Dogs, Dating and Dahlias: Household spend down in first quarter of 2021 but more being spent on making emotional connections

Household spending in the first three months of 2021 has reduced compared to last year as the impact of lockdown is laid bare. However, life in lockdown has led to more money being spent on building relationships with people, pets and plants as the nation puts a premium on making emotional connections.

Nationwide’s latest quarterly spending report, which is based on more than 450 million transactions made by the Society’s members between January and March, reveals the top areas which have seen the biggest increases are dating sites, gardening and pet-related costs, in addition to general retailers and department stores where spend has been driven by online sales.

However, across the board spending remains down on last year – with essential household spending reducing by 3.4 per cent compared to last year and non-essential spending plummeting 14.9 per cent.

Essential spend:

With lockdown measures continuing throughout the vast majority of the period, it is perhaps no surprise that travel saw some of the biggest decreases in spend during January to Match this year. As well as essential costs falling year on year, transactions also fell by 8.2 per cent compared to last year.

Travel spend (e.g. public transport, taxis) fell by 67 per cent to £85.3 million with the average spend per transaction over the three-month period £7.86 compared to £10.77 last year. Likewise, spending on motoring also dropped by 26 per cent to £461.9 million and with an average spend per transaction of £109.53, while spending on fuel and electric charging reduced by 24 per cent to £477.3 million.

However, spending on pets and supermarkets bucked the downward trend, according to Nationwide’s data, as people take more time out to look after their furry and feathered friends. Spending on pets saw the biggest increase in essential spend, with £116.8 million splashed out in the first quarter of the year – an increase of 22 per cent on the same period in 2020 and an average spend per transaction of £44.80. This growth in spend is likely a symptom of greater pet ownership, with data from the Pet Food Manufacturers Association revealing a total of 3.2 million households have acquired a pet since the start of the pandemic¹.

Supermarket spend jumped 16 per cent to £2.7 billion, with the average spend per transaction being £21.98.

Non-essential spend:

Non-essential spend in the first three months of 2021 was down significantly on the same period last year, mainly down to the impact of lockdown measures. The number of non-essential transactions also fell – by 21 per cent.

Airline travel dropped 81 per cent to £31.7 million, and holiday spend reduced by 73 per cent to £178.2 million. Spending on leisure & recreation, severely impacted by the closure of gyms and swimming pools, was down 43 per cent to £129.5 million, while the 38 per cent drop across the eating & drinking spend (£497.2 million) was partly mitigated with the fact many establishments have been able to offer a takeaway service.

However, general retailers & department stores saw the biggest year-on-year increase in both spending and number of transactions of all non-essential spending. There was a 62 per cent increase in spend (£856.7m) and a 77 per cent rise in the number of transactions in January to March this year – a gap that captures the growth in online orders from the likes of Amazon as well as the websites of major department stores.

While the rise of online orders in itself is perhaps not surprising, a 53 per cent increase in spending on gardening in January to March this year (to £62.4 million) highlights how lockdown has changed mindsets on how people see their open spaces, with many spending time turning to nature in lockdown, spending an average of £42.85 per transaction. DIY spend also increased, albeit by a smaller 16 per cent, as people spent more time indoors.

Online dating also saw a significant increase in the first three months of the year, perhaps driven by optimism on the one side as lockdown restrictions begin to lift and on the other a sense of longer-term loneliness among many. The number of transactions increased by 46 per cent year-on-year, while total spend is up by more than a third (34%) to £3.6 million.

Ways to pay:

Over the first three months of the year, there has been a 47 per cent increase in the amount spent via mobile payments, such as Apple Pay and Samsung Pay, as more and more people take advantage of the ability to use these mobile payment options on their online shopping.

At the same time, the number of transactions using contactless cards as payment in store has fallen by nearly 25 per cent, presumably as a result of fewer shops being open in the first quarter of this year compared to 2020 and more and more people going online to make any purchases needed.

While the amount spent on debit cards has increased slightly (7%), there has been a significant drop in how much was spent on credit cards in the first three months of 2021 (down 23 per cent on the same period last year) as many people decided to pay off existing debt instead.

Mark Nalder, Nationwide’s Head of Payments, said: “The difference a year makes to how and where we spend our money is staggering. The impact of the pandemic is clearly evident, to the point it has reversed a trend where both essential and discretionary continued to rise. 

“Life in lockdown has taught us that our connections are extremely important. Many of us have invested our time in our families, gardens and pets, while others are keen to embrace the relaxing of restrictions as they look to start new relationships after a long period of time alone. This equates to where we are spending our money and likely the reason why such areas have seen spend grow rather than shrink in line with general essential and discretionary costs.”