COVID-19 Report

Stocking up for lockdown: Wholesale and Grocery Spending Patterns in a Pandemic

Wednesday, November 25, 2020 • 4:00 PM EST

Key Takeaways:

1. As COVID-19 cases surge, so too does wholesale shopping as people stock up for a lockdown.
2. Not only are people spending more per visit than before, they are also visiting wholesale stores more frequently. This is to the detriment of grocery stores, which has seen a decrease in visits with lower average basket sizes.
3. Of the four major wholesale stores - Target, Costco, Sam’s Club, and Walmart - Target gained the most market share by volume.
4. Target also benefited from the largest uptick in basket size and increase in visits when compared to the other brands.

COVID-19 cases are surging with talks of further lockdown measures - if they haven’t already been announced. To better understand how people are preparing for a potential lockdown, Cardify analyzed spending data from wholesale and grocery stores throughout 2020, with a particular focus on the past couple weeks. The data shows people are buying more than they did in 2019, suggesting they are preparing for a lockdown in what many call the long, dark winter ahead.

A wholesale shift

Throughout the pandemic, wholesale and warehouse retailers have seen higher gross volume than grocery stores. This trend existed even pre-COVID.

During the early height of the pandemic, spend data showed that people disproportionately bought at wholesale and warehouse stores over grocery stores. That difference began to shrink through the summer as lockdowns got lifted. However, when cases began to surge, people defaulted to wholesale, yet again. The spend gap is now widening further, which can be seen in the most recent weeks.

Spending more and more frequently

In the past three weeks, spend data shows that the average basket size is shrinking at grocery stores and increasing at wholesale stores. While this could be partially driven by Thanksgiving preparation, the sharp increase in correlation with rising COVID cases suggests different spending motivations.

Further, the spending spike is significantly more in 2020 than it was in 2019 for the same period. In 2019, there was a holiday bump in early November that subsided by later in the month. This year, spend began to rise in early November but continued a sharper upward trend through the month.

In addition to an increase in dollars spent per visit, the frequency of visits to wholesale has increased. During the early peak of the pandemic, wholesale visits rose above grocery visits. This settled back down and people began visiting grocery stores more often than wholesale, which was the norm pre-COVID. However, in the past three weeks the gap is closing yet again as more people flock to wholesale stores.

Finally, weekly spend per customer is also surging up for wholesale stores, suggesting that people are buying significantly more than before. This isn’t just a case of switching preferences to wholesalers versus grocers, but also stocking up on more goods.

Target wins as people stock up

Beyond typical spikes that all wholesalers see during the holidays, Target won the bulk of the COVID-stocking-up spending surge. The US retailer was already growing faster than its competitors Sam’s Club, Costco, and Walmart throughout 2020, but the latest surge in spending disproportionately happened at Target stores.

This is an interesting trend when you consider that Target also has the lowest average basket size among the four retailers, trailing at nearly a third of the average basket size at Costco and about half the average basket size at Sam’s Club. However, spending data shows a relatively significant uptick in average basket size at Target, nearly hitting Target’s early pandemic peak average basket size from April 2020.

Target is also seeing increased visits, as the retailer is inching up to its main competitor: Walmart. Members-only wholesalers, Costco and Sam’s Club, have not seen the larger increases like their competitors. In fact, Sam’s club is seeing a slight decline. Since the stores are not open to the general public, non-members looking to stock up for COVID are more likely to go to Walmart or Target than to buy a membership at Costco or Sam’s Club.

A new kind of lockdown

In the first lockdown of 2020, people had no idea what coronavirus truly was. As a result, everything shut down out of fear and perceived necessity. With anticipation of another wave , the data shows that people are preparing for more lockdowns and a winter at home.