£13 billion shift in spending creates new “isolation economy”

The coronavirus lockdown has caused a £12.9 billion shift in the UK’s retail economy despite an overall drop in consumer spending.

A new “isolation economy” has emerged, seeing major boosts in grocery, alcohol, entertainment and hobbies and craft sector spending, according to a new report from Legal & General and Centre for Economic and Business Research (CEBR).

Overall expenditure across the UK has declined fairly dramatically since lockdown, especially in shoppers who have been furloughed, leading to an estimated annual drop of £215 billion.

However, shoppers are spending an extra 10 per cent on these new isolation categories, equating to around £107 a week for those still in employment.

A large chunk of this extra weekly spend goes on groceries hitting an average of £73.69 per week, representing an average increase of nine per cent, rising to 14 per cent for those who haven’t been furloughed.

READ MORE: Government confirms non-essential online retail is “encouraged” during lockdown

“The isolation economy is a new feature of our daily lives and now encompasses some £13 billion a year of the consumer economy,” Legal & General’s chief executive Nigel Wilson said.

“As the hub of the isolation economy, the home is becoming a more flexible space, doubling up as a place for schooling, work, fitness and entertaining – and we can expect changes to the way we think about and design homes for future home owners.”

The US has seen a similar shift in spending, with online grocery sales set to rise 40 per cent this year according to Coresight Research’s Online Grocery Survey 2020.

Coresight’s chief executive Deborah Weinswig added: “The coronavirus outbreak has prompted shoppers to buy food and essentials online in greater numbers and more frequently.

“By the time of our survey in mid-March, the outbreak had already encouraged just under half of online grocery shoppers to buy more groceries online or driven them to start buying online.”

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