Summer is in full swing, and the mercury is rising with both the U.S. economy and inflation on an upward trajectory. Consumer trends show that many are undaunted by the rising cost of goods and services and formerly housebound shoppers are keen to spend their dollars outside and in person.
Since our last State of Spend report, total spend has remained consistent, floating between +5% and +10% year-over-year (YoY) over our estimated non-pandemic baseline*.
Based on consumer trends, it appears consumers are spending more on travel, retail, and restaurant purchases but are spending less on the ‘essentials’ like grocery. This isn’t to say that there’s been a drop in grocery spend, in fact grocery is still doing well YoY, but we are seeing a declining rate of growth as consumers reallocate their wallet share to discretionary categories.
As consumers venture out, they’re spreading the wealth.
Tip: Focus on Retention
Our data shows that consumers have expanded the number of brands they buy from, so hiding in your top line sales growth is a customer who may not be committed to your brand for the long term but could be persuaded.
Flattening the Curve: The Cardlytics’ Recovery Leading Indicator (RLI) is back to flat
Cardlytics’ RLI tracks spend in select discretionary categories to help brands measure consumer confidence during the recovery. The latest spend trends show more consumers are dining out in-person, shopping in-store and visiting salons—a great indicator of ‘true’ recovery and driver of economic growth.
What’s the implication of the RLI?
It could be that consumer spending will continue to slow back to the historic averages. If that happens, their brand preferences may follow suit, so a savvy marketing leader should be prepared to invest in re-engaging their most loyal customers and growing their share of wallet by converting more casual new shoppers into long-term loyalists.
A table for two and a weekend away
The pandemic hit the dining and travel industries pretty hard and now, more than a year later, we’re seeing improvements in each category since shoppers can now enjoy spending on activities outside of the home. Over the last six months, spend in airline, car rental, and hotel categories has seen significant improvement with car rentals seeing a 24.2 percentage point increase, hotels a 36.9 percentage point increase, and airlines a whopping a 46.8 percentage point increase in year-over-year spend change. Similar trends are present among ticket providers and amusement parks—spend in both areas ramped up really quickly over the last three months as vaccination rates continue to increase.
Dining continues to see improvement but ordering in remains top dog.
Dining spend is up 5.3% YoY in early June compared to estimated ‘non-pandemic’ spend in 2020. All restaurant categories continue to improve, with full service seeing the biggest changes between January and June of this year. The quick serve restaurant category remains consistently positive but perhaps the biggest surprise is that restaurant delivery is still going strong. While many expected a decline as in-person dining returned, we’re seeing consistent growth compared to last year with restaurant delivery up 129.4% YoY.
The Bottom Line:
Consumer confidence continues to grow. However, the COVID-19 Delta variant could be a speed bump to economic recovery and potentially curb spending. But, if consumer trends continue as they have, the second half of the year could show consumer spend patterns that exceed pre-pandemic levels. Marketers should take note of current spend behaviors (they’re not what they used to be) and focus efforts on a customer retention strategies. We’ve seen that consumers are willing to spend, so re-assess customer loyalty and look at share of wallet per category rather than purchase frequency.
*Estimated non-pandemic baseline is calculated by applying YoY growth rates from 2019 to 2020 before the pandemic affected consumer spending.