It is one thing to look at the impact of coronavirus on the wider U.S. economy, and another thing entirely to dive into areas that have been more directly affected. Severe impacts on a local level can be mitigated by wider strength when aggregating all locations of a chain across the country.
As a result, we dove into the data around Washington state to see if more local impacts could reveal trends on how retail is impacted by more heightened tensions.
Travel Takes a Major Hit
One of the first places to start when analyzing the damage is with the major Washington airport, Seattle-Tacoma International. Though the airport is not a hub to the same degree as New York, LA or San Francisco, the hit to visits has been equivalent if not worse.
Visits to the airport dropped 7.1% year over year for the last week in February before seeing that number increase to 20.4% the first week of March. This indicates a massive decrease in domestic visits both in and out of the state. The drop is especially significant considering both weeks had seen significant jumps year over year between 2018 and 2019.
Mall Traffic Nosedives
Next, we looked at two of the state’s top malls, the Westfield Southcenter and the Kitsap Mall and the early indications are that concerns are having a significant impact. Following relatively minor year-over-year declines for the last week of February, the drops increased dramatically in the first week of March. Visits to the Westfield Southcenter were down by 23.8% year over year, while the Kitsap Mall saw a drop of 5.1%.
The increasing pace of the visit decreases indicates growing levels of concern and an increasing lack of willingness to go to major public places.
And, critically, this is happening in a very high-performing location. From September 2019 through January 2020, visits to the Westfield Southcenter had been higher the same months year over year.
Major Brands Being Affected
And it isn’t just major malls that are feeling the pressure of coronavirus concerns, major retailers are also being impacted. While Starbucks saw nationwide year-over-year growth in the last week of February and the first week of March, the situation was different in Washington. As opposed to national year-over-year increases of 1.1% and 2.2% respectively for those weeks, in Washington there were drops of 3.7% and 20.2% respectively. Again, there wasn’t just a decrease, but a rapidly increasing pace of visit decline. McDonald’s also saw declines of 0.1% and 2.0% again going against nationwide increases and showing a hastening pace of slowdown.
Even Costco, one of the clear retail success stories during this period, saw performance tempered by virus concerns. While the brand did see year-over-year growth for the last week of February and the first week of March, it was less than the number nationally. In Washington, those weeks drove year-over-year increases of 11.6% and 7.2%, which was far less than the nationwide increases of 13.2% and 18.3%.
While there are certainly bright spots in the wider retail landscape that could perform better than expected during this period, the spread of the virus will likely bring with it a direct local impact. Even without a full government-led shutdown, there are clear indications that populations in more directly affected areas are going to behave differently.
Visit drops are more likely and they are more likely to be steeper in these areas. This pattern is a critical one as it brings to light a fundamental truth about the virus in America - it should not be seen as a monolith. As the virus spreads, there are strong indications that the local impact will be far more severe, but the same will likely be true in reverse. As areas are able to flatten the curve and mitigate the impact, the return could be far more rapid.