Proof Points Fast Take
Consumer spending is still strong in June with yo-yoing expected in the coming months due to more anticipated coronavirus lockdowns.
Digital and omnichannel shopping are here to stay.
Consumers are seeking inspiration online for where to shop.
Walmart is the clear leader in grocery as they have embraced the digital transformation and reaped the reward from their effective curbside service.
Consumers are still craving in-person experiences at restaurants.
The latest June retail sales numbers from the U.S. Department of Commerce, Census Bureau, continues the positive trend started in May, but should be considered in the light of spiking COVID-19 cases in many states across the U.S. The Advanced Monthly Retail Trade Report includes their first calculations of June’s retail sales.
It seems that our recovery may be stalled by this latest surge in the pandemic. Analysts say that fear caused by the virus caused consumers to pull back their spending at the end of June. However, their prior spending in June led to an increase of 7.5% in total U.S. retail and food services sales over May.
As the folks at Russell Research noted, we took “one step forward, two steps back.” At the beginning of June, their COVID-19 Monitor showed that over 1/2 of Americans thought the trajectory of the pandemic was positive. Just a few weeks later near the end of June, it had shifted to only 38% of Americans believing that the pandemic is getting better. Furthermore, nearly half of Americans who live in the South and West regions of the country, where cases are really surging, now say the pandemic is actually getting worse.
A McKinsey & Company survey in late June took it a step further and found that more than 50% of Americans believe it will take longer than 6+ months for the economy to recover and that the crisis will continue to impact them for another 4+ months. As such, the homebody economy continues with consumers adapting with new habits that are likely here to stay. In fact, 73% of consumers are still not comfortable returning to their regular out-of-home activities. They are waiting for milestones beyond simply lifting restrictions, such as approval from medical authorities, further safety measures to be put in place by retailers, and the development of a vaccine or better treatments. Read on for our retail sales insights for key categories.
Nonstore Retailers:
Despite a slight dip in total nonstore retailer sales in June, it is clear that the flight to digital is here to stay. In fact, the McKinsey survey actually showed a 15-30% growth in reported online shopping that consumers say will continue after the crisis.
As explained by Steve Dennis, a senior retail contributor to Forbes, the disruptive impact of digital technology has been significantly fueling an epic revolution in the retail industry for the past two decades. Customer journeys are now officially digitally-enabled.
General Merchandise Stores:
Positive consumer sales growth continued in this sector with a 2.7% increase in spending.
Sales in this sector may reflect the fact that consumers have shifted some of their discretionary spending from experiences like concerts and summer camp to more tangible items in this category, like TVs and gym equipment.
Retail Trade:
Consumer spending was still strong with a 6.4% increase, after the 16.8% record increase in May.
The McKinsey survey found that consumer intent to purchase is shifting toward value and essentials. In fact, spending on essentials was the only category that reflected a positive intent. Consumers are simply being more careful overall as they evaluate what and where they are spending. Forty percent report being more mindful of where they spend, while 38% are actively looking for ways to save money when shopping.
Another insight from the McKinsey survey is that cleaning and the use of masks and physical barriers are top priorities for consumers in deciding where to shop in-store.
Department Stores:
Malls and department stores have benefited from the lifting of lockdown restrictions with a sales increase of 19.8% in June for this category on top of the record 36.9% increase in sales we saw in May.
Yet, digital continues to greatly impact this category. Not only is contactless shopping and BOPIS (buy online pick-up in store) here to stay, but the McKinsey survey found that 60% of consumers used inspiration from digital channels, such as social media and online ads, to decide where to do their shopping.
Grocery Stores:
Consumers who have shifted their grocery shopping online amid concerns regarding their safety are likely to stay that way. Per the McKinsey survey, one participant reported that a local grocery store “doesn’t do drive up or delivery, so we can no longer go there. We now exclusively use curbside grocery pickup and will continue to do so going forward.”
Google Trends data reflects the leadership of Walmart in this area with searches for grocery.walmart.com increasing 1,950% in the last 90 days.
Consumers have also been hit with limited access to some of their favorite brands during the pandemic causing them to try different brands. Now 70% report that they expect to integrate these new brands into their post-COVID-19 life, according to McKinsey.
Food Services and Drinking Places:
Sales in this category continued their positive trajectory in June as receipts at bars and restaurants jumped 20% from May to June.
Google Trends data also reflected this pent up demand for dining in at a restaurant. The top five queries were significant at over a 5,000% increase in the last 90 days. These trending queries were all variations of “restaurants open for dine in.”
According to the McKinsey survey, 72% of Americans were at least somewhat concerned about the dangers of dining in at a restaurant or bar in June, which was an increase of 15% over the prior month.
Recent consumer research from Datassential found that 63% of consumers will feel most safe going to a restaurant with outdoor seating after shelter restrictions are lifted.
Yet, cleanliness is of paramount importance. Whether a restaurant was perceived to be clean and sanitary was reported to Datassential as the top consideration for selecting a restaurant to visit after the coronavirus crisis. 76% said that a restaurant’s cleanliness and food safety procedures “will always matter more to me now than it did before.”
Datassential reported that 29% of people plan to eat inside a restaurant less, even after restrictions are lifted. The McKinsey survey also found that 18% of Americans have enjoyed restaurant delivery so much during the pandemic that they intend to use it even more moving forward.
However, the positive growth experienced in May and June has recently stalled, according to OpenTable, the restaurant reservation website which tracks the number of seated diners.
The Stratistry team loves nothing more than digging deep into available data and research to derive actionable insights that can help lead your brand to achieve better business results. Contact us to find out how we can combine the art and science of marketing for your brand.
Sources:
U.S. Department of Commerce, Census Bureau Advanced Monthly Retail Trade Report 7/16/2020; McKinsey & Company Covid-19 US Consumer Pulse Survey 6/26/2020; Russell Research Covid-19 Monitor 6/19-6/22/2020; Datassential.com/coronavirus; Google Trends