A common debate on the financial airwaves has been what consumer behaviors will permanently change due to coronavirus. Generally, we believe humans are creatures of habit and many of the “everything will change” forecasts are likely overstated. Clearly, however, this lockdown has pushed people to use products and services they may not have otherwise and it is our belief that those alternatives that provide some material advantage to old habits will undoubtedly grow market share and permanently alter consumer behavior.
Perhaps one of the most evident places of this phenomenon is ecommerce. Per recent retail sales data, the percentage of US retail sales captured by ecommerce has skyrocketed from 16% to 27% in a mere 8 weeks. This is particularly impressive when you consider that it took roughly a decade for ecommerce to expand from roughly 5% of retail sales to 16% last year (see chart below)! Furthermore, this surge in ecommerce has been supported by recent earnings reports. For example, Target’s online sales in the first quarter rose 141%, Walmart saw digital sales climb 74%, and Amazon saw net sales (unfortunately it does not break out ecommerce) rise 26%. It will be very interesting to monitor ecommerce penetration as this crisis progresses and we will be on the look out for any research that attempts to breakdown this surge in ecommerce by age group.
Coming up next week:
– FHFA Home Price Index
– Consumer Confidence
– New Home Sales
– Durable Goods Orders
– Q1 GDP (second reading)
– Initial Jobless Claims
– Pending Home Sales
– Personal Consumption Expenditures
– Chicago PMI
– Consumer Sentiment
Ian Browning | Director, Investment Strategies & Shareholder
Peter E. Simmons | President & CEO