Britain’s shoppers are keeping their money in their pockets — but the little they are spending is going online.
Two surveys released on Friday showed falling consumers spending and confidence, but online sales surging to a decade high.
BDO’s High Street Sales Tracker found a 129.5% increase in online shopping in May, the biggest jump since the company began its tracker in 2010.
The jump in online sales came as High Streets remained shut during Britain’s COVID-19 lockdown, which drove spending online or to essential shops like supermarkets that were allowed to stay open.
However, while online orders jumped, BDO found overall consumer spending declined by 18.3% in May. That was the second biggest fall ever recorded, behind only the slump registered in April 2020.
“Despite the significant pick-up in e-commerce, the monumental collapse in discretionary spend remains stark as retailers continue to face challenging headwinds,” said Sophie Michael, head of retail and wholesale at BDO LLP.
A separate survey from market research firm GfK found consumer confidence had fallen by 2 points to -36 in the final week of May. It marks the lowest reading in over a decade and was “just three points shy of the historic low of -39 in July 2008,” according to Joe Staton, GfK’s client strategy director.
“Against a backdrop of falling house prices, soaring jobless claims, and with no sign of a rapid V-shaped bounce-back on the cards, consumers remain pessimistic about the state of their finances and the wider economic picture for the year to come,” Staton said.
The figures will worry business owners who are preparing to re-open on 15 June. Katie Cousins, a research analyst at stockbroker Shore Capital, said many were stuck in a “vicious circle.”
“Many businesses are still closed, and the majority of those who are operating are suffering to maintain a low demand and high operating cost model,” she and her team wrote in a note sent to clients on Friday.
“This has led to severe cost-saving measures and as a result, the UK Consumers are faced with furlough schemes and redundancies, creating a vicious circle of financial and general economic worry.”
GfK’s Staton said the only “bright spark” in its survey was an uptick in consumers saying they planned to make a “major purchase” in the coming months, such as a fridge or car. Staton said this pointed to “latent demand among shoppers.”