Impact of COVID and Delta

Part
01
of one
Part
01

Impact of COVID and Delta

Key Takeaways

Introduction

We have provided an overview on what industry experts are predicting surrounding how COVID and the Delta variant will likely impact both brick and mortar and online businesses, both positively and negatively, in the foreseeable future. Where we could, and the research path allowed, we provided data that was focused on food and/or beverage retailers and/ or restaurants. As requested, this was a United States focus. We also included statistical data under a separate area, as we thought this might be helpful in extrapolation into the future.

We also noted this source as the kind we should reference for the type of data to be included in this report, which we did. However, as this source was already known, we did not cite it in any of the research findings.

We do want to emphasize, however, that this source gave no reference to any predictions surrounding how COVID and the Delta variant will likely impact both brick and mortar and online businesses, both positively and negatively, over the next 6-12 months. We found this true for most of the sources we located. While there were lots of experts providing their opinions, almost none of them were willing to go as far out as 6-12 months. This is likely because of the fast changing nature of COVID and the variants, specifically the Delta variant. Because of this, we provided expert opinion, but the time frame varies from the 6-12 months that was requested, as that is just not publicly available.

Of note, under the header "Industry Experts, all data points have been provided almost verbatim from their sources as they are direct quotes from industry experts. We did this to prevent any misinterpretation or misappropriation of expert analysis, which is key to proper interpretation of the data.

Industry Experts

Specific Data: Food, Beverage Retailers and/or Restaurants

  • There are many restaurant companies that are reporting that there is little impact to their sales data because of the Delta variant, however, that appears to be subject to change based on where the restaurants are located. For example, New York City has put in place protocols for businesses that will require "proof of vaccination for some indoor activities, like eating inside", which could result in reduced restaurant revenue.
  • Restaurants are among those industries that have suffered the most from the COVID-19 pandemic, and the subsequent Delta variant. However, many of the companies in the restaurant industry are reluctant to blame the Delta variant for weaker recent bookings. According to data from Similarweb, visits to OpenTable and Resy fell over 12% and almost 11% respectively between the weeks of July 10 and August 7, 2021. It is widely accepted that reservation booking websites such as these are reliable predictors of ongoing consumer sentiment. However, it should be noted that it is difficult to determine the driver behind this drop as it could be the Delta variant or it could simply be the fact that it is summer vacation. According to Laurie Thomas, executive director of the Golden Gate Restaurant Association in San Francisco, "[w]e can’t really tell if the slowdown the first weekend in August was variant-related or vacation-related."

Statistical Data

  • A poll conducted by Lisa W. Miller & Associates of one thousand American consumers surrounding their restaurant dining behavior, revealed that slightly more than half [51%] were “very/extremely concerned” about the Delta variant in July 2021. However, the more significant statistic surrounds how the Delta variant is being perceived as a barrier to their activities. Almost 60% asserted that the impact of the Delta variant would somewhat or significantly reduce their activities, and those percentages continue to rise. By August 16 consumer positive sentiment had dropped 58% among the "first-out-the-door" group of already wary guests. Those reporting that they were somewhat/significantly reducing activities due to COVID climbed to 71%.
  • When digging into brick and mortar retail companies and their earnings releases for quarter 2, some interesting insights as to the possible future can be gleaned. The earnings reports have been quite positive, and in some cases surprisingly strong. One of the biggest surprises comes from Macy's, a retailer that, for some people, was not even considered a viable retailer pre-pandemic. Their Q2 earnings report belies that supposition, as they have done an about face, showing solid earnings, with "comparable sales up 61.2% on an owned basis and up 62.2% on an owned-plus-licensed basis versus 2020; up 5.8% and up 5.9%, respectively, versus 2019." Additionally, there was a "trend improvement of approximately 16 percentage points compared to the first quarter of 2021." However, when looking at their online sales, those "declined 6% versus second quarter 2020, but grew 45% versus second quarter 2019."
  • "Before the pandemic, just 7% of grocery shopping was done online. Once the virus hit, though, many retailers expanded click-and-collect operations, which enabled contact-free shopping without the steep logistical delivery costs." With new consumer habits forming, and starting from a low user base, Mastercard Economics Institute expects that 70%-80% of the close to 3 percentage point COVID-related digital shift to grocery will be permanent. E-commerce made up about 18% of total restaurant sales before the crisis. Based on this low market penetration pre-crisis and the rapid adoption, Mastercard Economics Institute expects about 30%-40% of restaurants' e-commerce peak will stick.

Research Strategy

For this research on how industry experts are expecting COVID and the Delta variant to impact both brick and mortar and online businesses, both positively and negatively, in the foreseeable future, we leveraged the most reputable sources of information that were available in the public domain, including Google mobility data and CNBC, as well as reputable and credible sources such as the Wall Street Journal, The New Yorker, Census.gov, Deloitte, and AP News.

As outlined in our introduction, while there were lots of experts providing their opinions, almost none of them were willing to go as far out as 6-12 months. This is likely because of the fast changing nature of COVID and the variants, specifically the Delta variant. Because of this, we provided expert opinion and statistical data, but the time frame varies from the 6-12 months that was requested. Unfortunately, that kind of specific data is not publicly available.
Sources
Sources