Key Consumer Spending Trends For Investors To Gain Insights

New Zealand witnessed a paradigm shift in consumer behaviour as the lockdown sparked increasing reliance on online channels. Going digital became the most powerful tool to fight against the coronavirus scenario, empowering companies to sustain their business operations for early financial recovery.

The country has gradually progressed towards a safe harbour, and business operations are picking up the momentum. Most importantly, the Government’s efforts through fiscal support for employment generation and financial aid to businesses helped the nation emerge from the COVID-19 crisis. The flattened curve with no new active cases is NZ success story against the pandemic.

On Friday, NZ Finance Minister Grant Robertson indicated that the traffic volume is approaching normal and the electricity demand is already back to pre-lockdown levels.

Now, as businesses are gearing towards a pre-COVID scenario, investors are keenly eyeing consumer spending pattern considered crucial in steering the market momentum. The green shoot of recovery would undoubtedly depend upon consumer spending to reboot the entire economy.

Let us look at some key consumer spending trends to get a picture of NZ market during the pandemic.

Liquor Sales

The stockpiling of liquor along with essential supplies dominated the purchasing trends during the lockdown. As bars and clubs remained shut, people panic-bought alcohol at the stores. Yet, there has been a 29% fall in food and beverage sales compared to the previous year.

Bars, clubs and pubs reopened on 21 May 2020 signifying further growing prospect for liquor sales.

In the equity space, share price of beverage company Moa Group Limited (NZX: MOA) has increased by ~4.6% to $0.18 in the past one month as on 22 May. Meanwhile, Foley Wines Limited’s (NZX: FWL) stock edged up by 6.06% in a day trading session to close the week at $1.75. Notably, FWL has posted a positive return of about 8.7% in last one month.

Pharmacy Sales

Essential pharmacy business remained at the forefront amid the lockdown to provide necessary health support to the country. Sale of PPE equipment, gloves, masks and sanitisers skyrocketed during the lockdown with online deliveries acting as a catalyst to pharmacy sales.

Paymark, NZ leading payments innovator, reveals that the average spending at pharmacies and fruit/vegetable shops picked up by 13% in Level 3 and 27% in Level 2 compared to last year.

Supermarkets Spending

Global supermarkets have been in the limelight with abundant online orders and long queues outside the stores. The industry players were able to cash in on the substantial gains made during the strict lockdown measures.

Online supermarket stores such as Service Foods Home and Countdown’s Rototuna supermarket that provides drive-thru services have revamped the face of grocery shopping in a bid to contain the community transmission of virus.

On equity market front, Investore Property Limited (NZX: IPL) that leases property to big-box retailers has seen a rise in its share price by over 23% since the lockdown was first imposed in NZ on 23 March, closing at $1.71 on 22 May 2020. Meanwhile, the stock of the supermarket giant The Warehouse Group Limited (NZX: WHS) closed at $2.09 on Friday, posting nearly 39% return since the lockdown, majorly taking cues from the growth in its Foodbox online delivery services.

Café and Restaurants Spending

Employees in cafes and restaurants are back to work in the Level 2 lockdown, signalling positive hopes for businesses battered by the crisis. While Level 3 was marked by long queues collecting fast-food takeaways, the now operational level 2 has allowed customers to savour their appetite with various dine-in services. However, social distancing norms remain in place for avoiding the rise in infection.

Fast-food giants such as McDonald’s and KFC plan to gradually reopen their dining services. It seems that restaurant players that stayed afloat through online deliveries may soon get back to pre-Covid scenario bringing in the hopes of higher cash inflows.

Looking at stock market scenario, Restaurant Brands New Zealand Limited (NZX: RBD) saw its stock rising by around 11% in the past one month to $12.55 as at 22 May 2020. Besides, Burger Fuel Group Limited (NZX: BFG) noted the appreciation of 80% in its stock price during the lockdown to date, closing at $0.45 on 22 May 2020.

Energy Efficient Products Sale

With winter around the corner, the threat of financial instability has made many Kiwis look at the option of adopting energy-efficient routes like solar lights. Households and businesses expect higher electricity bill as the lockdown compels Kiwis to stay at home.

NZ solar energy services company, Solarcity stated that New Zealanders are demanding cheaper and cleaner energy. Besides saving money, it has spurred a more than a decade long battle for environmental conservation.

Focussed on renewable energy generation and retailing, Mercury NZ Limited (NZX: MCY) has gained more than 25.24% in the past one year. The stock closed at $2.740 on 22 May 2020.

While businesses have adopted digital models that add a new matrix in their operational chain, increasing reliance on contact-less services amidst convenience and safety considerations seems to be the new normal. Moreover, evolution of consumer spending pattern amidst unprecedented times will define the future of retail, hospitality, health care and energy space.

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