With luxury spend also showing robust growth, middle-market retailers are struggling to attract shoppers, leading to flat, nominal or even negative growth.
Data on debit and credit card transactions shows that consumer spending in discount stores, budget grocers and fashion outlets has grown sharply over the last 12 months. This has led to a 21% rise in the amount spent across the sector this year versus last, and a 23% increase in the number of transactions. Luxury retail spend is also growing – it was up 6% in March compared to last year; with the average basket spend up nearly 9% to £121.
The huge growth in spending at value retailers and the strong performance in luxury spend is in stark contrast to more muted figures seen elsewhere. At just 1.1% last month, overall spend growth was below inflation for the first time in six months while supermarket spend was down 2.6% and department stores sales were flat.
Valerie Soranno Keating, CEO of Barclaycard, said: “During the economic downturn we saw a notable shift in spending patterns with many consumers ‘trading down’ and focusing on getting value for money. It’s a trend that’s continued into 2014, with discount retailers doing particularly well, and is likely to remain the case until we see meaningful and sustained wage growth.
“Perhaps a little surprisingly, however, we continue to see strong growth in the luxury sector as consumers make sacrifices elsewhere to afford a luxury purchase. This has created a ‘squeezed middle’ of retailers, many of whom are seeing flat or negative growth.
“The challenge for those retailers caught in the middle is how to quickly adapt to meet the demand for greater value - whether that’s through the prices they charge, the products they stock or the channels they use.”
NamNews - Monday 14th April 2014
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