Fintech Insights

Harness the power of transaction data

Melissa Lagrange, senior product manager, FIS Data Solutions

September 21, 2020

The principle “What gets measured gets managed” may have more relevance for businesses today than ever before. As we continue to navigate the COVID-19 pandemic, examining how commerce has changed in such a short period of time is the best bet for effectively managing change going forward. Payments data is key to this effort.

Our shopper analytics platform illustrates the pandemic’s impact on consumer shopping behavior in retail and restaurant purchasing in America.

Transaction data from the last six months reveals impacts by industry, payments types and purchase channels. The data paints an interesting picture about how much commerce has changed and how business and consumers are adjusting their shopping and spending habits accordingly.

Vertical impacts

By mid-March when COVID became present in all 50 states, the country went into a panic-buying mode, with sales up at grocery, club, liquor store and drug store verticals. A month later, there was a bit of a pause followed by what has become the new normal at the pandemic’s six-weeks mark.

Data indicates that essential industries such as grocery, drug stores and motor fuel (driven by convenience store purchasing) have fared the best thus far. Full-service restaurants have been hit harder than fast food. And while general retail is down, verticals such as sporting goods and home improvement continue to fair better than their retail counterparts.

Payment trends

Debit usage has surged over credit and is continuing to grow as consumers’ preferred means of electronic payment. This is fueled in part by government funded stimulus payments as well as unemployment benefits.

Stimulus payments sent out the beginning of June circulated more than $260 billion into the economy. Ninety-seven percent of these payments were delivered to consumers via direct deposit or check, giving their bank accounts an instant boost. Additionally, at the end of June, approximately 30 million workers were collecting unemployment benefits, including an additional $600/week from the relief act.

As unemployment rates remain high and the U.S. government continues to seek ways to offset economic burdens, these influxes of cash into bank accounts could continue to drive the preference for debit.

Channel preferences

Stay-at-home orders and social distancing have accelerated online adoption in a number of industries that have historically been dominated by in-store activity. Overall, online sales are up 76 percent in the last six months. Critical industries such as grocery, including club and liquor, and restaurant are showing triple-digit growth versus last year.

Growth isn’t only attributed to higher traffic. In the restaurant vertical, people are spending more when buying online; online purchases comprise 15 percent of total restaurant dollars, up 13 points from a year ago. We are seeing similar growth in fast food as online orders have grown to represent 41 percent of transaction dollars.

Contrasting all this online growth is lighter dollar volume increases for in-store sales for grocery, including club and liquor (up 22 percent), as well as steep declines for the restaurant vertical (down 55 percent).

Market size and consumer generations

Both market size and consumer generation play a part in the shift to online purchasing. Ease of access and product distribution networks vary greatly across metropolitan, micropolitan and rural areas and reflect varying preferences for online spending.

When viewing the data by market size, consumers in metropolitan areas are driving growth for online restaurant orders (+283 percent). Rural area residents have also increased online ordering for restaurants, by almost twice as much as metropolitan areas (+442 percent). Home improvement online purchases have seen significant growth in micropolitan areas (+730 percent).

Overall, the pandemic has pushed more consumers across all age groups to online purchasing. Gen X, Y and Z are driving online purchases in the restaurant, home improvement and grocery/club/liquor verticals. Boomers’ online grocery purchases are up as high as their younger counterparts (72 percent), even though they’ve had historically lower adoption of online purchasing.

Effect on your business

COVID’s effect on shopping trends has been significant and the longer the pandemic continues, the more likely some of these “temporary” shifts in consumer behavior will become the new norm. Future success and growth rests on a comprehensive understanding of these changes and the ability to adapt business models to accommodate those changes.

As you take the necessary steps to keep your business relevant for the long-haul, here are some things to consider:

  • Make your business a destination by meeting emerging consumer needs. As consumers continue to consolidate their shopping trips, make sure that your business is a destination of choice by offering the convenience items that are most in demand.
  • Consider what consumers want at both a national and a local level, and how demographics influence purchase decisions. Demonstrating to your customers that you understand what they need and can deliver it will help cultivate loyalty that will outlast the pandemic.
  • Track the changes that are happening in your industry and in your business so you can plan for the recovery and beyond. Tracking consumer trends and preferences is key to managing through change and making business decisions for long-term success.

To learn more about how you can leverage transaction data to help your business grow and thrive through current and future challenges, contact us. .