Finance firm Visa has announced its latest consumer spending figures.
Consumer spending for July fell by -0.8% on an annual basis, following declines in May and June – the first time in four years that spending has declined in three consecutive months.
Visa UK & Ireland managing director Kevin Jenkins commented: “Consumer spend fell for the third month in a row in July, the first time overall spending had fallen for three consecutive months since February 2013. The figure provides further evidence that rising prices and stagnant wage growth are squeezing consumers’ pockets.
“There were still some bright spots in July, with hotels, restaurants and bars reporting a 6% increase. The sector is likely to have benefited from an early surge in summer staycations, as the weak pound made holidaying at home more attractive.”
Among those to comment on the figures was Salmon global head of consultancy and innovation Hugh Fletcher.
“Consumer spending continues to endure its longest period of decline in four years as shoppers refuse to show an appetite for increased spending,” he said. “Visa’s latest analysis clearly demonstrates that shopping habits are changing, particularly as card spend fell by 0.8%; having a strong online strategy alone is clearly no longer enough in the highly competitive retail sector. Evidence continues to grow that prices will rise as a reaction to inflation, and retailers must react accordingly to their share of the customers’ wallet – which is increasingly shrinking. They should do this by implementing a strategy that places all types of innovation at the forefront of their offering. Doing so will not only help drive footfall and online spend, but our figures proved that six in 10 would be more likely to spend with a retailer which is digitally innovative.
“In a retail world that is increasingly dominated by Amazon, retailers shouldn’t, and cannot afford to, shy away from innovative ideas. Amazon’s Dash, Fresh and Echo devices are designed to help the digitally native firm secure a wider customer base, and a greater share of wallet, while its acquisition of Whole Foods will see it enter the physical space and combat traditional supermarket chains like Sainsbury’s. What Amazon has begun to do is develop its overall offering beyond online to own the entire customer experience – this feeds into the term Interface Imperialism where brands diversify and expand their offering into entirely new services. It’s imperative to understand that innovation isn’t an option, but a universal characteristic that all retailers must embrace. Those that don’t will quickly become outdated and see the customer turn to a savvier competitor.”
Fujitsu UK and Ireland director for retail and hospitality Heather Barson added: “As we witness consumer spending fall for its third consecutive month, this is less than favourable news for our high-street. However, when we look at the figures more closely, there has been a happy uplift in hotels, restaurants and bars, which demonstrates how consumers are choosing to spend their money on more experiential services.
“If retailers are to attract customers in an effort to reinvigorate the high-street in the same way, they will need to adopt new and agile tactics to entice them in. To really stand out, it’ll be more important than ever for retailers to make the in-store experience as seamless as shopping online – this is where smart use of in-store technology can come into its own.
“We recently found in our Forgotten Shop Floor study that 80% of consumers say they would spend more with retailers that have a better technology offering. High-street stores hold greater opportunities than ever, they just need to be willing to embrace technological advancements to reap the rewards. Retailers must be visionary in their use of tech and give shoppers what they want, before they know they want it, just as Henry Ford once said. With customers and competitors poised to move forward, those standing still face a worrying prospect – being the next generation of retailers to be pushed out of the high-street for good.”