December 22, 2020
Consumer spending, particularly in economies such as the US is of vital importance. One of the areas hit hardest in a typical recession is consumer spending on goods and according to some news reports, the US could be looking at a pretty severe recession.1 Yet spending has so far remained relatively sanguine, albeit selectively.
Retail is such a huge area. For example, any product related to travel may take years to recover from the pandemic but some grocery companies saw sales go up 10-20% through the second quarter.2
If they can maintain this elevated demand in a post-Covid world, those companies can be very successful. We believe the future of some of the retailers depends on the specific sector they are operating in. The pandemic hasn’t been bad for all of retail. It’s very nuanced. Food retail is having the best year it’s had in decades whereas apparel bricks-and-mortar stores have been left devastated.
Convenience is mainly highlighted through food delivery companies maintaining their recent heightened popularity. Although restrictions have eased in many parts of the world, consumers are still attracted to the appeal of paying to have meals delivered to their homes versus going out to restaurants and putting themselves in potentially busier and riskier areas.
At a wider political level, apart from the important financial support president elect Biden will give to the unemployed, I don’t see the recent US election outcome having as big an impact on consumers as the ongoing pandemic. The latter is imposing a real and lasting structural change to the way we consume, and that disruption is likely to continue regardless of which party is in power.
Maria Toneva, consumer analyst, Newton