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May was a month of change on the high street. German womenswear brand Basler fell into administration; Joy was bought out of administration by its owners in a pre-pack deal; and Edinburgh Woollen Mill acquired the Jaeger name. Additionally, Edinburgh Woollen Mill embarked on a new department store concept, Days, which launched in a former BHS store in Carmarthen.
Household spending growth slowed in May as British shoppers selectively cut back purchases, as the rise of inflation threatens living standards. According to Barclaycard figures, spending was up 2.8% on the year, which marked the slowest rate of growth since last July. The British Retail Consortium’s (BRC) study of shops’ sales found growth slowed to 0.2% on the year, a substantial slowdown from the strong Easter spending in April.
The BRC’s Online Retail Sales Monitor also found that e-commerce sales grew at their slowest rate for more than four years in May. Online sales of non-food products grew by 4.3% in May – down from 13.7% a year earlier and at its lowest level since the BRC analysis started in December 2012. The three-month average stands at 7% – also the lowest the BRC report has yet recorded.
This slow-down both online and on the high street in May could have been the result of a pre-election and pre-Brexit blip. However, according to the long-running and closely-watched GfK Consumer Confidence Index, consumers’ confidence in May stood at -5, two points up compared to -7 in April, suggesting that this isn’t the case.
Interestingly, Payments UK – the trade association for the payments industry – has forecast that debit cards will overtake cash as Britain’s most frequently used method of payment by 2018 thanks to the rise in contactless cards. Worldpay, which handles 40% of all UK card transactions, said that spending on all forms of contactless systems now accounts for 28% of all non-cash transactions in the UK, with total spend exceeding £10b for the year in 2016.
However, the Bank of England’s chief cashier and director of notes has said cash payments were “very much alive and kicking” and that contactless and electronic payments were not a threat. Victoria Cleland highlighted how technology has had a “huge impact”, with ways to pay including digital currencies, mobile payments and innovations such as contactless cards gaining “real traction”. But contrary to predictions of the eventual death of cash, Cleland said “if we dig further, it is clear that cash is very much alive and kicking”.
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