As the pandemic continues in early 2021, consumers indicate they are spending the last round of stimulus money on essentials such as paying bills and buying food, according to a survey by Coresight Research conducted on Feb. 8.
While Congress continues to debate the next round of stimulus, more consumers are in need, the survey found. That supports what Walmart President and CEO Doug McMillon said on Feb. 18 in his address to the investment community. He noted that Americans urgently need another round of stimulus checks.
He said consumer spending patterns changed with the most recent stimulus check. McMillon said store and website sales indicate more shoppers put extra dollars toward buying necessities like basics, private brands, smaller pack sizes — a departure from big purchases consumers were making last year with the larger stimulus checks.
McMillon said he recently talked with a shopper trying to stretch $20 on food and fuel for the week. He said those are the people who need the stimulus immediately. McMillon said he has been clear about the need for a stimulus with President Joe Biden and Treasury Secretary Janet Yellen, with whom he recently met to discuss the consumer’s state.
Coresight reports essential spending and paying bills was how the majority of respondents spent the last stimulus check. It will be how they intend to spend any future stimulus, throwing a wrench in the notion that more stimulus will boost discretionary spending retail.
The survey found 43% of consumers who received a stimulus check by early January reported they used it to pay bills, which was more than 13 percentage points higher than the next highest category, food spending. In discretionary purchases such as clothing, footwear and accessories, just 8% of consumers reported spending. The survey also found only 10% of consumers said they would use the next round of stimulus on non-discretionary purchases.
Deborah Weinswig, CEO of Coresight Research, said consumers do not appear to be prioritizing retail spending with their stimulus checks. She reports just 10% of consumers reporting spending stimulus check money on purchases other than food. The research found nearly half of respondents said the future stimulus would go to pay bills. According to the survey, more than 35% said they would spend it on food and groceries, and home improvement will be how less than 10% spend more stimulus. Replacing appliances or electronics is how about 10% said they plan to spend more stimulus.
Weinswig said consumers remain cautious and are avoiding public places, which is problematic for restaurants and brick-and-mortar retail without an online presence. She said mall and shopping center traffic continues to be light. She said the number of shoppers visiting malls fell below 40% for the first time since October in the last report. Coresight also reports those avoiding entertainment and leisure venues dropped sharply to 41% in early February. Weinswig said this segment of the economy is still a long way from recovery.
Some retailers have been winners with record sales, while profit has been harder to come by. Walmart is the nation’s largest retailer and by many standards, had a stellar fiscal year with record U.S. revenue of $559.15 billion, a gain of 6.7% from the prior year. The year’s net income was $13.51 billion, down from $14.88 billion in the previous fiscal year.
Weinswig said the survey regularly asks consumers where they made food and non-food purchases in the prior two-week period. She said for food purchases, Target and Amazon overtook Kroger as the second most-shopped grocery store. Coresight said it’s just the second time Amazon beat Kroger, and the first time Target has had more consumers shop for food than Kroger.
She said Walmart extended its lead over food retailers, with the proportion of consumers reporting having shopped at Walmart for food over the past two weeks (ending Feb. 8) rising by more than 5%.
Walmart execs have said the market share gains they have been able to capture during the pandemic stems from their previous multibillion-dollar investments in expanding online grocery in recent years. More investment is coming as the retailer will put in dozens of in-store fulfillment centers to help growing demand and improve efficiency in its burgeoning online grocery business.
Coresight also reported while Amazon and Target each saw an increase in food purchases, they saw a downtick in non-food shoppers from the previous period. Kohl’s saw shopper numbers decline for the sixth straight week, and Macy’s saw a slight bounce in its proportion of shoppers from the prior report.
Other retail winners in recent weeks have been dollar stores. Coresight reports Dollar Tree/Family Dollar and Dollar General saw increases in shoppers, with the proportion of shoppers at each retailer rising to its highest point since Jan. 4. Economists say low-price-point dollar stores are where consumers often go when they need to stretch a meager budget.
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