Insights on Changing Consumer Spending
The daily US Consumer Spend Index shows the percentage change in spending on a daily basis, compared to consumer spending in 2019.
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FIRST REPORT: AUGUST 12, 2020
Consumer spending trended higher this past week, breaking through the holding pattern of the past few weeks. Retail showed the largest gain with specific bright spots in Department & Discount Stores and Grocery Stores & Supermarkets. Entertainment remains relatively flat with exceptions for Tourist Attractions and Video Games. Restaurants see a slight decline from the previous week’s level. In Travel, continued improvement is seen in the Lodging and Travel Booking segments demonstrating people’s desire to get out of the house — but without flying. Overall, the average yearly growth rate per category has improved to a 6% decline year over year from the narrow range of the last 6 weeks, a level not seen since June.
Retail spending accelerated across the major categories in the week ending August 9, growing between 30-45% year over year. Spending in the Home Supply category continued climbing to 44% year-over-year growth.
Home Depot vs Lowe’s–Round Three
Both Home Depot and Lowes are slated to announce earnings the week of August 17. Both companies participate in a sector that has thrived in an otherwise struggling economy, with the segment seeing spending growth between 30% and 80% year over year since April, after growing in the single digits pre-pandemic.
While both companies had strong April 2020 quarters, Lowe’s saw a surge in spending well in excess of what Home Depot experienced, outgrowing Home Depot by between 10 and 20 percentage points through the end of April. That outperformance continued through the first three weeks of May; a trend consistent with guidance Lowe’s provided on their earnings call for same-store sales growth for May in the mid-20% range. We speculated at the time for the reasons behind the outperformance (more relaxed capacity and distancing rules, more rural locations, etc), and the outperformance was real.
However, since May 24, Lowe’s relative spend outperformance has disappeared and even reversed, with Home Depot outgrowing Lowe’s between 3 and 7 percentage points year over year during this period. The absolute growth rates for both remain healthy—near 40% year over year—but notably shares of Lowe’s have outperformed Home Depot by 2x in this period starting May 24. Part of this may be driven by Home Depot’s decision to not provide guidance during the May earnings call. However, it may also be influenced by market expectations that Lowe’s was continuing to out comp Home Depot. Our spend data indicates that market expectation may no longer hold.
RETAIL: AMAZON + WALMART
Walmart narrowed its relative spending growth gap with Amazon slightly, jumping to 11% year-over-year growth compared with Amazon’s fairly steady 73% year on year growth.
Restaurants dipped to a 5% decline year over year while Fast Food continued to grow at 12% above 2019 levels. Video Game spend bounced back to 68% growth year over year, continuing its role as the bright spot for Entertainment consumer spending.
Lodging continues its recovery with a 10% decline year over year and Air Travel keeps moving sideways with a 68% decline from last year. The growing gap between Lodging and Air Travel illustrates consumers’ willingness to hit the road—but not the skies.
FIRST REPORT ARCHIVE