At a glance: The average UK consumer in May ‘25
As far as 2025 goes, May proved to be a relatively less turbulent month that brought some more positive news for UK consumers as an easing in the U.S.’ trade wars came alongside the UK government’s announcement of a trade deal with the EU. In addition, the Bank of England’s decision to reduce the interest rate to 4.25% brought hope for new buyers as well as the promise of increased disposable income for those renewing their mortgages who had previously experienced rates higher than 5%.
May saw average consumer spend decline -2.7% from April to an average of £2,424 per person, and a second successive month of low single digit growth year over year at +1.5% which may indicate slowing consumer appetite and increased caution. The greatest decline in outgoings reflected the seasonal drop in allocation to Savings & Investments which dropped -40%, equivalent to -£3.6bn, after consumers rushed to utilise their new tax year allocations in April. However, this decline is greater than that seen historically and may indicate a shift in the consumer allocation of their finances as uncertainty and falling savings interest rates may encourage more consumers to keep their funds in current accounts or cash.
The outlook is far from doom and gloom though with Travel & Holiday (+5.5%) and Retail (+0.9%) seeing an extra £500m in spend from UK consumers compared to April. In addition, whilst Entertainment & Leisure (-2.8%) spend contracted slightly from April it saw the strongest year over year growth in the period (+7.8%). The growth across these 3 verticals represented an extra £1.2bn windfall for brands within these industries as consumers continue to indulge. Consumer spending allocation indicates a change in appetites as Out of Home spend declined -4.7% YOY, driven by a drop in consumption occasions (-6.8%), as rising food & drink prices erodes the perceived value for consumers.
Brits plot sunny escapes over bank holiday weekends
It seems across the bank holidays that the warm weather, and perhaps not a little post holiday blues, inspired a host of bookings in May as Travel & Holiday spend grew +5%, with consumers spending an extra £340m. Travel & Holiday spend has exceeded £66bn for the last 12 months and consumer appetite in the category shows no signs of slowing as they spend more, and more often. This growth was driven in large part by online Travel Agents which grew +7%, with more modest growth through direct bookings for Airlines (+4%) and Hotels (+3%). Travel Agents are used by 2 in 3 UK consumers and these predominantly digital travel agents accounted for 57% of spend in May.
Jet2Holidays (+25%) and British Airways (+17%) were the biggest winners as their respective promotions saw them grow their market share. This is an industry with strong loyalty and repeat purchase propensity which can be seen in May as 64% of these Jet2holidays customers and 72% of the British Airways customers had made a previous booking with these brands in the last 12 months. In the UK travellers average 9 bookings per year, but spread this across just 3 brands, showing a preference for proven, trusted providers and the ripe opportunity provided for travel brands retargeting their existing customer base.
Consumers directed their spend to international escapes over domestic indulgence with Entertainment & Leisure -2.8% and Out of Home -0.2% in May. For Out of Home it was a similarly challenging picture as it had been in April with 2 bank holidays, as well as an extra Saturday in the month, proving unable to stimulate demand. Coffee & Bakery outlets were the only segment within Out of Home which saw modest growth with spend increasing +3% vs. April, and +1% vs. last year.
Pubs and Bars recorded a second successive month of double digit declines, -10% vs. last year, and the picture may not improve in June and July as these venues cycle the impact of Euro 2024 that buoyed pub visitation. Alcohol brands may find the greatest opportunity by focusing on Grocery sales and at-home consumption to reflect this changing consumer behaviour and can capitalise on interest in the Lionesses’ campaign at Euro 2025.
The outlook was more positive for Retail as spend crept up to £19bn in May, adding an extra +£323m vs. last year. This included a strong performance month over month from a number of segments including Apparel (+7%), Marketplaces (+5%), and Beauty (+3%) as retailers within these categories benefitted from the warmer weather and the changing of the seasons continuing to stimulate new need states.
The strongest performers were the online native retailers Shein (+15%) and Temu (+17%) as well as fast fashion brands Zara (+14%) and H&M (+12%). The online native brands in particular benefitted from the acquisition of M&S’ customers as their pause on online orders after the cyber attack resulted in a -21% decline in spend year over year, equivalent to £221m or 1.7% of their sales from the last 12 months. M&S’ online presence is critically important as it taps into a distinct audience and they will face a battle to reclaim defected customers.
