New data from Barclays highlights key shifts in UK consumer spending habits for 2024, with particular emphasis on retail and discretionary sectors. Overall, consumer card spending increased by 1.6% year-on-year, which is significantly lower than the previous year's 4.1% growth. In particular, spending on essential items grew by just 0.9%, a sharp decline from 2023, while non-essential spending saw a 1.9% increase. However, categories like home improvements, furniture, and DIY have faced slowdowns.
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Home-related spending has not escaped the effects of the ongoing economic pressure. Spending on home improvements and DIY dropped by 7.3% year-on-year, while furniture stores also saw a decline of 2.2%. This suggests that consumers are cutting back on their home décor and furniture purchases as they face growing financial constraints. Many have shifted their focus away from large, discretionary home purchases, favouring more experience-led categories instead.
The downturn in home-related spending is linked to broader trends in retail, where both food and drink as well as 'big-ticket' purchases saw reduced demand. Despite this, smaller, affordable luxuries such as cosmetics and health products have remained relatively resilient. Notably, there has been an up tick in spending at pharmacies and beauty retailers, which experienced a 7.1% growth, reflecting the broader "lipstick effect," where shoppers prioritise affordable mood-boosting products despite tightening budgets.
This trend of prioritising experiences over material goods was particularly evident in the entertainment sector, which recorded a 5.8% growth in spending. Live events, music concerts, and blockbusters contributed to this shift, further supporting the move away from significant home purchases. While entertainment experienced a boost, spending on home-related categories remained subdued, highlighting the ongoing impact of economic uncertainty on consumer behaviour.
In terms of consumer sentiment, the overall decrease in spending on furniture and home improvements suggests that consumers are re-evaluating their financial priorities, looking for ways to limit non-essential outgoings. Retail sectors directly linked to leisure and entertainment have seen greater growth, as people opt for experiences that offer short-term enjoyment rather than long-term investments in home furnishings.
While furniture and home décor may have slowed down, the digital content and subscription sector has shown impressive growth, up by 13.2%. This suggests a marked shift towards virtual experiences as part of consumers' 'new essentials' for a more affordable lifestyle. As people continue to face pressures such as rising bills and increased living costs, their spending on tangible goods like furniture and home improvements has taken a back seat, while experiences and smaller indulgences take precedence.
Despite the challenges facing home-related spending, Barclays' report highlights that Brits are increasingly adopting a mindset of "conscious consumerism." The data suggests that, although many are reducing spending on luxury home goods, they are still finding room for affordable indulgences such as beauty products and small treats that bring joy.
The slowdown in spending on furniture and home improvements aligns with wider trends across the retail sector, where consumers are prioritising experiences, digital content, and small luxuries over more significant investments. This shift indicates that, while household budgets remain under pressure, Brits are opting for experiences and items that bring immediate gratification rather than focusing on long-term purchases like furniture.
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