Findings

COVID-19 has rapidly transformed everyday life. While the scope of the pandemic is global, consumers experience the economic impacts locally. Understanding the strain of COVID-19 on the local economy requires a place-based view of the interplay between consumers and merchants within communities, which can inform ongoing efforts to aid the recovery of local economies.

This insight leverages a local commerce dataset of approximately 450 million monthly credit card transactions from a sample of 11 million de-identified Chase customers each month between October 2019 and March 2020. The local commerce view represents everyday goods and services transacted between local buyers and sellers and includes the channel by which the transaction was made (online/offline) and the zip code of both the consumer and the merchant, providing an understanding of the distance between a consumer’s residence and where they made a purchase.

The aim of this insight is to inform the impact of the pandemic on the supply and demand of local commerce across U.S. cities, including analyses of high-income versus low-income neighborhoods, access to food, shifts in the types of products and services purchased, and shifts from brick-and-mortar to online.

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01

Spending on local commerce declined simultaneously across cities, with extreme declines most likely in low-income neighborhoods.

  • Local commerce spend declined by 12.8 percent between March 2019 and March 2020.
  • San Francisco, Chicago, New York, and Detroit experienced the sharpest declines in local commerce spend.
  • Lower-income neighborhoods experienced a disproportionate share of severe spending declines over 15 percent.

Year-over-year percent change in local commerce spend, by city

Bar graph showing Year-over-year percent change in local commerce spend, by city

Bar graph showing the local commerce growth rate for the sixteen cities in our sample. All sixteen cities saw robust LC growth in February 2020, but by March 2020, all cities experienced significant declines. The heaviest decline was in San Francisco, where growth declined by 16.6 percent. The next heaviest declines were in Chicago, New York, and Detroit.

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Online local commerce spend grew by 1.5 percent as offline declined sharply, and the online share of LC spend grew by 4.6 percentage points.

  • The online share of local commerce spend grew from 42.9 percent in February 2020 to 47.5 percent in March.
  • Offline spending decreased the most in San Francisco (-31.0 percent), Seattle (-27.7 percent), New York (-24.9 percent), and Los Angeles (-24.5 percent).
  • Low-income neighborhoods were most likely to experience large decreases in online spending.

Year-over-year percent change in local commerce spend, by channel

Bar graph of Year-over-year percent change in local commerce spend, by channel

Bar graph showing the year-over-year percent change in local commerce spend. Many of the cities with the severest overall spend declines had declines in both online and offline spend. San Francisco experienced the most significant contraction with a growth rate of 031.0 percent in offline spend.

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Only grocery and pharmacy spend grew materially, with online growth at least three times greater than offline growth.

  • The share of local commerce spend at grocery stores and pharmacies grew from 15.6 percent to 23.9 percent and from 2.2 percent to 2.7 percent, respectively, between February and March 2020.
  • Online spending on groceries more than tripled.
  • Online and offline spending fell for clothing, personal care, leisure, and transportation.

Year-over-year percent change in local commerce spend, by product category

Line graph of Year-over-year percent change in local commerce spend, by product category

Line graph showing the year-over-year percent change in local commerce spend by category. Consumers dramatically decreased the consumption of services related to intra-city transportation, restaurants, leisure-related activities, and fuel. There was little change in spend on goods one can consume at or close to home, like furniture and hardware stores, legal and childcare services, and general goods like large non-specific online retailers.

01

Approximately 8 percent of LC spend shifted from restaurant to grocery spend; local access to groceries varied widely by neighborhood income quintile and across cities.

  • The share of local commerce spend allocated to groceries grew from 16 percent in February to 24 percent in March. The restaurant share fell from 20 percent to 13 percent.
  • Residents of low-income neighborhoods tended to live farther from their grocery stores, and utilize online grocery to a lesser extent than their higher-income counterparts. Both factors increase the time away from home when purchasing groceries.

Spend share for grocery stores and restaurants, by online and offline channels

Bar graph of Spend share for grocery stores and restaurants, by online and offline channels

Stacked bar graph showing the spend share for groceries and restaurants, split by online and offline channels by neighborhood income. In February, total grocery and restaurant spend as a share of local commerce spend was about 16 and 20 percent respectively, across neighborhoods. In March, all consumer reallocated towards grocery such that shares were about 24 percent and 13 percent for grocery and restaurants, respectively. Consumers in lower-income neighborhoods increased their spend share on online groceries more than those in other neighborhoods.

Authors

Chris Wheat

Director of Business Research, JPMorganChase Institute

Marvin Ward

Local Commerce Research Lead JPMorgan Chase Institute

Lindsay Relihan

JPMorgan Chase Institute Academic Fellow