At a glance: The average UK consumer in April ‘25
Talk about tariffs has dominated the airwaves and commanded eyeballs in April, and whilst UK shoppers have yet to feel the painful implications of these measures, the prevailing uncertainty surrounding the tariffs is coming at a time when household budgets are feeling the pressure of increasing Household Bills.
As a result whilst average consumer spending increased for a second month in a row to an average £2,462 per person, April saw the slowest year over year growth of the last 12 months growing +1.4% behind March’s rate of inflation of +2.6% indicating that consumers are reigning in their spending. The increase in outgoings from March also masks important shifts in the household budget in reaction to the macroeconomic environment. Household Bills increased +16.7% versus March, which amounted to an average of £43 per person, following changes to the bill cap across energy and water as well as the return of council tax payments after the February and March break that is utilised by around a third of Britons.
Consumers responded and offset these rising costs by cutting back on discretionary spending across Retail, Out of Home, Leisure & Entertainment, and Travel which all saw spend decline between -3.5% and -4.8%. This decline stemmed from changing consumer behaviour as they reduced the frequency of purchasing, with 3 fewer transactions on average, rather than a culling of brands in their repertoire or reducing their spend when in an indulgent mindset. For brands this means that there are fewer occasions to compete for but on a positive note the size of the prize for every incremental engagement is unchanged and consumers are not yet culling the brands in their repertoire.
Out of Home blues in spite of sunny weather
April was another record breaking month for UK sunshine and the hottest April in 7 years. However, even combined with the long Easter Bank Holiday weekend it proved insufficient to stimulate Out of Home demand with sales dropping 9% versus last year – equivalent to nearly £400m of consumer spend. Bars & Pubs (-13%) and Mid Tier Restaurants (-14%) were the hardest hit compared to last year and combined with a decline in Takeaway Delivery (-10%), indicates that people opted for home cooking and drinking off premise.
Many consumers channelled their energy into more productive endeavours over the Bank Holiday which provided time for them to kick off projects around the home with Home Improvement and Furniture & Homewares sales growing +5% and +6% respectively. This is a trend that should continue through the bank holiday season before demand lulls for Home Improvement during the summer holidays. Targeting DIYers can provide a low hanging opportunity for Homewares brands by going after these fixer-uppers offering furniture and decorations to complete their look.
As we have seen, Household Bills surged in April but when we dive into the specifics we can see that this was not a universal picture as Mobile, TV and Broadband providers actually saw spend decline -5.4% compared to last year. This includes several of the leading mobile network providers O2, EE, and Three who saw double digit declines and this indicates that consumers are changing their behaviours where possible to minimise costs whether switching to cheaper packages, delaying upgrades, or hunting down the best deals.
This may reflect greater financial prudence as it coincides with Consumers once again increasing their Savings (+37%) to capitalise on the new tax year allowances and declining spend with Betting and Gambling vendors (-10%). But this goes beyond financial pragmatism and the strong growth of Experiences (+17%), Hobbies (+13%) and Womenswear (+11%) indicates consumers are prioritising their spending towards avenues that provide the greatest happiness dividend. There is still a healthy appetite for indulgences and brands can win that provide that sought after joy, connectivity, and distraction.
Shining a spotlight on Experiences
The warm weather and Easter holiday stimulated strong demand from family audiences. This is a nationwide trend whether it is days out providing that opportunity for emotional connection, a trip to the cinema, or bookings for concerts and the theatre.
The future planning for the summer seen in the purchasing of concert & theatre tickets and annual memberships can provide an opportunity for Travel & Holiday brands to tap into by leveraging demand for relevant local attractions.
Growing 18 – 34 spend goes beyond rising household costs
The growth of 18 – 34 spend compared to April 2024 is a more nuanced and optimistic view than might be expected in the economic environment of their rising Household Bills (+11%), Mortgage Rates & Rents (+31%). On a positive note, Savings & Investment deposits grew at the start of the new tax year +42% versus last year and +12% vs. March with this digitally savvy generation embracing new gen Smart Savings and Trading Platforms like Moneybox & Trading 212. For many consumers this seems to have been achieved by cutting back on Leisure and Retail spending, but as noted last month BNPL (Buy Now, Pay Later) is on the rise particularly with this audience (+81%) far ahead of Credit Card spend (+19%) indicating possible future financial risk amongst some younger segments.
From an income band perspective spending has remained relatively stable both versus last year and month over month. Rising household costs expressed themselves most markedly on consumers earning under £60k who saw monthly costs rise slightly, whilst the flat spend amongst the £60k+ segment in part reflects contraction of travel spending reflecting the seasonal booking cycle.
At a geo-level we found that spending declined from March across the North, Scotland and Wales, which also saw low single digit growth year over year. With the South Coast and Midlands reporting some growth in spend it may implicate the role of warmer and sunny weather in shaping spending patterns as seen at a category level.
3 things i’m keeping an eye out for in May:
- Boost for home buyers. The Bank of England reduced the interest rate again by 0.25% at its May meeting and the IMF predicts 2 further cuts before the end of the year. This could help to offset the short-term impact of the stamp duty changes, boost home prices, and provide consumers with more reasons and resources to invest in their home.
- Competitors benefit from M&S cyber attack. M&S sales dropped -7% in April and have continued to plummet through the start of May as their online ordering remains out of action. With consumers refreshing their wardrobes in preparation for the summer it will be interesting to see who can attract M&S’ digital natives and win share in May.
- Chinese Digital Natives Focus on UK growth. The imposition of tariffs and revision of import duties rule could undermine the competitiveness of Chinese imports from the likes of Temu and Shein. For the latter the U.S. makes up over a quarter of their sales and in the hunt for long term sustainable profitability we may see Shein focus more on their third largest market.
Do you have any questions, thoughts or want to get a deeper insight into consumer confidence in the run up to 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.
Glossary:
- Merchant: This reflects spend at a vendor who is taking the payment which can include particular retailers, restaurants, service or financial providers e.g. Tesco, Pizza Express, ASOS, Aviva Life Insurance, Klarna.
- Consumer Monthly Spend: This reflects the average amount of outgoings seen from a customer’s account in a month. This covers all outgoings from Retail and Leisure spend to Household Bills, Mortgage Payments, or Savings deposits.
