Insights on Changing Consumer Spending
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FIRST REPORT: JULY 1, 2020
The theme of the 14th installment of the FIRST report is deceleration. There was a slowing of growth in the retail and entertainment sectors (in the case of Video Games, a very meaningful slowing), while other sectors were no better than flat from the prior week. While it’s hard to draw a conclusion from one weeks’ worth of data, this was the biggest negative change from week-to-week in aggregate growth/decline we have seen during the recovery period.
Retail spending growth decelerated in the week ending June 28. In the Discount/Wholesale Club category, spending rates fell from the prior week, with Discount stores growing 37% year over year, and Wholesale Clubs growing 23%. In the Home Supply segment, spending growth also decelerated, growing 38% year over year, which was down sharply from the 58% growth it saw in the prior week.
Spending at the two US retail giants, Amazon and Walmart, also decelerated in week ending June 28, with spending growth dipping to 65% year-over-year at Amazon and 5% at Walmart. While the growth gap between the two companies remains wide, both companies saw the same deceleration as the other retail categories we track. One week does not make a trend, but this is an area worth monitoring, as the CARES Act benefits approach expiration.
Consumer spending growth at restaurants was roughly flat from the prior week, with fast food growth at 2% year over year, and the overall category down 9%. Restaurant spending growth is close to pre-shutdown levels, so unless regions/cities need to shut down again, we would not expect much volatility in this category. Spending in the Video Game category saw a sharp decline from the prior week, with growth decelerating to 63% year-over-year from over 100% in the week prior. While 63% growth remains a robust number, this segment is also consistent with patterns we see in general retail.
Consumers are showing few signs of returning to the air for travel, with the aggregate spend levels still declining over 60% percent year over year. Spending on lodging continues to fare significantly better, but has stalled at around 18% declines year-over-year, and has been at this level the last three weeks.
FIRST REPORT ARCHIVE