Easing of Covid restrictions has coincided with a loosening off people’s purse strings, according to data from Nationwide’s latest quarterly Spending Report1 that shows both essential and non-essential spend have soared.
The amount spent on non-essential items, such as holidays, leisure, gardening, eating out and even charity soared during the second quarter of the year as people enjoy their new-found freedoms by spending more on both themselves and others.
According to the Society’s latest Spending Report, more than £22 billion was spent by Nationwide members during the second quarter of the year as inflation jumped to 2.5 per cent in June. This is based on around 566 million transactions made by members between April and June – a 20 per cent increase on the number of transactions made in the first three months of the year.
Spending continued to rise across the board during the second quarter of the year – essential household spend increasing by 13 per cent compared the first quarter of the year, while non-essential spend in Q2 grew by 60 per cent.
As spending continues to rise, the UK Consumer Insight Panel2 convened by Nationwide Building Society earlier this year continues to look at ways that consumers can support the local and national economy, while ensuring that spending is done in both a safe and sustainable way.
Non-essential spend:
Holidays:
More than 150 million non-essential transactions were made by Nationwide members between April and June (up 73% on the first quarter of the year) equating to around £4.6 billion – a 60 per cent increase in spend versus January to March.
Holidays saw the biggest increase in the number of transactions, marking a 288 per cent increase to 3.1 million compared to the first quarter of 2021. Total of £429.4 million spent in Q2 – up 141 per cent.
And with staycations very much in demand, spending on campsites and caravan parks went up by 139 per cent to £69.5 million compared to the previous three months. The 500,000-plus transactions recorded make up around one in seven (16%) of all holiday transactions.
While the number of transactions made on hotels and resorts increased in the second quarter to 1.8 million (compared to 353,000 in January to March), it is still much lower than how many transactions were made in Q1 2020 (2.25 million). Total spend via travel agencies is also starting to recover, with £128 million spent between April and June – double that spent in the first quarter (£67.5 million). However, it is still someway short of the amount spent in Q1 2020 (£356 million).
Charity:
They say charity starts at home and Nationwide’s members upped contributions in the second quarter of the year, despite being in lockdown, giving £133.7 million to good causes – a 16 per cent increase on the first quarter of this year.
Gardening:
Gardening continues to bloom across the nation with Nationwide members spending £110.6 million between April and June, an increase of 77 per cent on the first quarter of the year. This is based on more than 2.8 million transactions in the second quarter, which represents a quarter-on-quarter increase of 103 per cent.
Dating:
The search for love continues to thrive in 2021 with £3.8 million spent between April and June (up 5% quarter-on-quarter and 36% against the same period last year).
Leisure and recreation:
£269.4 million was spent on leisure and recreation in the second quarter of the year – an increase of 108 per cent on January to March, with the number of transactions increasing by 113 per cent to 7.93 million. Sporting goods stores have particularly benefited as the year has gone on, with the number of transactions increasing 41 per cent to 2.29 million compared to the first quarter of last year (146 per cent against the first quarter of this year).
Eating out:
As restrictions have begun to ease, more people have started to eat and drink out once again, with the number of transactions between April and June (75.7 million) increasing 100 per cent on the first quarter of this year. This equated to a total spend of £1.05 billion in Q2 (a quarter-on quarter increase of 112 per cent). The average value of each transaction has also increased slightly from £12.87 in April to £14.43 in June.
Drinking:
The number of transactions in bars and taverns has reached 9.39 million in the second quarter of this year. This is nearly back to where it was prior to the first national lockdown in March last year (9.56 million transactions in Q1 2020). This has had an impact on the number of transactions made in fast food restaurants. While they accounted for 47 per cent of all transactions in the eating and drinking sector in Q1 2021, that dropped to just 34 per cent in the second quarter.
|
NON-ESSENTIAL SPEND |
||||
|
Spend category |
Total spend Q2 2021 (£s) |
Change in spend vs Q1 2021 |
Total number of transactions in Q2 2021 |
Change in transactions vs Q1 2021 |
|
Airline travel |
42,184,338 |
33% |
236,206 |
70% |
|
Charities |
133,700,865 |
16% |
5,769,048 |
42% |
|
Clothing & Shoes |
610,945,107 |
73% |
14,083,592 |
81% |
|
Dating |
3,777,546 |
5% |
191,710 |
3% |
|
General retailers/dept stores |
74,860,264 |
-91% |
538,333 |
-98% |
|
DIY/home improvements |
912,292,766 |
28% |
12,576,935 |
19% |
|
Eating & Drinking |
1,053,925,769 |
112% |
75,717,674 |
100% |
|
Gardening |
110,595,773 |
77% |
2,858,520 |
103% |
|
Health & Beauty (e.g. hair, nails, massage) |
508,902,277 |
48% |
13,927,296 |
53% |
|
Holidays (e.g. hotels, travel agents, packaged holidays, resorts) |
429,351,013 |
141% |
3,097,449 |
288% |
|
Leisure & Recreation (e.g. sports, gym, swimming) |
269,413,453 |
108% |
7,934,319 |
113% |
|
Other shops (e.g. furniture shops, specialist shops, catalogues) |
461,105,356 |
17% |
16,199,008 |
26% |
|
TOTAL |
4,611,054,527 |
60% |
153,130,090 |
73% |
Essential spend:
Although essential spend and the number of transactions has risen quarter-on-quarter, they have not increased to the same extent as non-essential spending. The number of essential transactions (267.9 million) in April to June have increased by 19 per cent on the first three months of the year. That equates to an essential spend total of around £9.3 billion (up 13 per cent on the first quarter).
Utilities:
The amount being spent on utilities, such as gas, water and electric, has also increased as the year has gone on. In fact, the £1.4 billion spent between April and June is a 33 per cent rise on how much was spent during the first three months of the year.
