The core perspective from which we analyze the spread of Coronavirus should always center around health and safety concerns. Yet, an epidemic of this magnitude also has secondary consequences, including a heavy toll on global economic activity. The US stock market has been hit especially hard driven by concerns over supply chain viability, drops in global travel, consumer fears and more.
With this in mind, we dove into the location analytics to examine the short term impacts and to test some of the theories driving this downturn.
Air Travel is Declining
One of the first places to begin is airports, a particularly vulnerable sector as the spread of the virus has been so directly tied to global travel. And indeed, there are strong indications that air travel has already taken a significant hit.
Analyzing visits from January 2019 through February 2020, visits to San Francisco International Airport, an area of higher concern within the United States, were 24.6% below the baseline for the period, compared to February 2019 when visits were 21.9% below. But this relatively minor decrease belies the fact that the pace seems to be quickening. The last Thursday of February in 2020 saw visits that were 16.4% below the baseline, a massive drop from 2019 when the final Thursday was just 2.1% below the baseline.
Yet, the impact is not being limited to Northern California. LAX in Los Angeles, JFK in New York and Chicago’s O’Hare Airport are all seeing declines. Looking at year-over-year traffic in February for all airports saw declines of 3.4% in San Francisco, 0.9% in LA, 8.2% in NY and 5.0% in Chicago.
And these declines are significant. Firstly, all but JFK saw year-over-year visit increases in January 2020 compared to the same month a year prior. Secondly, February was 29 days in 2020, as opposed to 28 in 2019 meaning an increase should have been expected. Finally, all have seen more of the decline coming in the final days of the month, when fears around the spread of the virus in the US grew.
Analyzing visits on the last Thursday of February 2020 compared to the equivalent day in 2019 showed major drops in each case, as seen in the graph below. Further indicating that this is a sector that could see increasing challenges as concerns over the virus continue.
But what does this mean for wider shopping trends? Some have posited that the virus could have a major impact on the willingness of consumers to venture out for a shopping trip. We analyzed four top-performing malls across the US to see if there is a wider impact around the country.
Yet, all saw strong February visit numbers with the average for the group coming in at 13.3% year-over-year visit growth for the month. Both the Galleria in Dallas and the Aventura Mall near Miami even saw year-over-year growth in the final days of February 2020 compared to the equivalent days in 2019. The Westfield Garden State Plaza in New Jersey saw a drop year-over-year for the final Thursday, but a significant jump the next day. The Woodfield Mall in Illinois saw drops both days, though the Friday decrease was very limited.
The takeaway here is that while some aspects of the economy, like air travel, may have turbulent periods ahead, there are indications that wider consumer trends could be fairly resilient.
With that said, as expected, location does matter.
The Westfield San Francisco saw visits on Thursday, February 28th and March 1st, 2019 that were 15.9% and 1.3% below the baseline for the period from January 2019 through February 2020. Visits for the equivalent days in 2020 were down 39.8% and 30.1%. So, while there is reason to believe that the overall national impact could be limited, there is also a clear correlation between areas associated with the virus and traffic declines.
Who Might Stand to Gain?
As coronavirus fears spread, there were two types of retailers that were expected to see bumps - wholesale grocers and pharmacies. The logic being that individuals would look to prepare themselves with the necessary medications and prevention tools while stocking up on key foods in case there were shortages, or leaving home became more worrisome.
As predicted, wholesalers did certainly see a massive bump. Visits to Costco rose 71.7% above the baseline on Saturday, February 29th, far above the equivalent Saturday in 2019 when visits were 45.0% above.
The same was true for Sam’s Club which saw visits rise 95.3% above the baseline on the final Saturday of February, a jump from 2019’s equivalent Saturday when visits were 77.3% above.
This was not the case for pharmacies. CVS saw visits on Friday, February 28th rise 13.6% above the baseline for the period from January 2019 through February 2020. This was slightly below visits on the equivalent Friday in 2019 when visits were 14.3% above the baseline. This relative flatness indicates a further degree of stability and potentially, a lack of panic.
There’s no doubt that the spread of Coronavirus is going to have a significant economic impact, even if it just pertains to travel, tourism and threats to global supply chains.
That said, there are indications that elements of the US retail economy will be far more resilient than expected. Should relevant authorities succeed in curbing the impact of the virus, the potential for a fairly quick bounceback is absolutely present. There are also players in the retail sector that could benefit. Wholesalers like Costco depend on low-frequency visits with large basket sizes, meaning the run on goods in late February could present a significant boost.
Who else might stand to gain? How might other sectors and companies be impacted? Visit Placer.ai to find out.