Household spending tumbled 11% in the first quarter of 2021. Only e-commerce prevented an even greater collapse, says ParcelHero

This article is brought to you by Retail Technology Review: Household spending tumbled 11% in the first quarter of 2021. Only e-commerce prevented an even greater collapse, says ParcelHero.

The latest Office for National Statistics (ONS) Consumer Trends report reveals household spending tumbled 11% in the first quarter (Q1) of 2021, compared to the same period last year. The report shows that hotels and restaurants were hardest hit: spending on meals and accommodation collapsed by 63% this January-March, compared to Q1 last year.

The home delivery expert ParcelHero says the damage to the High Street would have been greater if embattled families hadn’t turned to the internet for their goods and food.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: “A collapse in household spending on this scale is disastrous enough, but imagine if the virus had hit back in the 1990s, before most stores had websites and when most people were still on dial-up – if they had the internet at all. The impact would have been far greater and many businesses would not have weathered the storm.”

Jinks continues: “This report shows spending fell overall in Q1 this year during Lockdown 3.0, but ParcelHero’s own research reveals online sales grew exponentially to meet the demand for goods and food. In February 2020, online accounted for just 19% of all retail spending; by February 2021, this had mushroomed to 36% of the entire retail spend. Without e-commerce, household expenditure would have collapsed by well over 20%.

“Perhaps surprisingly, the Consumer Trends report also reveals that households spent 4.6% less in the first quarter of this year than in the preceding quarter (October-December 2020). Spending would have been severely affected during this period by the impact of England’s second national lockdown (5 November-2 December). However, Black Friday and Britain’s first truly online Christmas helped keep household spending relatively buoyant during this period. 

“In contrast, England’s third lockdown hit on 6 January and non-essential stores didn’t reopen their doors until 12 April. The consequences were significant, with hotel and restaurant income falling by 42.2% compared to the months leading up to Christmas.

“Looking on the bright side, the collapse in household expenditure at the beginning of the year may mean families have more cash in their coffers to spend this summer. We could be looking at a bumper holiday season for stores, hotels and restaurants as Brits enjoy the 2021 Great Staycation.

“Even so, the e-commerce genie is out of the bottle. ParcelHero’s research has found two-thirds of consumers say they will never return to their pre-pandemic High Street shopping habits.”