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Houston Bounceback

by 
Tali Rozenman
 on 
April 9, 2020
Houston Bounceback

In times of crisis, we tend to look to the past to see if there are any lessons we can apply to the current situation. So, how have we recovered from significant falls in the recent past, and what could this mean for the coming months? 

We dove into the data surrounding Hurricane Harvey, ranked the second-most costly hurricane to hit the US since 1900. The hurricane struck Texas Friday night, August 25th and reached the city of Houston just two days later, causing unprecedented flooding. With a focus on a few key sectors in the Houston area, we explored visit patterns to understand how each of these sectors reacted and rebounded. 

Hard Hit, Fast Return

Expectedly, diving into a few chains within key industries like Grocery, QSR, Fitness and Apparel, similar trends emerge for the duration of the hurricane. There is a clear and significant dip during the last week of August, followed by a fairly quick recovery, with traffic stabilizing around Labor Day. 

Malls Feel Decline Early

While, for the most part, all sectors saw their biggest drop during the week of August 28th through September 3rd, 2017, followed by signs of recovery, malls and shopping centers actually experienced an earlier significant drop. 

For all three centers analyzed, The Plaza, The Galleria and River Oaks Shopping Center, the second to last week of August was just as weak, if not weaker, than the last week of August. The Plaza, the southernmost of the three locations, experienced its lowest-traffic week from the 21st to 27th, with a 53% drop below baseline. Perhaps in times of heightened danger, mall shopping is regarded as a “nice to have” rather than an essential, like grocery shopping. 

Impressively, once visits did return, they seemed to find a normal stride growing through the eventual peaks during the holiday season.

Interestingly, in the first weeks of the coronavirus, the same pattern was observed. Malls were again one of the earliest sectors hit, and while they are currently in a state of nearly full closure, this data suggests that the bounceback could be very rapid.

Fitness and QSR Rebound Fast

One of the standards for the fitness center industry is that January visits peak amid a rush of New Year’s Resolutions before slowly, and then not so slowly, plummeting as the year progresses. Yet, it appears that being forced to stay at home can actually create a mini-peak.

Analyzing three gyms in the Houston area showed that the decline may have created a renewed vigor to get in shape. For all three, massive declines during the week prior to and during the hurricane pushed traffic to annual lows, but the weeks that followed created growth not normally seen during that time of year. While traffic did eventually return to a normal downward trend through late 2017, it does create an indication that gyms may enjoy a fairly substantial bounceback when social distancing restrictions are removed.

QSR restaurants also showed a major dip in the final week of August, stabilizing and returning to growth the following week. Again, there are strong indications that this is a sector that could return to high levels of performance quickly once a sense of normalcy returns.

Grocery Resilience 

The Grocery sector stands out as a pillar of preparing for a crisis, so expectations were that the sector could see a peak prior to the hurricane. And looking at a Houston Kroger showed exactly that. The location saw a distinct and significant peak on August 24th, just a day before the hurricane officially hit Texas. With growth of 116.7% above the baseline for the period, it marked the highest traffic day for this location in 2017. Even on August 25th, when Harvey had already made landfall in Texas, visits were up 71.3% above baseline as customers rushed to stock up on necessities.

Whole Foods’ and Trader Joes’ traffic tell a similar story with Thursday, the 24th marking a major peak for 2017. The visits for all chains also returned to a positive baseline growth by September 3rd, showing a fairly quick turnaround. Clearly, people saw their window of opportunity to stock up on supplies shrinking, and ventured out right up until the hurricane’s official arrival in the area. 

For Whole Foods, Walmart and Trader Joe’s, the week of August 28th was the lowest, or one of the lowest-performing weeks of the year. But Kroger showed an entirely different picture, with a 14% increase in visits as a result of the Thursday and Friday peaks, followed by a speedier recovery with a 60% growth over baseline visits on August 30th. Yet, assuredly, once the hurricane had passed, normal visit patterns returned.

Takeaways

In Hurricane Harvey’s case, through geography seems to have played a role in the magnitude of the impact, all sectors recovered quickly despite the enormous amount of damage inflicted. While we can never downplay the emotional and economical burden that individuals and families face in times of tragedy, we must state the obvious -  people are resilient and have a powerful capacity to recover from difficult situations. Even when their routines were abruptly interrupted, Houston residents found ways to return to business as usual often faster than expected. Grocery chains, as seen both with Harvey and with COVID-19, often flourish in times of greatest need, while the other sectors still manage to get back on their feet. Though every crisis is different, the desire to get back to regular life is a constant that will continue to propel retail forward even in the hardest of times. 

Check back in at the Placer.ai blog as we continue to look at past data and what it can teach us about overcoming the COVID-19 crisis. 

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