By John Kelly
For the first couple of months, 2020 looked like it was going to be a banner year for brick-and-mortar shopping, with in-store traffic up 8.6% in the middle of February compared to the previous year. The U.S. was in the midst of one of the longest bull markets in modern history, and it seemed like nothing could cool the economy down—that is, of course, until the novel coronavirus pandemic swept across the nation (and around the globe), forcing state and local governments to implement strict social distancing and stay-at-home measures.
Beginning in early March, when it became apparent that the containment of the coronavirus would require drastic, top-down action, foot traffic patterns dropped rapidly and precipitously, with walk-ins at the end of the month being only 38.5% of what they were at the same time in 2019. Nationwide, foot traffic hit its lowest point in mid-April—a mere 25.2% of normal—when most states were under relatively strict shelter-in-place orders.
It’s interesting to note that this decline in retail walk-ins began before most states had even implemented shelter-in-place orders: for reference, only eight states had issued quarantine orders by 3/23, and yet nationwide foot traffic had already dropped by a whopping 49.5% from what it was just one week prior. This is likely due, in part, to the fact that some of the earliest-closing states were also among the most populous, such as California, New York, Illinois, and Ohio. Consumer safety concerns almost certainly played a part as well.
Elaine Brubacher, a 79 year-old retiree living in California, is one consumer who has completely altered her shopping behavior during the outbreak. Before the spread of COVID-19, she used to go shopping twice a week. Now, she says plainly, “I don’t go out.” Elaine has limited her shopping to once every ten days, and only for the necessities: “I’m not doing any shopping other than what is absolutely necessary—the grocery store or the pharmacy. I’m not comfortable with ‘general shopping.’”
Elaine is not alone. Consumer concerns about the possibility of catching or spreading this invisible disease via social contact are at all-time highs. While many merchants have taken steps to make their locations safer—installing partitions, sanitizing shopping carts, disinfecting pens—many shoppers are still wary of being in close proximity to other shoppers.
So what does all this mean? When can we expect consumer foot traffic to get back to a level we could consider normal?
The foot traffic data that we monitor at Zenreach, which is garnered from the WiFi signal across thousands of merchants in North America, indicates a slow but steady return to pre-COVID-19 levels not before October.
Looking at the nationwide trends, we saw retail traffic hit its lowest point on April 18, when traffic was at an anemic 25.2% of last year’s traffic at the same time. Since that time, we have seen foot traffic more than double to 59.4%. This is ostensibly good news—two solid months of steady recovery bodes well for a relatively quick return to normal. If current trends hold, we can expect a return to 2019 levels of foot traffic sometime by the beginning of September. Our present estimate is that September 2 will officially be Return to Normal Day.
However, that is not the full picture. A look at some of the state-level data tells a more nuanced story. Different states (and independently, many municipalities and counties within the states) implemented and lifted their quarantine orders at different points in time, meaning some states experienced longer stay-at-home orders than others—in some cases, by a margin of weeks.
States that were slow to close and fast to open—like Arizona, Florida, Georgia, and Texas; let’s call them the “Optimistic States”—have experienced a less significant impact to the retail sector. On average, these states saw their lowest foot traffic numbers in mid-April where they bottomed out at 24% of year-over-year traffic, which was not too dissimilar to the national average. All of those states have seen their customer levels return above 50% since that time. However, the impact of these steep decreases was much more limited. On average the number of days during which retail traffic was below 50% of the historical average was 77 days. In fact, Georgia, which had one of the shortest lock-down timelines, saw 55 days of sub-50% traffic.
Contrast that with states that acted quickly to enact shelter-in-place orders and which have shown more caution in reopening—like California, Hawaii, New Jersey, and New York; let’s call them the “Cautious States”—have seen a much smaller bump in in-store activity.
Like the Optimistic states, these states saw their lowest foot traffic numbers in mid-April where they bottomed out at 20% of year-over-year traffic. The Cautious States, however, all still have some form of business restrictions still in place. Consequently, none of those states has seen its customer levels return above 50%. In fact, Hawaii seems to have been hit hard, since their traffic numbers have not yet climbed above 30%. The result is that on average the number of days during which retail traffic was below 50% of the historical average is, as of June 16, already at 86 days. That means that the Cautious States have seen a 26% greater traffic impact than the Optimistic States.
Clearly, the impact is not the same across the country.
Unfortunately, we’re already seeing a big spike in COVID-19 cases in the Optimistic States. Infections in Arizona are up over 200%(!) since late May, and they’ve increased significantly in that same time period within other states as well, such as Texas (53%), Florida (87%), South Carolina (93%), and Utah (126%).
Though we’re also seeing new cases in the Cautious States, the rate at which COVID-19 infections are growing has largely leveled off (and in several cases, is actually decreasing). The daily average number of new cases is more or less unchanged over the past couple of weeks in states like California, Washington, and Kentucky. In New York, New Jersey, and Illinois—three of the earliest- and hardest-hit states—new infection rates are down over the past 14 days.
So while policy makers wrestle with the best way to balance the minimization of COVID-19 contamination against the need to open up the economy, two things look sure: 1) the economic correlation between the the length of the stay-at-home orders and the negative effect on retail foot traffic, and 2) even with reopenings, consumers are not flocking to stores in the same way they did pre-coronavirus.
John Kelly is the CEO of Zenreach, the walk-through company, which is helping merchants connect the online and offline world through in-store WiFi and digital marketing.