RANCHO CUCAMONGA, Calif. – Despite an improving economic outlook, credit union members have been holding tight to their wallets, according to new report from Co-op Solutions that shows payment transaction numbers have been relatively flat.
Overall, per Co-op Solutions spending data, May year-over-year transaction volume was up modestly across both the debit and credit portfolios.
According to Co-op Solutions, its SmartGrowth team has been watching the following trends:
Conferences Lead Travel Revival
Travel has been among the “most resilient” categories in recent months, posting a 69.7% transaction growth in credit and 65.9% in debit year over year, per an analysis of Co-op’s credit union portfolio. Business travel – and the return of live conferences specifically – have been a boon to the category, a bright spot in the overall economy, Co-op said.
“To Las Vegas, a city uniquely dependent upon business conferences and tourism, the return to pre-pandemic ‘normalcy’ has been a welcome boost to the economy,” Co-op said. “Whereas unemployment in Sin City hit a historic rate of 34% in April 2020, it has since rebounded to a manageable 5.7% as of March 2023.”
Added John Patton, Co-op senior payments advisor, “The travel sector has been one of the best stories of the past year. Leisure travel spending will continue to increase this summer, and when combined with the return of corporate travel and events, we expect the overall category to show strong growth through the remainder of 2023.”
Discount Stores Still Holding Strong
In its analysis, Co-op said that although the broader retail category has suffered over the past year, discount stores remain a bright spot as consumers look for deals in their everyday spending to offset rising prices.
According to Co-op’s credit union payment portfolio data, discount stores are up 2.3% in credit transaction volume and down -2.2% in debit year over year. Compare this with specialty retail, which is down by -8.8% and -10.3% in credit and debit respectively, over the same time period, the company reported.
“Discounters like Target, which had flat sales in its latest quarter compared with prior year, are holding their own,” said Beth Phillips, director of strategic portfolio growth for Co-op. “Shoppers are going to continue to look for discounts on the brands they value, as they wait for inflation to finally cool off.”
Grocery Spend Increases
Co-op noted that the gradual easing of inflation is finally helping consumers’ pocketbooks, as grocery prices ticked down by 0.2% in April, and added the decline is translating to increased monthly transaction volumes in the grocery category, which rose by 6.4% in credit and 5.5% in debit in May, respectively.
“Interestingly this lift is attributed in large part to wholesale grocery retailers, which outperformed grocery stores across both credit and debit,” Co-op said. “Of particular interest to credit unions, consumers who shop for groceries online are among the most desirable, spending 34% more per purchase as compared with in-person transactions.”
Home Improvement Softens
“Homeowners appear to be finally over their love affair with home renovation projects, one of the true economic bright spots during the pandemic,” Co-op said.
The company noted its analysis shows the category is down slightly year over year, with nearly double-digit declines in the appliances and repair services sub-categories.
“The seasonality of home improvement shouldn’t be overlooked,” said Phillips. “Credit unions should keep home improvement promotions in mind leading into summer to earn top interchange in this category.”
Co-op noted that Home Depot is already warning that its annual sales will decline this year, for the first time since 2009.
Even Pets Feeling the Pinch
According to Co-op, during this period of economic uncertainty and rising inflation, certain luxury purchases have been particularly affected.
“This includes spending within the pet category, which has seen both supply shortages and a faster rise in prices than other merchant categories, such as groceries,” Co-op reported, adding its analysis shows that year over year, transaction volumes within the pet category are down by -0.7% and -3.3% in credit and debit, respectively.
