Outdoor leisure, food and DIY lead June retail sales boom

Barclaycard's Consumer Spending Report has revealed that spend growth hit a three-year high of 4.5 per cent in the second quarter of the year.

Consumer spending on 'leisure' such as in restaurants, pubs and travel, and 'non-essential spend' such as household furniture and in DIY stores, grew strongly as increasing confidence saw consumers spend on leisure time and the home.

The Leisure and Outdoor Furniture Association said average sales of outdoor furniture and barbecues were 25 per cent up this year, with peaks of 85 per cent. The GCA saw 15 per cent outdoor plants uplift in June, and more than 10 per cent rises in catering, clothing and houseplants. Year to date garden centre sales rises are nudging 10 per cent, though are lower in the north.

Wage growth, higher employment and low inflation all combined to boost consumer confidence. Key findings from the Barclaycard report include:

Home improvement and DIY stores saw growth of 5.2 per cent and restaurants and pubs 12-14.9 per cent.

Some 43 per cent of UK consumers say that they are more likely to holiday in Europe this year to take advantage of the weaker euro, while 26 per cent of holidaymakers are opting for a UK staycation instead this summer.

The decisive result of the General Election also had a positive impact, with almost a third (32 per cent) of consumers saying the result has buoyed their confidence in the UK's economic future.

Barclaycard chief operating officer Chris Wood said: "A decisive General Election, low inflation, an uptick in earnings and improving job security all contributed to a sense of financial wellbeing among consumers in the second quarter, which in turn led to record growth in both overall and discretionary spending.

"With the UK's economic prospects continuing to improve, and as consumers look forward to the summer ahead, spending on entertainment and leisure, large household purchases and overseas holidays was up strongly. With the strength of sterling against the euro making everything from short city breaks to two-week beach getaways more cost-effective, we expect this trend to continue into the third quarter.

"Rather than a fleeting trend, consumer spending has been growing steadily since last summer as more and more people started to believe that improvements in the macro environment were here to stay. With the UK's economic recovery appearing now to be firmly established, households are likely increasingly to spend more on themselves and their families."

Spending rose in every region in the UK, with the biggest rises witnessed in London (5.4 per cent), the North West (4.9 per cent) and Scotland (4.7 per cent). In the North East, East of England and South West spending increased by 3.9 per cent, 3.8 per cent and 3.7 per cent respectively.

The British Retail Consortium found UK retail sales increased 1.8 per cent on a like-for-like basis from June 2014, when they had decreased 0.8 per cent on the preceding year. On a total basis, sales were up 2.9 per cent, against a 0.6 per cent rise in June 2014. This is the strongest growth since January 2014, excluding Easter distortions and compares with a 12-month average of 1.6 per cent. Toys and baby equipment was the best performing category, helped by outdoor toys, particularly in the last week of the month, when the heat wave stimulated the sales of all seasonal items. Online sales of non-food products in the UK grew 17.6 per cent in June versus a year earlier.

BRC director general Helen Dickinson said: "The retail industry performed strongly last month, experiencing the best overall sales growth in eighteen months, excluding Easter distortions, albeit on the back of a weak June last year. Food sales grew for the seventh month in a row, while June also brought with it a boost for the non-food categories, with furniture doing particularly well. Fashion sales were also up, but this was likely helped by several retailers entering summer sales a little earlier this year. The last week of June ended the month on a high note, with seasonal items like outdoor toys in high demand.

"We saw welcome signs of growing consumer confidence, with people more willing to 'trade-up' and spend a bit more on big-ticket purchases, likely boosted by the growth in the supply of credit and other factors such as low inflation and rising real incomes. Some of the measures outlined by the Chancellor in last week's budget are likely to help boost consumer confidence even further, with measures like the continued freeze in fuel duty and the increased personal tax allowance ensuring consumers have more money in their pockets to spend. We also welcome the Chancellor's focus on increasing productivity. This is of crucial importance to enhancing retailers' ability to continue to serve their customers better."

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