A Blog by Jonathan Low

 

Mar 27, 2020

Groceries, Guns, Cannabis and News: What Sells In A Pandemic - And Doesn't

Car dealers and furniture salesmen are having a rough time. But consumers in the US are loading up on groceries, guns - and cannabis, which may say more about their state of mind than they intend. JL

Gwynn Guilford reports in the Wall Street Journal:

Shoppers stocked up on groceries, sending sales online and offline sharply higher. Discount ammunition revenue quadrupled. Consumers have placed a record number of cannabis orders. By March 19, dining visits across the country through OpenTable had collapsed by 98%. Yelp noticed increased consumer interest in pizzerias and fresh produce shops, while consumers shunned cafes, wineries and gelato. Hotel occupancy collapsed. Sales of new autos decline; "we are seeing100 million consumers living in states where dealerships are closed." "Now is a bad time to buy furniture or appliances."
U.S. household consumption patterns have gone haywire during the early stages of the global coronavirus health crisis.
A Wall Street Journal analysis of high-frequency data from a range of U.S. industries showed sharp declines in spending on hotels, restaurants, airlines and other travel, while spending boomed in other areas including groceries, general merchandise stores, gun and ammunition shops and marijuana suppliers. Mortgage applications surged as interest rates dropped, new car sales in many cities fell and consumers quickly grew reluctant to buy big-ticket household items.
The data suggest that while overall consumer spending is likely sinking sharply, this is happening unevenly, producing losers—and some winners—among the firms that meet consumer needs.
Consumers are a critical engine of the global economy, providing more than two-thirds of demand for all U.S. economic output, in addition to demand for production and jobs at major U.S. trading partners including China and Mexico.
Spending patterns will surely change in the weeks ahead, as the shock plays out in the economy. Here is a look at how spending changed in the first few weeks of March.
THE HARDEST HIT
In some industries, the hit from coronavirus has been quick and devastating.
Dining’s Dive: Well before several big cities began ordering millions of people to stay home, visits to restaurants in Seattle and San Francisco—where the coronavirus took hold relatively early—began tanking, according to data on reservations and walk-ins released by OpenTable, the restaurant booking app. As the West Coast went, so did the rest of the nation: By March 19, dining visits across the country through OpenTable had collapsed by 98%, according to OpenTable.
There are signs of surprising resilience among some types of eateries. Yelp, an online business directory and review site, said it noticed increased consumer interest in pizzerias and fresh produce shops, while consumers shunned cafes, wineries and gelato shops.
Travel Plunge: Travel and leisure suffered an abrupt collapse in demand. Hotel occupancy in Seattle, where the virus has claimed the most lives so far, collapsed from 70% in late February to 33% two weeks later, according to STR, a hotel research firm.Leisure Lost: Spending on leisure—activities such as theme parks, movie theaters and other ticketed events—dropped in late February, and was down 35% on an annual basis as of March 13, reports Earnest Research, a data analytics company that tracks the purchase data of millions of anonymous U.S. consumers.Job Listings Vanish: ZipRecruiter, an online jobs marketplace, has registered a slide in job listings over the last few weeks. A decline that began four or five weeks ago in the travel industry has more recently spread to tourism, manufacturing, sports and recreation.
SURGES
In other sectors, the coronavirus pandemic has induced a consumer frenzy.
Grocery Stockpiling: As the outbreak worsened in major cities, shoppers stocked up on groceries, sending sales—both online and offline—sharply higher, according to Earnest Research.Online News, Shopping Booms: Web traffic to retailers Amazon, Target, and Walmart climbed in March too, according to Comscore. With audiences holed up at home and seeking information about the fast-moving virus, news viewership and, in particular, online news consumption are sharply growing.Virtual Meetings: The number of companies temporarily shutting offices and directing employees to work from home is likely behind the jump in digital-conferencing activity. By March 16, average meeting minutes were up 47%, compared with the October 2019 average, according to BlueJeans, the videoconferencing platform.
Washington state may be a bellwether for this activity. After a slight drop in late February—possibly as workers began adjusting to working from home—the state’s daily number of digital meeting minutes is now twice what it was last October.
Weapon Gains: Ammunition sales and the share prices of major gun manufacturers rose in March as the crisis took hold in the U.S. Yelp reported a 360% uptick in consumer interest in gun and ammunition stores in recent weeks. As the S&P 500 has fallen, share prices of gun makers have risen.Discount ammunition site Ammo.com said revenue more than quadrupled between Feb. 23 and March 15, compared with the previous 22 days. In Colorado, sales volume leapt 730% during that time.
“In times of uncertainty people want to know that they can protect themselves and people they love,” said Mark Oliver, director of public affairs at the National Shooting Sports Foundation, an industry trade association, which says background checks for firearms purchases were up 300% on March 16 from a year earlier.
Cannabis: Consumers are turning to cannabis too, according to data from Weedmaps, the nation’s largest legal cannabis marketing platform. On March 19, Weedmaps’ Travis Rexroad said the site’s users placed a record number of orders on the platform, surpassing sales volume booked last year on April 20, an unofficial day of cannabis celebration. The company has also noticed a growing share of orders for edible products, which can be discreetly consumed.
BIG TICKETS
Housing Finance: As the economic outlook darkened in recent weeks, a sharp slide in mortgage rates sent homeowners scrambling to refinance, according to the Mortgage Bankers Association indexes of borrowing activity. Online lending site Better.com had around 27,000 mortgage applications in the first 18 days of March, compared with 18,000 in February and 4,500 in March a year ago.
In addition to the scramble to lock in record-low rates, the company also attributed the surge in part to borrowers hunkering down at home and spending more time dealing with personal-finance issues than they might in the office.
Despite the refi bonanza, the outlook for the industry as a whole may be less rosy. Redfin, an online real-estate brokerage, said demand has weakened markedly in recent weeks at a national level.
Car Crash: Sales of new autos have declined this month. J.D. Power, the auto-industry research company, reported a 13% slump in auto sales so far this month, as of March 15, compared with the same period in 2019. Before the coronavirus outbreak, the company had expected a decline of about 4%.
Sharper drops in Seattle and other cities at the front lines of the pandemic suggest that bigger declines may yet come. “On top of that, we are seeing roughly 100 million consumers living in states where dealerships are either totally or partially closed,” said J.D. Power’s Tyson Jominy.
No New Sofa: There are other signs that consumers are increasingly inclined to scrimp on big-ticket purchases: A daily survey conducted by Morning Consult, a data intelligence firm, has registered an sharp uptick in respondents saying now is a bad time to buy major household items such as furniture or appliances.

1 comments:

Lavarda said...

Hi! When the pandemic started, many people rushed into grocery stores like crazy. I acted smarter and decided that I would order food only online, and recently I came across cbd oil, which promises a good effect for my health. I decided to order from Blessed CBD, they say these guys have the most effective cbd oil. Has anyone tried it?

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