Supermarkets:
Supermarket spend, which has already seen a rise during the pandemic, remained fairly stable with a five per cent increase quarter-on-quarter to around £2.9 billion between April and June.
Travel (e.g. public transport, taxis):
As the UK begins to open up, it is perhaps no surprise that travel saw the biggest increase in essential spend during April to June this year. There were around 23.7 million transactions made (up 118 per cent on Q1 2021), equating to a total spend of circa £193.2 million, which is a 126 per cent increase on the first three months of this year.
Taxis:
Taxis have experienced an increase in usage with 5.5 million transactions in Q2 2021 versus 4.4 million in the first three months of last year (2.8 million in January to March 2021). Around £49.5 million was spent on taxis during April to June, slightly higher than what was spent pre-pandemic (around £43 million), and around double what was spent in January to March this year (around £24 million).
Public transport:
There was a drop in spend on local commuter transport, with £26.4 million spent in Q2 this year compared to £41.8 million in the first three months of 2020. In fact, local commuter transport transactions dropped by around a third (35%) in that time – from 7.4 million in January to March 2020 to just 4.8 million in April to June this year.
Motoring & Fuel:
Spending on motoring increased by 52 per cent to £703.9 million, while spending on fuel and electric charging increased by 42 per cent to £676.1 million between April and June versus the first quarter of this year.
Pets:
The UK continues to have a love affair with pets. In the first three months of this year, 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. April to June saw even more money spent on our furry and feathered friends, with Nationwide members spending £124.5 million – a seven per cent increase on the first quarter of this year.
|
ESSENTIAL SPEND |
||||
|
Spend category |
Total spend Q2 2021 (£s) |
Change in spend vs Q1 2021 |
Total number of transactions in Q2 2021 |
Change in transactions vs Q1 2021 |
|
Motoring (e.g. cars, bike, road tax, maintenance) |
703,946,177 |
52% |
4,289,495 |
2% |
|
Debt |
1,342,754,410 |
-3% |
6,201,878 |
-1% |
|
Discount stores |
102,572,073 |
-2% |
4,392,088 |
21% |
|
Fuel/Electric car charging |
676,103,207 |
42% |
27,002,208 |
34% |
|
Insurance (e.g. home, car, life, travel) |
652,914,927 |
3% |
13,733,726 |
3% |
|
Mortgage payments |
474,718,487 |
5% |
832,182 |
6% |
|
Pets |
124,509,025 |
7% |
2,795,280 |
7% |
|
Rent payments |
25,394,471 |
-7% |
102,214 |
-13% |
|
Supermarkets |
2,858,967,322 |
5% |
144,495,072 |
17% |
|
Travel (e.g. public transport, taxis) |
193,226,523 |
126% |
23,697,486 |
118% |
|
TV, phone & broadband |
733,516,299 |
5% |
21,288,688 |
4% |
|
Utilities (e.g. gas, water, electric) |
1,372,476,311 |
33% |
19,095,067 |
15% |
|
TOTAL |
9,261,099,232 |
13% |
267,925,384 |
19% |
Ways to pay:
The boom in contactless payments, particularly via mobile, generated as a result of the pandemic, has continued even as the country begins to open up once again. Between April and June, more than 58 million transactions were made using mobile payments, such as Apple Pay and Samsung Pay. This is up 70 per cent on the first three months of this year and a 191 per cent increase on the second quarter of 2020.
Perhaps unsurprisingly, as more and more shops reopen, the number of transactions using contactless cards as payment in store has increased by 48 per cent (189.9 million) on the January to March period this year.
While the amount spent on debit cards increased slightly (15%), there was a bigger increase in how much was spent on credit cards in the second three months of 2021 (up 27% on January to March 2021).
|
WAYS TO PAY |
||||
|
Total spend Q2 2021 (£s) |
Change in value vs Q1 2021 |
Total number of transactions in Q2 2021 |
Change in transactions vs Q1 2021 |
|
|
Debit card |
14,044,559,398 |
15% |
447,736,758 |
28% |
|
Credit card |
1,858,334,925 |
27% |
38,210,947 |
29% |
|
Card contactless3 |
2,259,360,578 |
46% |
189,927,520 |
48% |
|
Mobile payments4 |
703,449,327 |
76% |
58,754,823 |
70% |
|
Direct debit |
6,167,565,488 |
10% |
79,656,545 |
8% |
Mark Nalder, Nationwide’s Head of Payments, said: “As the country reopens, our latest quarterly Spending Report suggests that consumer spending is following suit as people loosen those purse strings and start to enjoy getting back out there. This yearning for a sense of normality, combined with a successful vaccination programme, is perhaps what is driving spend upwards – with a significant increase in holiday spend a prime example of this. The feeling of a brighter future is perhaps acting as a catalyst for wider increased spending, from charity donations to seeing friends again – all of which is keeping the tills ringing.
“Essential spending has also increased in most areas, although not by the same margin. We’re spending more on utilities as costs continue to rise, while travel and fuel spend has also risen as a result of getting out and about more. However, areas which were already high, such as supermarket spend, have remained broadly flat, with a rise in eating and drinking out potentially offsetting some of that expenditure.
“It’s not just in what people are spending either, it’s also in the ways that they are paying. The pandemic has seen a surge in use of contactless, particularly via mobile phone, and it’s clear from our latest data that the switch to tap and go is here to stay, even when shopping in store.
“As we move deeper into summer, we expect non-essential spending to continue edging up as people look to enjoy their freedom using some of the savings built up during lockdown to help boost the economy. As we look ahead to a brighter future, we want to capitalise on this by seeing more work being done to help consumers spend safely and for the benefit of society.”