Year-Over-Year Category Level Spending (Rolling Year Average, and Comparing May 2022 to May 2023)
| Credit #Transactions | Debit #Transactions | |||||
| Category |
12-month YoY Analysis: May'21 - Apr'22 vs May'22 - Apr'23 |
May'22 vs May'23 Analysis |
12-month YoY Analysis: May'21 - Apr'22 vs May'22 - Apr'23 |
May'22 vs May'23 Analysis | ||
| Agricultural | 0.3% | -3.7% | 1.6% | 5.1% | ||
| Amazon/Bookstores | 19.7% | 33.1% | 29.9% | 67.6% | ||
| Auto | 3.5% | 3.1% | -3.5% | 3.8% | ||
| Auto Dealers | -0.6% | -2.3% | -8.9% | -4.0% | ||
| Auto Services/Parts | 2.6% | 2.7% | -3.7% | 4.3% | ||
| Misc. aircraft, farm equipment dealers | 10.4% | 6.1% | 0.0% | 2.9% | ||
| Campers & Camping | -4.9% | -6.1% | -12.8% | -5.9% | ||
| Campers & Camping | -4.0% | -6.1% | -11.9% | -5.9% | ||
| Mobile Home Dealers | -8.4% | -8.7% | -16.0% | -3.2% | ||
| Computers | -5.7% | -20.1% | -12.8% | -18.1% | ||
| Computers | 1.9% | -20.1% | -3.6% | -18.1% | ||
| Services | -9.9% | -32.8% | -16.2% | -27.1% | ||
| Digital Goods | 16.7% | 20.6% | 11.6% | 15.2% | ||
| Applications | 27.1% | 2.5% | 12.1% | -18.0% | ||
| Books, movies, music | -12.6% | -56.8% | -12.2% | -56.0% | ||
| Dining & Entertainment | 7.4% | 3.2% | 1.0% | 1.4% | ||
| Amusement Parks | 8.2% | -9.9% | -0.7% | -11.2% | ||
| Bars | 24.1% | 11.9% | 16.5% | 8.7% | ||
| Billiards and bowling | 8.9% | -17.8% | 0.1% | -22.6% | ||
| Fast food, Restaurants | 6.3% | 2.7% | -0.5% | 0.5% | ||
| Movie Theaters | 14.8% | 2.1% | 8.2% | -5.6% | ||
| Theater | 18.7% | 3.2% | 11.6% | 3.3% | ||
| Education | 17.7% | 13.3% | 15.9% | 18.8% | ||
| Financial Services | 15.8% | 13.6% | 4.3% | 1.8% | ||
| Payments | 40.8% | 27.4% | 31.8% | 29.7% | ||
| Furniture | -11.9% | -11.9% | -17.9% | -12.5% | ||
| Gas | 8.7% | -0.9% | -2.3% | -2.0% | ||
| Grocery | 11.3% | 5.1% | -0.5% | 1.6% | ||
| Grocery | 11.5% | 5.1% | -0.3% | 1.6% | ||
| Wholesale | 12.1% | 9.2% | 0.1% | 5.3% | ||
| Home Improvement | 0.4% | -0.4% | -8.7% | -1.1% | ||
| Appliances | -8.0% | -7.4% | -14.3% | -10.9% | ||
| Equipment, parts & supplies | 0.2% | -0.7% | -8.9% | -1.2% | ||
| Materials | 13.6% | 23.3% | -3.6% | 3.8% | ||
| Services / Repair | -3.8% | -4.3% | -11.0% | -10.7% | ||
| Swimming pools | 0.8% | -6.7% | -8.3% | -9.5% | ||
| Medical | 3.9% | 1.6% | -3.8% | -0.4% | ||
| Office | -10.3% | -3.6% | -6.9% | -3.7% | ||
| Furniture | 26.4% | -11.9% | -24.4% | -12.5% | ||
| Other | 7.3% | 8.6% | 5.4% | 3.9% | ||
| Courier/Delivery Services | -2.6% | -0.6% | -8.5% | -5.8% | ||
| Self-care | 12.1% | 2.3% | 12.3% | 30.5% | ||
| Pet | 3.5% | -0.7% | -4.8% | -3.3% | ||
| Professional Services | 2.6% | 46.7% | -2.1% | 115.7% | ||
| Employment Agencies | 43.5% | 52.5% | 29.8% | 14.1% | ||
| Retail | 3.1% | -0.1% | -6.3% | -2.6% | ||
| Clothing | -13.7% | -6.0% | -24.9% | -9.4% | ||
| Department Stores | -5.4% | -5.8% | -12.2% | -4.5% | ||
| Discount Stores | 21.6% | 2.3% | 9.1% | -2.2% | ||
| Footwear | 4.2% | -2.8% | -7.0% | -8.6% | ||
| Online | 0.0% | 0.0% | 7.4% | 7.1% | ||
| Specialty Retail | -34.7% | -8.3% | -2.5% | -10.8% | ||
| Antique shops | 3.1% | -2.4% | -6.1% | -3.9% | ||
| Florists | -8.1% | -4.3% | -10.8% | -2.4% | ||
| Jewelry | -4.2% | -2.8% | -13.0% | -7.1% | ||
| Pawn Shops | 17.1% | 4.4% | -3.4% | -6.6% | ||
| Secondhand stores | 11.2% | 5.4% | 2.9% | 4.1% | ||
| Luggage | 45.8% | 69.7% | 28.7% | 65.9% | ||
| Sport/Recreation | 4.0% | 2.7% | -1.5% | 3.3% | ||
| Travel | 23.3% | 69.7% | 6.5% | 65.9% | ||
| Agencies | 41.5% | 35.0% | 15.5% | 25.7% | ||
| Airline | 8.5% | 1.9% | -9.6% | -2.4% | ||
| Auto Rental | 7.4% | 9.0% | -2.6% | 5.2% | ||
| Bus Lines | 55.0% | 25.1% | 1.4% | -8.7% | ||
| Cruise | 93.5% | 36.8% | 84.9% | 53.1% | ||
| Lodging | 3.6% | -5.3% | -12.8% | -11.5% | ||
| Taxi/Limo | 29.1% | 17.4% | 12.1% | 9.3% | ||
| Utilities | 6.5% | 3.5% | -1.7% | -0.2% | ||
| Grand Total | 5.5% | 3.5% | -0.4% | 1.3% | ||
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