Insights on Changing Consumer Spending
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FIRST REPORT: JUNE 17, 2020
Week 13 of the FIRST report is largely a story of most sectors trending towards pre-COVID growth patterns, but also increasing evidence that a few sectors may be seeing a more permanent change in customer behavior. Discount Stores in particular have shown an enduring and wide growth premium over the other verticals in their category, and the Home Supply and Video Games sector has also shown significant growth and resilience in the last 8 weeks. Also of note is Amazon, whose growth continues to stay above 50% year-over-year, which given its size suggests a real shift in consumer behavior as a result of the pandemic.
COVID-19 appears to have created a meaningful and sustainable change in the spending patterns in the Consumer Wholesale and Discount Store category. Growth rates in sub-categories were tightly packed at the beginning of the year, but after a stock-up spike in mid-March that favored the Wholesale Clubs, there has been a notable outperformance on a part of the Discount Stores, where year-over-year growth rate are 20 percentage points higher than Wholesale Clubs and Variety Stores. This gap has existed for roughly 8 weeks. Even more notably, the Discount Stores have been growing in excess of 40% in this same period, with year-over-year growth reaching 48% in the week ending June 14. In the Home Supply category, spending continued to be strong, growing 52% year-over-year, similar to the prior week.
The gap in spending growth between Amazon and Walmart remains quite large, though it narrowed a bit in the week ending June 14. Amazon grew a little over 50% year over year, and Walmart grew 13%. Amazon’s ability to maintain this pace of growth for two months has been quite impressive.
Spending in the Restaurant segment continued to show week-over-week improvement, with the overall category declining only 16% year over year, up from an 18% decline in the prior week. The slow improvement is consistent with cautious opening up of sit-down restaurants across the country. Spending in the Video Game segment ticked back up in the week ending June 14, growing 62% year over year, likely driven by many businesses continuing to allow employees to work from home, and with the start of summer vacation.
Travel spending continued to improve, with lodging continuing its recovery at a faster pace than the Air Travel industry. Lodging spend declined 18% year-over-year in week ending June 14, much better than 28% decline seen in the prior week. Air travel spend dropped 63% year-over-year, improving from the 70% decline the week prior. It’s important to note that this category will likely improve more slowly, as most airlines have reduced capacity substantially.
Spending in Drug Store and Pharmacy category has remained fairly steady, with a decline to 0% year-over-year growth for the week ending June 14. As this category has seemed to stabilize, we will probably remove this tracking going forward.
FIRST REPORT ARCHIVE