What Happens If Consumers Stop Consuming?

I saw an interesting article the other day:

I Don’t Feel Like Buying Stuff Anymore … our economy is built on Americans of all class levels buying things. What happens when the ability — and desire — to do so goes away?

It’s theme is that when stuck at home with nothing to go out for, who needs to buy clothes, make-up or anything. Rich, pampered stars are complaining about the fact they can’t get a decent Botox or liposuction right now, but who needs one? Who’s looking?

Most of us are pigging out at home, drinking too much and changing our look from beautifully presented business person …

 

Source: BBC

… to a massive couch potato.

 

Source: Hello!

Anyhow, if this is the case, what is all of this having as an impact on payments?

It struck me that if no one is buying anything, then our card and payments companies must have seen a massive drop in volume and value of processing in April. In fact, in my own case, I’m getting far more refund transactions in April than ever before as flights, hotels, and theatre trips are canceled.

According to Oliver Wyman, U.S. debit card transactions are down by up to 30 percent since the lockdown started.

 

With people losing their jobs left, right and center, no savings and an incredibly uncertain future, who’s going to be running out and spending? Well, apart from Warren Buffett and his billionaire brethren. American retailers saw sales slump by 8.7% in March 2020, the largest decline since the study began in 1992, and I’m pretty sure April was even worse.

Not everyone is losing out of course: online is booming. Oliver Wyman notes that eating at home has led to massive increases in supermarket shopping, alcohol consumption, gaming, and home improvement.

 

This is reinforced by research performed by PYMNTS.com.

5.1 percent of the 12,000 consumers we studied say that they are shifting the retail spend once done in physical stores, to digital channels … it took about 15 years for 5 percent of retail sales to shift online, then another 10 to shift another 5 percent. It has taken 10 weeks for another 5 percent of retail sales to shift online by consumers who say that they will never return to doing those activities in a physical world.

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