1.8 per cent.
Out of fashion: Spending on clothes declined at the quickest pace in five months, Visa has said
British Retail Consortium chief executive Helen Dickinson said: ‘Whilst the prolonged period of bad weather has had an impact on shoppers visiting the high street, we are seeing a longer term trend of reduced footfall which highlights that shoppers face more choice in terms of how, where and when they shop.
‘The retail environment is changing and retailers are investing in innovation and technology adaptations in response to this.
Diane Wehrle, Springboard marketing and insights director, said the annual decline was ‘undoubtedly a function of low consumer confidence arising from ongoing economic constraints attached to current price inflation and concern for the future’.
The data come as high street shops are struggling to keep afloat.
Toys R Us and Maplin recently collapsed into administration, while Carpetright and New Look are shutting down shops and many others, including Mothercare, are struggling to revive falling sales.
Samantha Seaton, chief executive of Moneyhub, commented: ‘It’s a tricky time for household finances, and despite an increase in the national minimum wage providing some respite for consumers, high inflation and low wage growth still have a tight grip on purse strings. With interest rates set to rise in May, it’s unlikely spending will truly pick up for a while.
‘For businesses, this tough economic climate is affecting growth, as consumers are wary of spending their hard earned cash.’