Shining a spotlight on Furniture & Homewares
Whilst DIY had been the mission in focus across the April bank holidays for productive UK consumers, buying new Furniture and Homewares was the job to be done in May with spend growing +9.1%. The growth was driven by a higher average transaction size indicating consumers were investing in bigger ticket items to complete their rooms including beds & sofas.
There is a strong interrelationship between the Furniture & Homewares and DIY verticals as larger projects and work around the house stimulates demand for furnishings to complete the look. This is illustrated by the fact that more than ⅓ of those spending with Furniture & Homewares stores in May had visited DIY stores in the previous month. Brands can leverage this to their advantage by anticipating new need states, targeting these DIY’ers, and slotting their brand into the consumer journey.
The Furniture & Homewares & DIY segments also stand to benefit from recent and projected interest rate reductions as those who were on a 2 year fixed rate at 5% will shortly be remortgaging and may now have more funds to invest in their home. In addition, lower rates can entice a new wave of buyers. It will be important for brands to identify the relevant audience segments, their mindsets and jobs to be done that they can tap into.
£60k+ segment see outgoings slashed after utilising tax free allowance
The higher income segment saw the greatest reduction in outgoings versus April which was driven by the reduction in deposits to Savings & Investments accounts (-52%) which amounted to a whopping £1bn. As could be expected, these more affluent individuals are the fastest movers to utilise their tax free allowance at the start of the new tax year, whilst those of a lower income segment are more likely to scramble to use up their allowance in March. This higher income segment continues to indulge with spend across Travel & Holiday (+16%) growing even faster than the UK average, and their Out of Home spend bucking the market trend and holding in line with 2024.
Whilst all three age groups reigned in their outgoings in May, the 55+ consumers saw outgoings decline most significantly reflecting the decline in Savings & Investments deposits. When we dive into the discretionary spending habits we find that consumers aged 35 – 54 saw the greatest contraction in Out of Home spending (-5% YOY) indicating that it may be family audiences that are feeling the greatest impact of rising food & drink costs and focusing on at home dining and meal prep. For Retail, whilst all age segments saw their spend grow in the short term, consumers aged 18 – 34 saw the greatest increase YOY (+5.9%) indicating they can continue to provide a growth opportunity as the older age groups begin to plateau.
Londoners saw the sharpest fall in outgoings which fell -5.9% in May, which reflected the fall in Savings deposits from April. Londoners spending across Travel & Holiday soared +25% to an average of £534, compared to the UK average of £453, as the range of airports, trains, and coach connections provided means consumers can always find a solution to meet their price threshold. Two of the lowest spending regions Wales (+1%) and the North East (+0.4%) were the only regions which saw their outgoings grow in May, as they appeared disproportionately impacted by rising Household Bills which increased costs on average by £14 per person.
3 things i’m keeping an eye out for in June:
- Second month of declining consumer spend. In the last 2 years consumer spending has dropped between 4 – 7% in June as non-essential spend is curtailed following the periods of bank holidays & half terms, and as consumers keep their powder dry for their holiday escapes.
- Festival Season Begins. Across the UK June brings a feast of live music entertainment with Glastonbury, Download, Parklife and British Summer Time. Beyond the benefits for local economies, post-festival blues may provide a boon for Experiences & ticket vendors.
- Beauty spurred by holiday essentials. Health & Beauty retailers stand to benefit from international holiday makers and staycationers’ needs for summertime essentials. Retailers in these segments should continue to grow into late July as summer sun stimulates the need for sun-cream, travel kits, and other skincare essentials.
Do you have any questions, thoughts or want to get a deeper insight into consumer confidence as we enter the summer? If so, please reach out and we can take a deeper look into how consumer mindsets are evolving.
Introducing our Consumer Mindset Tracker
Our Consumer Mindset Tracker is released in the first half of every month. The purpose is to leverage the wealth of open-banking data that powers our Spendmapper platform to get a clear picture of how consumer spending behaviour is evolving in the UK. This can help us get an insight into consumer confidence, reactions to societal, economic, or seasonal events, and how this ultimately shapes the opportunity available for brands and can inform their marketing strategies.
What powers our Spendmapper platform?
Our Spendmapper platform, developed in collaboration with award-winning consumer app Snoop, utilises open-banking data which provides visibility of the spending behaviours of over £10bn of UK consumer spend across more than 3,000 of the UK’s biggest merchants within a broad range of categories including Retail, Finance, and Household Bills. Our starting point is the consumer which means that we get a holistic 360° view on how they are managing their household spend, indulging or cutting back across categories, and the retailers that sit in their repertoires.
