consumer spending

Consumer Spending Report: The impact of Coronavirus (UK edition)

The recent Covid-19 outbreak has sparked a number of government-imposed restrictions in many countries across the world, putting many jobs at risk and negatively impacting the economy.

With financial markets in turmoil and little visibility as to when restrictions will be lifted, we decided to take a closer look at weekly consumer spending throughout the month of March to help uncover some insights into people’s reactions and what it means for key industries.

After crunching over £700m worth of transaction data since the start of the month, we present our findings for the most affected verticals and companies.

Here we look at aggregated weekly spend per capita across the first 4 weeks of March, identifying significant changes in relation to the recently-announced government policies.

Read on to find out more…

Key findings by industry

All spending categories took a hit since the start of March.

Perhaps unsurprisingly, the worst affected were holidays, transport, eating out and entertainment.

While most of the impact was felt between the 1st and 2nd week of the month, consumer spend continued to fall as the UK government gradually introduced measure to curb the spread of Covid-19.

The only exception seems to be grocery shopping, which went up 25% in the 3rd week of the month following the announcement of a country-wide lockdown.

Now let’s have a closer look at some key companies in the worst affected industries…

Eating Out

As expected, one of the hardest hit sectors was the hospitalities industry, and restaurant businesses in particular.

With most restaurants now required closed under new government policy, consumers have been spending much less on eating out in the last 2 weeks.

This has affected most restaurants chains as well as small businesses, with most establishments now relying on deliveries as their main source of income.

Here the sharpest weekly declines (23 – 29 March compared to 2 – 8 March) were seen for Starbucks (-90%), KFC (-81%), McDonald’s (-69%) and Greggs (-67%).

Comparatively, food delivery services experienced a smaller drop, led by Just Eat (-25%), Uber Eats (-24%) and Deliveroo (-23%).

Transport & Holidays

With most of the country’s population now forced to self isolate, it’s no surprise that airlines, railway operators and travel booking companies have seen quick declines in revenue.

This was supported by our data, with consumer spend going down over the same period for these companies: New Southern Railway (-96%), Transport for London (-77%) and South West Railway (-67%).

Consumer spend for British Airways even went negative from the 3rd week of March, mostly due to ticket refunds kicking in for the affected period. Similarly online travel giant Airbnb saw a 67% decline in consumer spend compared to the start of March.

We also saw a sharp fall in spending at petrol stations, the worst affected being Shell (-70%), Sainsbury’s Petrol (-64%) and BP (-42%).

Entertainment

The entertainment sector has been widely talked about as perhaps the worst affected by the recent measures.

With most pubs, nightclubs, cinemas and other cultural venues fully closed down for over a week, many contractors are at risk of losing their jobs and there are few alternative sources of income for those businesses.

This correlates with our data, with most entertainment companies showing sharp falls in consumer spend, led by a string of refunds for Ticketmaster (-99% on consumer spend) and pub chain Wetherspoon (-97%) closing all it’s establishments in the past 2 weeks.

Shopping

The impact was more mitigated for the retail industry, with brick & mortar stores suffering the most while online retailers were less affected.

Here the downtrend was led by WH Smith (-61%), Primark (-55%) and John Lewis (-49%), with many other high street shops reporting falling sales following the recent store closures.

On the other hand, online retail displayed a comparatively solid performance, with consumer spending at Amazon only down 3.6% since the start of the month.

Groceries

This is where it gets interesting.

While grocery spending per capita was relatively flat throughout the month, it spiked in the week of 16th to 22nd of March, which is when the UK government stepped up it response by introducing social distancing policies.

This is particularly evident when looking at Waitrose (+25%) & Morrisons (+15%) compared to the first week of the month, with consumers stockpiling items to prepare for lockdown.

Larger supermarkets such as Tesco & Sainsbury’s were less affected by this trend, experiencing flat consumer spending throughout the month.

Wrap Up

We can see the Coronavirus outbreak has already had a profound impact on spending across a variety of sectors.

This rapid change in consumer behaviour happened in just a couple of weeks, and for now seems to be mostly affecting specific industries: hospitality, entertainment, travel and high street retailers.

While it is harder to assess the impact of the recent slowdown on smaller businesses, there is no doubt this will be a challenging time for many business owners across the country.

We hope you found this report insightful.

If you would like to request further information or discuss the findings with our data team, feel free to reach out at [email protected]

Have a great day and see you soon on the Emma app!

Edouard Daunizeau

I look after all things Growth here at Emma. I come from France and have spent the last few years scaling consumer tech startups in the UK and beyond. 🚀