• Pressure on household finances sees consumers trade down to discount retailers, pushing up year-on-year spending by 21 per cent
• Luxury retailers also see robust growth with shoppers spending six per cent more at the top-end of the retail sector
• The 'squeezed middle' is left facing flat or falling growth

Consumer spending at the value end of the market is significantly outpacing other retail sectors as shoppers focus on getting more for their money, according to Barclaycard, which processes nearly half of all the UK's debit and credit card transactions.

With luxury spend also showing robust growth, middle-market retailers are struggling to attract shoppers, leading to flat, nominal or even negative growth.

Consumer spending in discount stores, budget grocers and fashion outlets has grown sharply over the last 12 months. This has led to a 21 per cent rise in the amount spent across the sector this year versus last, and a 23 per cent increase in the number of transactions. Luxury retail spend is also growing - it was up six per cent in March compared to last year; with the average basket spend up nearly nine per cent to £121.

The huge growth in spending at value retailers and the strong performance in luxury spend is in stark contrast to more muted figures seen elsewhere. At just 1.1 per cent last month, overall spend growth was below inflation for the first time in six months while Supermarket spend was down 2.6 per cent and Department Stores sales were flat.

Valerie Soranno Keating, CEO of Barclaycard, said:

"During the economic downturn we saw a notable shift in spending patterns with many consumers 'trading down' and focusing on getting value for money. It's a trend that's continued into 2014, with discount retailers doing particularly well, and is likely to remain the case until we see meaningful and sustained wage growth.

"Perhaps a little surprisingly, however, we continue to see strong growth in the luxury sector as consumers make sacrifices elsewhere to afford a luxury purchase. This has created a 'squeezed middle' of retailers, many of whom are seeing flat or negative growth.

"The challenge for those retailers caught in the middle is how to quickly adapt to meet the demand for greater value - whether that's through the prices they charge, the products they stock or the channels they use."

For more information please contact Tom Foxton, Media Relations Manager, Barclaycard, on 07880 184381.

Barclaycard processes nearly half of all card transactions in the UK. Our spending data is based on transactions from our UK credit card business, UK payment acceptance business and spending on Barclays debit cards.

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