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There’s a problem hiding in most retailers’ data right now. Customers are still coming in, still using their loyalty cards. They still show up as active customers. But the bigger, more considered purchases, the ones that take more thought, carry more margin, and signal a real relationship, may be going elsewhere. And nothing in your weekly reports will flag it.
This is what retail customer spending habits look like when they fragment. There’s no complaint or dramatic exit. Just a slow redistribution of spend to specialists, resale platforms, and category alternatives.
Why Retail Customer Spending Habits Are Getting Harder to Read
UK consumers now shop across an average of 12-13 physical and digital stores each month, according to Retail Economics. The idea of a ‘main’ retailer, the place someone goes first, automatically, for a whole category, is becoming harder to hold on to.
This isn’t disloyalty. It’s more that consumers have become deliberate about what they’re spending where. One place for everyday basics. A specialist for anything that takes real consideration. A resale platform. Spreading spend across a portfolio of retailers now feels smarter than concentrating it in one place.
At the same time, overall UK retail spend fell 0.7% year on year in April 2026, according to Barclays. But within that, health and beauty grew around 8%. Consumers aren’t cutting everywhere, but they’re making active choices about which categories they want to buy and which they defer, or avoid.
What Dunelm’s Trading Data Reveals About Share of Wallet in Retail
Dunelm’s Q3 FY26 trading update is a useful illustration of how this plays out in practice because on the surface, it doesn’t look like a problem.
Customer visits held up through the winter promotional period. People were still coming in, still engaging with sale activity. But the bigger purchases, like custom window treatments, larger furniture, and significant home investments, were being deferred or going elsewhere. The customers were still visiting, but their relationship had narrowed.
In a standard trading report, that would look broadly fine. Visits healthy. Scheme active. Customer retained. But retail customer spending habits had already changed.
How Loyalty Schemes Create False Confidence About Retail Customer Spending Habits
Loyalty schemes are supposed to give retailers more visibility into customer behaviour. And at their best, they do. Tesco’s Clubcard, built over thirty years with Dunnhumby and covering around thirteen million British households, can actually function as a wallet visibility tool. It can detect early signals of spend drift; a customer reducing the number of categories they buy across, shifting toward lower-margin lines. They can spot it early enough to respond.
But Tesco is an outlier. That level of analytical capability took decades, and a scale most mid-market retailers won’t reach. For the majority, the loyalty card tracks engagement: swipes, points, and offers redeemed. That’s useful. But engagement is not the same as wallet share.
A customer can be an active, loyal scheme member while directing their most considered spend to retailers that don’t even know they exist in that person’s shopping life. The card keeps getting swiped. But the spend has already moved.
CACI’s share-of-wallet methodology makes this distinction clear: scheme participation and wallet depth measure different things. For most mid-market retailers, treating one as a proxy for the other is a structural blind spot, not a minor calibration issue.
When Fragmentation Is Permanent and CRM Can’t Fix It
OC&C Strategy Consultants put the value of the UK second-hand fashion market at over £7 billion last year, with roughly one in four apparel transactions now involving a resale platform. The fastest-growing segment on Vinted (17 million active UK users) is households earning over £75,000 a year.
These aren’t customers leaving first-hand fashion retailers because a better loyalty offer didn’t reach them. They’re making deliberate choices about which retailers reflect their values. For a significant share of higher-income apparel spend, first-hand retail is no longer the right answer, and that’s a shift, not a relationship failure that better CRM could have prevented.
Retail customer spending habits fragment in two distinct ways. Some fragmentation is situational; a customer tries a specialist, it works, and they go back.
Some is values-driven. The spend moves permanently because the retailer no longer fits how the customer sees themselves. (The second kind isn’t solved by improving the transactional relationship. It connects to something deeper, which is the territory Episode 25 on retail customer identity explored directly.)
What Retailers Who Hold Wallet Depth Tend to Do Differently
The retailers least exposed to fragmentation aren’t all running sophisticated data programmes. What tends to set them apart operates long before any loyalty mechanic becomes relevant.
Some stay close to who their customer is becoming. Not just what they’ve bought, but what’s changing in their life. A children’s clothing retailer that reaches out ahead of back-to-school isn’t doing something technically clever. It’s being present at the right moment because it knows enough to anticipate it.
Some own a specific occasion so completely that there’s no real deliberation when the need arises. That retailer is simply where you go for that thing and everything around it. Occasion ownership creates a concentration of spend that discounting alone can’t achieve.
And some make it easy for customers to spend more naturally, through ranging, layout, and communications that make adjacent purchases feel obvious rather than being sold to them.
None of these is a loyalty mechanic. They’re upstream decisions about the customer relationship that determine whether a wallet consolidates or fragments. By the time fragmentation shows up in a trading report, those decisions have already been made or not.
The link between upstream relationship investment and commercial outcomes was examined in Episode 19 on making the business case for CX from a different angle.
Key Takeaways
- Stable footfall and loyalty card activity don’t tell you whether the customer relationship is healthy. They tell you the customer is still showing up. The two can diverge for a long time before standard reporting spots it.
- Loyalty scheme engagement and wallet share are not the same thing. For most mid-market retailers, treating loyalty participation as a measure of relationship depth is a structural blind spot.
- Some fragmentation, particularly values-driven shifts toward resale, is permanent. It won’t be reversed by better CRM, stronger offers, or improved service. Understanding why spending is moving matters as much as detecting that it is.
- The retailers who most consistently hold onto wallet depth are making upstream relationship decisions, around occasion ownership, identity relevance, and cross-category ease, well before any loyalty intervention becomes possible.
- The more useful question isn’t “are our customers still here?” It’s “What share of their spend are we still winning?”
