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FMCG INSIGHTS SERIES

A Snapshot of Retail Spend from Lockdown to Recovery

Eftpos machine

Studying transaction data to understand how lockdowns effect spending.

At the very beginning of 2020’s lockdown, Paymark, the digital payment company that processes over 70% of New Zealand’s electronic card transactions, in partnership with TRA’s data team, launched the Consumer Spend Trends dashboard. It provides a snapshot of the country’s consumer spending, with data from in-store EFTPOS, credit and debit card transactions across regions in New Zealand.  

Our team explored this data to understand how spending was affected by a year in and out of lockdown, and what insights we can take with us into 2021. Because, despite the Trans-Tasman bubble and vaccines rolling out across Australasia, short and sharp lockdowns will likely stay a part of our lives. 

Paymark data is available for the New Zealand region only. But the results make for an interesting case study – one that provokes many questions that marketers will want to answer.  

What happens when peoples’ everyday lives are so thoroughly disrupted?

How does this affect our choices, and how we spend? What does recovery look like? 

How does disruption effect how we choose and how we spend?

It comes down to what matters to people, and how brands fit into their lives – even in times of change. So, I asked Colleen Ryan, TRA Partner and Behavioural Scientist, to add a human lens to our data analysis.  

“Change is challenging because as a species we resist change (it uses too much brainpower and removes our level of comfort) but we also love change because it offers new opportunities and potential. It’s a balance therefore and smart marketers always present change with a big dose of familiarity.“  

Colleen also refers to the way people rely on patterns to make sense of the world, especially at a time of change. “Our patterning instinct is one of the things that has made our species successful so although we may be forced to do things differently in times of disruption, we try to follow the same patterns – so for example mimicking the way people shop at bricks and mortar in the way that an online shopping site is formatted will take stress out of the experience for people.” 

What a difference a year makes 

Spending % changes by lockdown level in Auckland
Looking at year on year spend differences, from March 2020 to March 2021, there was, of course, a big dip in spend when New Zealand first went into lockdown.  

From then, through to August, spending recovered – this was celebrated by the New Zealand Government as an economic success. But, at the end of August 2020, Auckland was back in lockdown, and again, we see a dip. Spend spiked again when Auckland entered Level 1 (our most “normal” level), and then gradually trended to below 2019 levels through to Christmas. In summer, it’s clear that Kiwis heeded the call to “do something new in New Zealand” over summer – spending rose across the regions.  

Chart of YOY revenue NZ vs Auckland

But there appears to be a hangover from that summer splurge.  

A further downwards trend emerged before the second Auckland lockdown in February, and unlike in August 2020, no spike in spending followed it. People are very adaptable and that terrible phrase ‘the new normal’ reflects how quickly people even out the bumps and subsequent lockdowns are likely to have less and less impact. But I wonder how much longer the downward trend might continue. And what that could mean for all of us. We’re certainly not out of the woods yet.  

Regional spending in lockdowns 

Spending in Auckland, naturally, was affected by lockdowns in August 2020 and February 2021. But Otago and Queenstown have been hit the hardest. With international tourism on hold, we can see impacts from March onwards, and quite clearly in August 2020 when Aucklander’s trips down South were cancelled. There’s an extra 10% decrease in revenue compared to August 2019.  

We also saw a 93% correlation between our payment data and Google’s Mobility data in retail. This may feel like a given: not being able to travel would naturally limit retail and recreation spending. But the graph below provides a concrete visualisation: when travel is limited by lockdowns, retail sales will be affected.  

New Zealand revenue YoY change 2021
Spending by category 

For FMCG brands, spending depends on the kind of retailers that sell your products. 

In the last year, we have seen reduction in spend across almost all categories, with a few key exclusions: 

Reductions by category: 

. 23% Food and beverage services 

- 20% Clothing, Footwear & Department Stores 

- 16% Fuel retailing and Automotive 

- 8% Takeaway Food Services 

Growth by category: 

+ 3% Supermarket, liquor and other store-based retailing has seen a slight increase, as well as spikes when people panic shopped before lockdown.   

+ 2% increase for Home & Recreational retailing – possibly indicating that time at home gave people the impetus to pick up DIY and home improvement projects. There was strong retail spending here after lockdown, too.  

 This graph shows how revenue changed from 2020 to 2021, separating out supermarket retailers from other industries. As well as seeing the stark differences in the lockdown periods, you can see how people spent more during Xmas and New year. This was actually a 15% increase year on year in Paymark's spend data, and about 5% in MBIE data. What does this show us? Well, that we were shopping locally, spending more money on gifts, and not spending money on overseas travel. 
 
NZ YoY Revenue change by Industry in New Zealand

Knowledge is power 

What does this mean for you? Well, knowledge is power. As last week’s short, sharp lockdown in Perth showed, we will likely be flexing in and out of lockdowns for the next while. Understanding how people spend during these times what they purchase can help you respond quickly and effectively: 

1. Spend spiked in New Zealand in 2020 after lockdowns – but not after Auckland’s lockdown in February 2021. Brands should not look to rely on post-lockdown spend spikes as a matter of course. 

2. Lockdowns have ripple effects: lockdowns in Auckland affected tourism in Queenstown which affected spending there. 

3. There is a high correlation between our payment data and Google’s Mobility data in retail spend, indicating that when people are not able to get around as much, retail spend drops with it.  

Want to know more?

• You can explore the Paymark Spend Trends Dashboard here.

• We can help bring a human perspective to your organisation’s data. Get in touch if you’d like to talk more about how we can help you.

Tony Lai
Data & analytics director

Find out how TRA can help you find your purpose

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