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December's weakest spending for last five years

Christmas closed off a very lean year for spending, according to the latest survey from Visa.

The credit card giant published its latest UK Consumer Spending Index, revealing that consumer spending in December rounded off the weakest annual performance of the last five years.

Household expenditure fell by one per cent in December, following the 0.9 per cent drop in November. 2017 as a whole marked the first annual decline in consumer spending in five years, down 0.3 per cent on 2016.

Face-to-face spending fell by 2.7 per cent on the previous year, while e-commerce sales remained on an upward trajectory. However, growth in e-commerce slowed from 2.4 per cent in November to two per cent, and continued to signal a weaker rate of expansion than recent months.

Spending by sector showed that five of the eight categories registered dips in year-on-year spend – transport and communication (-4.4 per cent), household goods (-3.4 per cent), health and education (-2.8 per cent), and recreation and culture (-1.8 per cent).

Hotels, restaurants and bars remained a bright spot, with spending up 4.7 per cent on the year in December (a five-month high). Food and drink retailers meanwhile registered the first increase in expenditure since last September, although the rate of growth was only marginal (0.4 per cent).

Mark Antipof, chief commercial officer at Visa, commented: “Christmas rounded off a lean year for retailers, with consumer spending seeing its first consistent 12-month decline since 2012. December’s consumer spending figures confirm our earlier prediction that the UK would see its first fall in overall Christmas spending in five years. This result has bucked the trend of the previous four years which saw annual consumer spending rise by an average of 1.7 per cent.

“Despite some large retailers signalling a strong Christmas performance, it is clear that the High Street has suffered recently, while online spending has held up,” he continued. “This is emphasised by the torrid year for face-to-face expenditure, which continued in December as face-to-face spending was again outstripped by e-commerce, a trend we have witnessed in 11 of the last 12 months.

“Hotels and restaurants were again a bright spot in December’s results. Consumers have been opting to spend on UK staycations as opposed to physical items and trips abroad. Interestingly, clothing and footwear, and household goods, two categories that might be expected to perform strongly in the lead up to Christmas, saw significant drops of 2.4 per cent and 3.4 per cent respectively.”

In the week leading up to Christmas, Yodel saw a 28 per cent year-on-year increase in the number of delivered parcels, while the total peak period saw an 11 per cent increase in parcels.

The delivery firm recently opened its business control centre, which provided 24/7 visibility and support of the company’s UK operations. Using analytics and big data, Yodel is able to see trends and improve vehicle tracking.

Yodel also saw a substantial increase in overall consumer spending during Cyber Week, with a survey revealing that four in 10 customers spent more than they had planned. Figures from IMRG found that online retail sales in November were up 11.7 per cent year-on-year to reach £18.2 billion.

Mike Cooper, CEO of Yodel, said: “Despite the snow and ice, and atypical shape of volume, which led to an unusually high number of parcels in the final week before Christmas, we were proud to successfully deliver millions of our clients’ promises.

“As we continue our drive to improve service and customer experience, we are encouraged with how we performed over our busiest time of year, and enter 2018 with a renewed emphasis on driving improvements to the service we offer clients and to their customers.”

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