McKinsey, in a recent article “Meet the next-normal consumer” noted that companies will need data to increase their investment in insights to stay ahead of change and as critical to helping shape a positive future. In fact, in times of unprecedented change leveraging data and analytics to create insights to changing consumer behaviors can fuel successful corporate strategies.
In April alone, 24% of new online customers were World’s Largest Retailer shoppers for the first time. Without the appropriate tools, you may have missed this too. In just a few months the onset of COVID-19 has created previously unimaginable changes to our personal lives and to the business landscape. While some of these changes will become part of a new normal, other behaviors may revert back to the way they were pre-COVID, creating both challenges and opportunities for brands and retailers.
Based on figures from 1010Data, a leading provider of consumer transaction data, we notice that Americans have begun venturing outside. Some have even returned to discretionary shopping.
As of mid-April, while state governments were still strongly recommending citizens to shelter-in-place, consumer activity had picked up noticeably. Visitors to big-box stores rose from a 51.2% YoY increase on April 18th to an 80.4% YoY increase on April 30th.
With the US economy mostly shut, the impact to consumer spending has been dramatic. By examining transaction data from leading data provider 1010data, we can see the extent of the magnitude of damage to the consumer economy.
Prior to the European travel ban which went into effect in mid-March, weekly consumer spending in the US was fluctuating between -5% and 5% in terms of year over year growth. Within two weeks after the travel ban was implemented, credit card expenditures tracked by 1010data had falled 46%. After two weeks of bouncing along this spending trough, the US consumer has finally started to show signs of reacceleration. Peak weekly spending for the past four weeks has improved sequentially YoY: -35%, -34%, -32% and had recovered to -30% as of a week ago.
According to data from 1010data, a company tracking US credit card spending behavior, consumer spending collapsed at the end of March.
Spending on consumer credit and debit cards in the US had been mostly flat year over year heading into the European travel ban. Beginning on March 13th there was a freefall in spending which hit a bottom at a 46.3% year over year decline. Overall spend recovered slightly to down 32.9% by April 1st.
Diving into the specific sectors of the economy that have been impacted, Travel was by far the worst, declining 90% in overall spend.
The data from 1010data paints a scary picture for how the rest of 2020 is likely to play out. As discretionary spends come to a halt it will ripple through the supply chains of the companies impacted and ultimately lead to more layoffs in the future.