Coronavirus is continuing to make its impact felt across the United States. Yet, even with new peaks in cases, there is a strong hope that with effective social distancing in place, the virus’s impact could soon begin to dissipate. But the environment we return to will not be the same as it was when the crisis began. Beyond a new appreciation for the day-to-day normal, the wider economic effect will assuredly be significant.
While many industries will likely continue to feel the impact of slowed international tourism and a rising period of economic uncertainty, there are industries positioned to rebound quickly.
In the first of a series of posts that will touch on industries that could rebound effectively, we turn to fitness and home improvement.
While gyms and fitness centers were hit hard and quickly, there are a handful of data points that suggest this is a sector that could rebound quickly. Firstly, when we look at other areas that have been hit with crises in the last few years, one of the first examples is Hurricane Harvey. The storm-battered Houston, TX., resulting in closed gyms and incredibly low visits. However, not only did these gyms bounce back quickly, they were able to buck normal visitation trends. Where visits normally decrease substantially after the first quarter of each year, the weeklong hiatus seemed to spur a return to fitness for visitors.
Considering the long periods of being stuck at home driven by social distancing, there is a high potential for a comeback for gyms once again.
A second factor that plays into the potential rebound is the ‘stronger than expected’ performance of retailers like Dick’s Sporting Goods. Where most retailers saw significant downturn beginning late February, Dick’s saw visits that were 147.8% above the baseline for the last Saturday of February, when measuring the period between January 2019 through March 23rd 2020. This marked the highest performance for any day outside of the highly trafficked holiday period. That was until the next Saturday when visits rose 152.4% above the baseline, setting a new high point.
The fact that visits rose heading into this period indicates a desire to stock up on sports-related gear to help get through a long period at home. While products like baseball gloves for kids won’t need to be replenished, the patterns do indicate a strong inclination to staying active, something that could potentially give fitness centers a new peak in May or June.
With many expecting a period of economic uncertainty following the end of the initial wave of the coronavirus crisis, it is important to look at industries that fare better even during difficult financial periods. One of the prime examples is the Home Improvement sector. The concept is based on the idea that desires to restore will outweigh buying something new, and projects that might otherwise call for a contractor will be handled as a DIY process.
Following a strong end to 2019, Home Depot continued to see visits grow in early Q1. However, the prime period for the sector is generally late Q1 and into Q2 when spring cleaning and DIY projects reach their peak. Looking at March data from 2020, Home Depot saw an earlier rise than normal. Visits the second week of March were 9.3% above the baseline, marking a visit increase of 7.4% year-over-year. And this was following the first week of March where visits were up 7.6% year-over-year. While the third and fourth weeks of March did see declines, they were far more measured than those experienced by other sectors.
Lowe’s also saw strength during this period, outperforming the equivalent weeks in 2019 in all but one week. Early returns showed growth of 6.0% and 4.5% year-over-year for the first two weeks of the month, before visits dropped by 10.0% the third week. Yet, surprisingly, visits rose again the last week of the month growing to 20% above the baseline, a year over year visit increase of 9.6%.
The time at home combined with the timing of the DIY peak season seem to be enabling Home Depot and Lowe’s to weather the storm effectively. While this could come to a close quickly like other industries, there are also strong indications that the industry could do better than most during a period of economic downturn, like the one expected in the months post coronavirus. Accordingly, an industry that was likely to get hit especially hard – their visit peaks come in the middle of the coronavirus peak – could potentially find a softer landing than expected.
Not all industries are impacted equally. Not by the coronavirus or by a potential recession. And there are critical lessons within potential success stories for how other brands could improve performance. From apparel retailers who may look to push athleisure to brands orienting themselves to DIY projects, opportunities are present even in difficult times.
Want to see which other industries could outperform? Visit our blog to find out.