In Freefall: COVID-19 and Retail Sales

This article is translated and republished from the original article in German by Inga Fechner, economist at ING.

Chart of the Week

Numerous restrictions have been in place for over a week to reduce the spread of COVID-19. Schools and stores are closed. Places that tend to be bustling with people, especially when the weather is pleasant, are now eerily empty. It is no surprise that sales in the retail sector have plummeted, as our chart of the week shows.

Daily turnover in Germany and Austria (% change compared to the previous week)

Source: Suburbia, ING Economic & Financial Analysis

While extensive restrictions have been in effect in Austria since March 16, which were announced on March 13, the German government took a little longer to act. Yet, at the same time, public life was grinding to a halt. People’s increasing adoption of social distancing is clearly evident in retail sales since the weekend of 13th March, as we determined from data from Suburbia. Turnover across restaurants, hotels and leisure venues dramatically dropped over the weekend, compared to the previous weekend. 

The restrictions are still in effect, at least until Easter, and will continue to be a problem for numerous economic sectors. Fiscal support measures by governments and central banks are an important step in cushioning the impact of the slump. However, the impact cannot be completely reversed. At least for this year, we will see negative growth for the first time since the financial crisis for many economies.  

Data Shows that Pandemic Compelled Businesses to Act Faster Than the Government

  • Businesses more proactive than governments in Europe
  • Public behaviour no different in hardest hit regions in Germany and the Netherlands

The COVID-19 outbreak has thrown much of Europe into lockdown. Germany and the Netherlands have shut bars, while restaurants are allowed to stay open only for takeout and delivery services.

In recent days, both countries have also tightened rules on social interaction, banning groups of more than two or three people for gathering. It has been two months since the first confirmed case surfaced in Germany and nearly a month since the Netherlands’ first case – so have these moves come too late?

While this is up for debate among epidemiologists and public health policy experts, we analysed our CPG data* to determine two things: business response and public response to the crisis in Germany and the Netherlands over the first quarter. As a proxy for public behaviour, we looked at key indicators such as the number of transactions and sales volume at thousands of F&B outlets across these two countries.

Store closures preceded government action

In both countries, a plunge in open outlets occurred just days before the government introduced tougher measures to combat the spread of the virus, and mandated the closure of clubs and bars.

It seems that many businesses had already taken the initiative to close their doors before any government order. In Germany, voluntary closure of restaurants increased a few days earlier than in the Netherlands. On March 9, when the first COVID-19 deaths in Germany were reported, one-third fewer restaurants remained open compared to the Q1 weekly average.

Restaurants probably decided to shut down since more customers were staying home and shunning busy places in the wake of growing cases. Or they might have found it hard to enforce social distancing by seating diners at least 1.5 meters (5 feet) apart. Regardless of the reason, we can see from total sales volume below that this was a sudden, rather than gradual, dip in activity. It seems the rapidly escalating outbreak had little impact on public life – people were still going out to eat and drink as usual – but this was brought to a virtual standstill on the weekend of March 14.

We looked at sales volume in regions that were hit hardest by the pandemic – Germany’s North-Rhine Westphalia and the Netherlands’ Noord-Brabant province – to see if activity there differed from activity at a national level. But it appears that business and public behaviour in those regions were not significantly different from the rest of the nation, despite more stringent regulations being introduced there first.

In summary, the data demonstrates that even when the pandemic strikes close to home, it tends to be business as usual during the early days of the outbreak. However, businesses felt the impact earlier and acted quicker than governments did. While efforts to curb social interactions at a state or regional level can change public behaviour, not everyone will comply with the rules until there is a total shutdown.

About our data:
Suburbia partners with companies in the payments and retail industries to create data sets that track anonymized consumer purchases across Europe, delivering a daily view into some of the world’s biggest consumer brands. For insights on consumer packaged goods (CPG) trends, Suburbia’s data set covers sales in over 14,000 on-trade channels across six countries in Europe.