The Early Impact of COVID-19 on Local Commerce: Changes in Spend Across Neighborhoods and Online

32 Pages Posted: 10 Jul 2020

See all articles by Diana Farrell

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute

Chris Wheat

JP Morgan Chase & Co. - JP Morgan Chase Institute

Marvin Ward

JP Morgan Chase & Co. - JP Morgan Chase Institute

Lindsay Relihan

Independent

Date Written: May 2020

Abstract

We document a number of striking features about the initial impact of the pandemic on local commerce across 16 US cities. There are two novel contributions from this analysis: exploration of neighborhood-level effects and shifts between offline and online purchasing channels. In our analysis we use approximately 450 million credit card transactions per month from a rolling sample of 11 million anonymized customers between October 2019 and March 2020. Across the 16 cities we profile, consumers decreased spend on the set of goods and services we define as "local commerce" by 12.8% between March 2019 and March 2020. Growth in all 16 cities was negative. Consumers shifted a substantial share of local commerce spend online, such that year over-year growth in online spend was small, but positive, at 1.5%. With respect to grocery and pharmacy purchases, online spend grew at least three times as fast as offline spend. Overall spend declines were uniform across neighborhoods of differing median household income, though lower-income neighborhoods experienced the highest proportion of extreme negative declines. We also find evidence that many low-income neighborhoods are increasing spend on online grocery slower than others, but increasing their use of online restaurants the fastest. Consumers in low-income neighborhoods also tend to live farther from the grocery stores at which they shop. Compared to their counterparts in higher-income neighborhoods, consumers in low-income neighborhoods have not been more likely to shop at grocery stores closer to where they live since the onset of the pandemic.

Keywords: local spending, COVID-19, local commerce, cities

JEL Classification: R10, R12, R2

Suggested Citation

Farrell, Diana and Wheat, Chris and Ward, Marvin and Relihan, Lindsay, The Early Impact of COVID-19 on Local Commerce: Changes in Spend Across Neighborhoods and Online (May 2020). Available at SSRN: https://ssrn.com/abstract=3647298 or http://dx.doi.org/10.2139/ssrn.3647298

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Chris Wheat

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Marvin Ward (Contact Author)

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Lindsay Relihan

Independent ( email )

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