INSIGHTS ON CHANGING CONSUMER BEHAVIOR

Facteus Insight Report on Consumer Spending and Transactions (FIRST)

FIRST REPORT: MARCH 25, 2020

RETAIL

Consumers are meaningfully altering their behavior and redirecting dollars towards goods and services associated with a “shelter in place” environment. Spending at Wholesale Clubs, Discount Stores, and Variety/Dollar Stores all began rising the week of February 24 and spiked as much as 54% YoY the week of March 9. Growth decelerated sharply the week of March 16, suggesting the prior week was a demand-pull forward.

Spending at Beer/Wine/Liquor Stores and Grocery Stores also spiked starting the week of March 9, coinciding with news of the rapid spread of the virus. Spending on Beer/Wine/Liquor continued to accelerate the week of March 16, up 60% year over year.

Spending at Home Supply stores increased a bit in the week of March 2, but not at the pace of the other sectors we are following. Spending growth returned to near pre-crisis levels the week of March 9 but has since plummeted, falling 13% year over year during the week of March 16.

ENTERTAINMENT

We are seeing a rapid deterioration in spending at restaurants, as consumers avoided (or were forced to avoid) public spaces. The category as a whole fell 17% YoY for the week of March 7, but that likely understates the impact on sit-down restaurants. Fast food restaurants fared better the week of March 7. Both categories fell sharply the week of Mar 16, with restaurants as a whole seeing a 60% decline in spending, and fast-food restaurants falling nearly 40%. We would expect fast food establishments will fare better than the overall category going forward given their established take out and drive through infrastructure, but they are clearly seeing a significant negative impact.

Not surprisingly, spending at Movie Theatres has also been hit hard, with YOY declines beginning the week of February 17, and spending down over 90% YOY in the week of March 16. Amusement parks are experiencing a similar fate with spending down over 80% for the same week.

Spending on in the Video Games category (both online and offline) has seen strong growth for most of this year but began to surge in the week of March 9. Spending year over year is now up over 60% in the week of March 16.

TRAVEL

Spending on air travel began to fall precipitously the week of March 2 and has continued to accelerate down through the week of March 16. Notably, two airlines with operations on the West Coast, United and Alaska Airlines, have seen a significant drop in bookings, both falling 80% year over year in the past week.

Spending on lodging has suffered a similar fate as the airlines, though its decline began a week later (week of March 9) and has now declined almost 70% year over year during the week of March 16. One merchant, we track, Holiday Inn, has seen their business fall 59% during the same period.

HEALTHCARE

Spending at Drug Stores and Pharmacies has seen a pickup starting the week of March 2, spiking 22% YoY during the week of March 9. While it has decelerated a bit to 15% year over year growth in the week of March 16, it remains well above trend. We expect to have additional insights into spending in the Consumer Healthcare area in the coming weeks.

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