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COVID-19: The Winners and Losers So Far

Hard data from ecommerce sites reveals that a sudden shift in consumer values has long-term implications for business. This article was written in collaboration with J Bruce Daley of Jitterbit, the API management firm where game-changing tech meets world-class consultation.

 

That as a result of the unprecedentedly swift financial and social disruptions caused by Covid-19 there are retail winners and losers should not be a surprise to anyone. Finally, we have some hard data from the Seattle-based Stackline, an ecommerce product and services provider, to confirm everyone suspicions.

In a post entitled “Top 100 Fastest Growing and Declining Categories in E-Commerce” the firm compares consumer spending in March of 2019 with March of 2020 to identify the winners and losers by category.

Losers

Let us start with the bad news.

Not surprisingly, travel products have taken a big hit. The following online categories have taken a sustained hit:

  • luggage and suitcases (-77%)
  • women’s swimwear (-59%)
  • camping equipment (-39%)
  • party supplies (-55%)
  • bridal clothing (-63%)
  • men’s formal wear (-62%)
  • necklaces (-38%)
  • automotive parts and machinery (between -46 and -50%)

Winners

In our view, the more important news is that the disruption is not as bad for all of retail as some pundits and commentators would have you think.

There are quite a few SKUs seeing record sales or, at the very least, sales that are significantly up from a year ago. These include:

  • home exercise equipment (+170)
  • cough and cold medicines (+ 535%)
  • weight training equipment (+307%)
  • craft kits and projects (+117%)
  • hair coloring products (+115%)
  • computer monitors are selling (+172%)
  • bread making machines up (+652%)

Analysis

Much of this data confirms a common-sense understanding of the epidemic. But a new lesson to learn here, perhaps, is that the economic pain of Covid-19 will not be evenly shared.

The National Bureau of Economic Research defines a recession as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” By that definition, the Covid-19 virus has triggered a recession. The US Department of Commerce reports that total retail sales fell 8.7% in March 2020, the most significant decline since the government started tracking sales in 1992.

Of course, there have been many recessions before, but to most observers this one appears to be much more extreme. Past recessions typically acted as a waning tide that lowered all boats. In a traditional recession, auto supply stores often did well while new car dealers struggled as consumers repaired rather than replaced old cars. Yet in the current situation, both categories of stores are closed, and most people are driving less—so much so that automobile insurance companies are cutting premiums.

A similar dislocation is taking place in the movie distribution sector. Movie theaters and cinema companies such as AMC report zero revenues while streaming services such as Netflix are experiencing record sales. It seems that the aforementioned tide is, this time around, lifting just some boats while drowning others.

In the short run, this means that the shift in consumer demand is going to create some big winners and some big losers. On April 15, the American electronics provider of audio communications equipment, Plantronics, raised its quarterly earnings guidance, and the shares climbed 13.8% in a down market. Although the long-term implications of Covid-19 are still impossible to know, one change that could be permanent is a shift in business models.

Only time will tell whether more permanent changes are likely in store for us. If you’d like to discuss the implications for your business model or marketing plans now, please give Bruce Daley a call. To learn more about how to get on the winning side of this crisis, please follow Dave Sutton @TopRightPartner!  If you’d like to continue receiving a series of great analysis like this, sign up for the TopRight blog, connect with us on LinkedIn, or buy a copy of our latest book, Marketing, Interrupted.