State of Spend: Consumer Spend Surpasses Pre-Pandemic Levels

Marketers take notice: Increased spending in retail, restaurant and travel help boost recovery but it’s not back to business-as-usual.

The light at the end of the pandemic tunnel seems to be getting brighter every day. COVID cases are falling, and consumer spend is up 5.2% above pre-pandemic levels thanks to shoppers opting to indulge in the things they want instead of only buying essentials. We’re seeing a sharp uptick in year-over-year (YoY) spend in categories that were impacted by the pandemic like apparel, beauty, and footwear, suggesting that consumers are ready to upgrade their looks to reintroduce themselves to the world.

Cardlytics’ Recovery Leading Indicator (RLI) tracks spend in select discretionary categories to help brands measure consumer confidence during the recovery. We took a look at overall spend from February ‘21 to April ‘21 and discovered that the RLI is showing steady improvement, likely aided by the vaccine rollout and better weather.

Key findings:

• While spend is still down YoY, more and more diners are hitting the town instead of ‘add to cart’ as full-service restaurant spend grew 20 percentage points over the last three months. Delivery sales also slipped during the first two weeks of April, marking a shift back to in-restaurant dining.
• Retail shoppers are increasing spend across the board.  While these customers still appreciate online convenience as pureplay e-commerce spend holds steady, they're also venturing out in-person to omni-channel retailers.
• Certain sectors of the economy are getting a boost from unexpected places: Compared to 2019, spend on grocery delivery and restaurant delivery increased 139% YoY and 104% YoY, respectively, showing us that it’s not only urban populations that are enjoying the benefits of shopping and dining from home.
• Travelers are ready to take to the skies and hit the roads as airlines, hotels and car rental companies are seeing significant improvement amongst core travel categories. In the last three months, airline spend is showing marked improvement with spend growing 32 percentage points.

Though showing promising activity, the travel industry is still wrapped in uncertainty so maintaining flexibility is key. Sasha Trifunac, our VP of travel and entertainment partnerships, reminds us that it’s important for marketers to focus on their brand’s unique value. “These days, travel companies want to show they are a safe way to travel, regardless of when, where or why people choose to travel. This means marketers seem to be hedging their bets on messaging. ‘Clean and Safe’ is still commonly part of their messaging and I don’t think that will drop soon, but they aren’t assuming that is good enough to attract customers. ‘Clean and safe’ is effectively a requirement but not a differentiator.”

With consumers still adjusting to the idea of a post-pandemic life, marketers should tailor their offers and ads to match their respective industry challenges. For the restaurant industry, that means taking things one quarter at a time. “There’s still quite a bit of caution,” says Matt Drewes, Cardlytics’ VP of restaurant partnerships, “so marketing teams are only planning one quarter at a time for the most part. While dining rooms are opening, the industry is suffering from a deficiency in staff, adding a “new” constraint on in-restaurant sales, especially for full-service sectors. Marketers are still prioritizing their reduced marketing budgets on highest incremental returns.“

Bottom Line:

As pandemic recovery continues, the second half of 2021 should look very different than the first. An increase in discretionary spend is a good indicator that we’re returning to pre-pandemic spending levels. But, as rural shoppers have shown, that doesn’t mean people are spending the same way they were prior to the pandemic. Marketers should take a close look at their customers’ full wallet spend behaviors to identify opportunities to acquire new customers, build loyalty and ultimately drive spend.