For the first time since 2013, online consumer spending has declined as households across the UK begin to feel the effects of inflation. This is according to new data from Visa’s ecommerce spending index. April’s figures saw year-on-year spending drop by 0.1 per cent in April and overall growth of just 0.5 per cent. This latter figure represents the slowest rate of growth in four years and suggests that consumer confidence may be waning.
Perhaps surprisingly with the decline in e commerce spending, Easter helped to boost the high street and ‘face-to-face’ sales went up by 0.3 per cent which is the highest rate of growth in the past three years. The biggest boost was seen in the leisure and hospitality sectors which saw a 9.2 per cent increase in year-on-year sales.
Talking about the figures, Kevin Jenkins, Visa UK managing director said:
“Consumer spending slowed down further in April, as consumers tightened their belts in the face of rising prices running up against stalling wage growth. Annual spending growth fell back to 0.5 per cent, from an already subdued rate of 1 per cent in March.”
Deloitte recently published a study that echoed the figures from Visa UK. Ian Stewart, their chief economist said:
“Since last summer’s EU referendum consumer spending has held up well, but with inflation rising and nominal wage growth starting to slow, consumers are beginning to feel a squeeze on their disposable income. In March, the rate of inflation stood at 2.3 per cent, above the Bank of England’s two per cent target and the highest in more than two years. There are already some signs that these pressures are contributing to a slowdown in consumer activity.”
However it is not all bad news for online retailers in the UK. According to new research the Impulse Purchasing Survey, young professionals who are tech savvy are the biggest impulse buyers in the UK, with one in five 22 to 25 year olds admitting that they have spent more than £1000 on an impulse purchase.
The Impulse Purchasing Survey, which was commissioned by Gallery Rouge, the art retailer also found that of the 260 items that it found bought through impulse shopping, it was the fashion industry that benefits the most from online shopping impulse purchases, accounting for over one third of all purchases made on impulse. Tech and gadgets were the next most popular accounting for 22 per cent of all impulse purchases online. Home decor was next in line at 17 per cent followed by holidays at 12 per cent and jewellery at 7 per cent.
The total amount of money the average person spends every year on spur of the moment purchases is £1000 with 60% of people admitting to making as much as five impulse purchases per week, which makes a total of 260 snap purchases per year.
Trend expert Daniel Levine commented “Mobile shopping has compressed the time between thought, desire, and purchase. Think about it: You have the thought that you might want something. You can immediately look it up online, decide that you want it and click the ‘buy’ button.”