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How to Drive Sales as Share of Spend Shifts Across Industries

6 minute read

In the months since states first declared shelter-in-place orders and economic uncertainty gripped the country, consumers have reprioritized their spend. As they spend more on some categories and less on others, it can be hard for marketers to gauge whether these represent permanent or temporary shifts in behavior. To help answer this, we’ve taken a look at how share of consumer spend has shifted between industries over the past few months. The results are both expected and surprising.

Before we dig in, one note about methodology. In this analysis, we’re not tracking the overall decrease in consumer spend compared to this time last year. Instead, we’re using our whole-wallet view of consumer spend to illustrate what percentage, or share of spend, each industry receives.

Share of Spend by Industry

Here are key trends for industries that have seen some of the biggest shifts in share:

Retail gains share

Despite physical store closures, retail’s share of consumer spend spiked in April and has consistently remained higher than it was before the pandemic. As of June, retail spend was up by 8.1 share points since February. At first glance, this may seem surprising given the dramatic decline of retail sales early in the pandemic. A closer look reveals that eCommerce and “essential” retail categories are driving the industry’s growth.

In fact, eCommerce spend is up 51.5% year-over-year in June. Additionally, as reported in earlier State of Spend reports, we’ve seen retail spend consolidate within many essential retail categories – including mass merchandisers, home & garden retailers, and auto parts. Interestingly, these essential categories are also driving the first increase of in-store retail spend that we’ve seen since the start of the pandemic. Retail in-store sales were up 1.2% at the start of July compared to this same time last year — a significant early sign of recovery considering in-store sales were down -12.8% year-over-year in Q2.

In-store retail spend signs of return

Tip: Recapture in-store spend as consumers return to physical locations

While dependence on eCommerce is here to stay, the return to in-store spend represents a critical, time-sensitive opportunity for non-essential retailers to regain the share they’ve lost. They must act quickly to capture their rightful share of customers’ discretionary spend—especially as other industries like travel and restaurant are fighting for those same budgets. Cardlytics can help retailers bring back lapsed customers by using our purchase insights to reach consumers as they begin to increase their discretionary spend. Well-timed, targeted cash-back offers in our ad platform keep customers engaged and drive repeat purchases.

Grocery & restaurant spend begins to normalize

Initially, grocery saw some of the biggest gains as customers stocked up on quarantine essentials — increasing by 7.1 share points between February and March. By contrast, restaurant spend saw a decrease early on as they closed locations and consumers prepped more meals at home. Recently, share of spend between restaurants and grocery has normalized as restaurants reopen and consumers diversify their weekly menus. But things are hardly back to normal. Third-party delivery disruptors are now in the mix.

Even though customers are returning to some of their pre-COVID dining and grocery shopping habits, spend with third-party delivery apps is now higher than it was at the start of the shutdown and continues to gain momentum each week. Restaurant delivery appears to be here to stay as consumers continue to increasingly rely on these convenient, app-based services to get meals on the table. Some of these platforms are even rolling out online grocery delivery options alongside restaurant menus.  

Tip: Rebuild relationships with customers who have turned to delivery

As grocers and restaurants compete for at-home dining spend, both have the added challenge of reestablishing direct relationships with customers who now rely on third-party delivery. Using purchase insights, Cardlytics’ ad platform targets customers who have switched to delivery and engages them with timely offers that influence their next meal occasion.

Travel categories reach a tipping point

Lastly, let’s take a look at the travel industry. Travel was one of the first industries to see a drop in spend with the start of the pandemic—decreasing 6.3 share points between February and April. While travel spend is still down year over year, it has started to show early signs of recovery as select categories benefit from the summer travel season.

Both lodging and rental car categories have now regained more than half of the weekly spend they previously lost compared to a low point the week of 4/2. This is largely driven by an increase in alternative lodging spend as customers head to regional and local destinations for a change of scenery. For travel brands looking for a tipping point to indicate when consumer spend may return, this could be the signal they’ve been waiting for.

Travel spend recovery milestone

Tip: Act quickly to minimize the impact of disruptors

With alternative lodging and homestay brands leading the path forward for travel recovery, traditional hotels need to act quickly to bring their customers back before they’re lost for good. Cardlytics’ campaigns minimize the risk associated with returning to marketing with a pay-for-performance model. We drive proven results and positive cashflow with no upfront costs.

Want more actionable insights?

There is no doubt that consumer spend has yet to normalize. We’re still seeing dramatic shifts between industries, categories and even buying channels. We’re here to help you make sense of it all and find your most successful path forward.  With insight into 1 out of every 2 U.S. card swipes, Cardlytics puts purchase insights into action every day for advertisers in banks’ digital channels. Contact us today for an analysis and campaign strategy customized for your brand.

These trends were recently featured in our Cardlytics State of Spend report, which follows important shifts in consumer spend and tracks early signs of recovery. Download our latest issue today and be sure to check back for the next issue.

Analysis in this report is based on data derived from the Cardlytics platform between March 5th and July 8th. While analysis is representative of purchase behavior, it does not include every customer or every financial institution on the Cardlytics platform.

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