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A recent report from Barclays indicates a notable annual increase in spending on digital subscriptions, driven in part by the popularity of acclaimed series like “Baby Reindeer” and “Ripley.”
These shows, characterized by compelling narratives and standout performances, have significantly contributed to the uptick in subscription fees.
Impact of Blockbuster Series:
“Baby Reindeer,” created by and starring comedian Richard Gadd, has garnered widespread acclaim, generating substantial word-of-mouth buzz.
Similarly, “Ripley,” featuring Andrew Scott as an antihero entangled in a world of opulence, has captivated audiences, further fueling the surge in digital content spending.
Factors Driving Growth:
In addition to the allure of hit series, Barclays attributes the spending surge to factors like increased subscription fees and stricter regulations on password sharing implemented by streaming platforms.
These measures have collectively contributed to a notable 10.6% rise in digital content and subscription expenditures.
The research is based on the analysis of consumer spending data collected from Barclays debit and credit card transactions. A comparison was made between two specific periods: March 23 to April 19, 2024, and March 25 to April 21, 2023.
During the first period in 2024, spending on entertainment experienced a notable increase, growing by 3.2%. This rise is attributed to families enjoying the half-term break.
In contrast, spending on takeaways and fast food remained relatively unchanged, showing a flat growth rate of 3.0%, indicating consistent consumer behavior in this category compared to the previous year.
Furthermore, a survey conducted by Opinium for Barclays in April revealed a significant trend: nearly three-quarters (73%) of respondents are actively seeking ways to reduce their weekly grocery expenses.
This marks the highest level of interest in cost-saving measures since tracking began in January 2023, indicating a growing emphasis on financial management among consumers.
Economic Outlook and Consumer Confidence:
Barclays anticipates that the forthcoming easing of interest rates in the latter part of the year will bolster consumer confidence and stimulate spending.
However, despite this optimism, many retailers remain cautious, expecting a more substantial recovery to materialize later in the year.
Mixed Sentiments on Household Finances:
Consumer sentiment regarding household finances appears nuanced.
While there is a prevailing confidence in managing finances and adhering to budgets, a significant portion of consumers are actively seeking ways to trim their weekly expenditures, reflecting concerns about economic uncertainties.
Retail Spending Trends:
Overall retail spending has experienced a marginal contraction, with in-store shopping particularly affected by external factors such as weather conditions.
However, certain sectors have bucked the trend, with pharmacy, health, and beauty retailers witnessing a notable 4.9% increase in spending.
Influence of the “Lipstick Effect”:
The observed growth in spending on beauty products aligns with the concept of the “lipstick effect,” wherein consumers opt for smaller indulgences during periods of economic uncertainty.
This trend, coupled with the wellness boom and viral makeup and skincare content, has contributed to the resilience of the beauty retail sector.
Karen Johnson, head of retail at Barclays, said: “Retailers were hopeful that discretionary spending would bounce back by mid-year, buoyed by falling inflation and the prospect of better weather. While improving consumer confidence offers a ray of hope for the retail and hospitality industries as the summer season approaches, many retailers have adjusted their expectations, anticipating no real recovery until the autumn.”
Jack Meaning, chief UK economist at Barclays, said: “Given the long squeeze consumers have faced, it may take time for this to translate into stronger discretionary expenditure, but easing interest rates in the second half of this year should spur consumers’ confidence and spending.”
