RANCHO CUCAMONGA, Calif.—What happens when lockdown restrictions are lifted and businesses began open back up can be seen in June’s rebounding consumer spending—but only in certain categories, according to CO-OP Financial Services.
Examining spending within CO-OP’s credit and debit portfolios, overall debit and credit transactions were down 2% and 5%, respectively, compared to last year.
“However, the total dollar amount of those purchases increased 14% across debit and 3% across credit,” CO-OP said. “The data indicate that members are likely to resume normal spending levels in the short-term despite the long-term uncertainty of COVID-19. It also shows that spending will vary widely across merchant categories, reinforcing the importance of credit unions regularly analyzing their portfolio to identify top-of-wallet opportunities.”
CO-OP said it broke down category-level spending trends for the month of June (data comparing June 1 – 30, 2020 with June 1 – 30, 2019). Among the findings:
Online Bookstores (Amazon)
Debit: Up 28%
Credit: Up 57%
“June was another strong month for purchases at online bookstores, specifically Amazon. Amazon continues to be a strong top-of-wallet opportunity for credit unions, particularly as the marketplace begins offering summer deals and discounts,” CO-OP said.
Airline Travel
Debit: Down 59%
Credit: Down 71%
“While it may be summer vacation time, members aren’t ready to travel by airplane just yet. Air travel spending remains low despite many airlines significantly lowering fares and some even booking flights up to full capacity. As airlines begin offering more flights, it will be interesting to see if spending on air travel increases accordingly,” CO-OP said.
Car Rentals
Debit: Up 6%
Credit: Down 19%
“Road trips by car, on the other hand, are becoming more popular. Debit card purchases at car rental agencies increased in June compared to last year. Recent studies indicate this could be a long-term trend: a survey from the University of Chicago found that 27% of consumers anticipated taking more long-distance trips by car post-pandemic,” CO-OP said.
Barber, Beauty Shops and Spas
Debit: Down 34%
Credit: Down 37%
“Health and beauty businesses began opening up in many states in June but it appears most members are holding off on that post-pandemic haircut (or perhaps continuing to do it themselves). This may change in July as more businesses begin to implement safety precautions and procedures to put their customers at ease,” CO-OP said.
Department Stores
Debit: Down 4%
Credit: Down 1%
“Department stores experienced a little bit of respite from a difficult year with credit card purchases down only 1% and debit purchase down 4% compared to last year. However, the latest string of bankruptcies by well-established department stores like Macys and Neiman Marcus doesn’t bode well for the industry. Economists predict that the 8,700 retail stores that have closed so far in 2020 is just the tip of the iceberg,” CO-OP said.
Hardware Stores
Debit: Up 35%
Credit: Up 32%
“Home improvement spending continues to soar as hardware stores have seen steady positive year-over-year growth over the last several weeks,” CO-OP said.