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Driving Sales Through the Ever-Changing Landscape of UK Consumer Spend

When the UK government imposed a country-wide lockdown in March, consumers had little option but to change their spending behaviour. As stores closed and long-term travel restrictions were put in place, consumer spend shifted to other areas such as eCommerce and home delivery. But are these changes permanent or has the reopening of non-essential retail and dining helped spend return to their pre-lockdown status?

UK share of spend

Firstly, let’s look at how share of spend across the main consumer categories has changed in the UK. To do this, we analysed a whole-wallet view of consumer spend across the UK (minus direct debits) to illustrate the percentage share of spend each industry has received over the last six months:

The first noticeable trend is the significant increase in spend share for grocery and retail. In February, the total share for these two markets was 69%. In the first full month of lockdown (April), this share jumped to 89%. Despite physical non-essential stores having to close from 24th March, the Retail market still benefitted from online sales, with online businesses such as Amazon and Boohoo, seeing significant spikes in sales year-on-year (YOY).

The grocery market began seeing increased sales from the beginning of March as panic buying gripped the UK. This trend continued throughout lockdown; however, we’re beginning to see grocery spend share coming back down to pre-lockdown levels.

The industry with the biggest share loss was travel; falling from a 12.1% share in February to 1.6% in April due to travel restrictions and quarantine. The positive for the Travel industry is that there are signs of recovery. An easing of travel restrictions in the summer months has led to an increase in spend, however with more consumers preferring a “Staycation” rather than an international holiday, spend share has not yet reached pre-lockdown levels.

With doors finally opening in July, albeit with reduced capacity due to social distancing measures, dining is also beginning to show signs of recovery. With the government’s Eat Out to Help Out scheme also proving a big success in August, initial signs are that consumers are gaining confidence in eating out and, more importantly, going back to the pub!

Non-essential retail: what’s happened since reopening

As discussed above, the ability for consumers to shift their sales online meant that the retail market in some quarters actually benefitted from the lockdown. This, coupled with a the fall in Dining and Travel sales, helped retail increase their share of spend.

Notwithstanding, most non-essential categories saw a major downturn in sales during the lockdown. Switching to look at year-on-year (YOY) sales, many retail categories saw a significant drop in sales during the first month of lockdown:

  • Fashion: -61%  
  • Home & Garden: -56% 
  • Sports & Outdoor: -46%

However, the gradual opening of non-essential retail has provided a significant boost in sales as consumers were keen to get to back to shops:

  • Home & Garden: +40% 
  • Child & Infant: +22%     
  • Sports & Outdoor: +22%

It’s been a different story for fashion. Despite stores opening in June in most of the UK, fashion sales were still down -5% YOY. This could be due to factors such as delayed opening to some stores, the permanent closure of others, and shopping centres applying stricter social distancing measures.

Whilst consumer need for eCommerce isn’t going to disappear anytime soon, what we have seen is a decline in dependency for online media and eCommerce transactions. Whilst still enjoying increased YOY sales in every month since lockdown, these increases have declined since non-essential retail stores have opened, using the eCommerce and gaming industries as an example:

MarketFebruaryMarchAprilMayJuneJuly
eCommerce+15%+21%+61%+95%+81%+42%
Gaming-17%+20%+99%+61%+48%+35%

The impact of store openings is noticeable when looking at the different UK nations. Northern Ireland were the first to open their doors, and in May the Home & Garden category was up by 28%, whilst the UK experienced a -4% drop in the same period. This trend follows in Fashion, where English and Welsh sales were down -6.2% and -2.9% respectively in July, whereas Scotland (+2.5%) and Northern Ireland (+7.6%) registered increases versus July 2019.

With social distancing measures now understood and in place, along with the requirement of face coverings, marketers will be hopeful that, supported by targeted incentives to drive demand, this upward trajectory will continue for fashion and the rest of non-essential retail.

Actionable Tip:

As retail stores open and we head towards the traditional peak trading time, this presents a critical time for non-essential retailers to drive customers back into stores to give them confidence for the seasonal period ahead. At Cardlytics, we are helping retailers bring back lapsed customers, or those who have only favoured online spend during the last few months. Using our purchase insights, we can identify and target lapsed customers and provide well-timed targeted cashback offers through our native ad platform to keep customers engaged and drive repeat purchases.

Grocery: average transaction value vs. frequency

Before the lockdown was even announced, there was a significant shift in spend behaviour within the grocery market.

As we explore further in our UK State of Spend newsletter, panic buying and stock piling, in fear of a pending lockdown, resulted in an increase in average transaction value (ATV), as well as a fall in purchase frequency.

Now that the panic buying has subsided, and more stock is available, we’ve seen the YOY ATV increases drop each week. The worry for grocery marketers, in that the consumer frequency is still down YOY, and is trending flat week-on-week.  

More insights on this are available in the August issue of the UK State of Spend

Actionable Tip:

The focus for grocery marketers now will be to find ways to either increase ATV to its initial lockdown level or get customers back to their stores more frequently. Cardlytics can help grocers identify and target low-frequency customers, or those with lower than average basket sizes. By incentivising these customers with a well-timed “spend stretch” cashback offer, Cardlytics can help grocers increase their ATV, whilst driving repeat purchases

Want more actionable insights?

There is no doubt that consumer spend has yet to normalise. With social distancing and reduced capacity still an issue, potential government incentive schemes and travel restrictions, we’re still likely to see dramatic shifts between industries, categories, and even buying channels.

We’re here to help you make sense of it all and find your most successful path forward.  With insight into 1 out of every 4 UK transactions, Cardlytics puts purchase insights into action every day for our advertisers through banks’ digital channels. Download our latest State of Spend document or contact us today for an analysis and campaign strategy customized for your brand.

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