The recent outbreak of novel coronavirus (COVID-19) in the United States has affected businesses and workers across the country. As Americans adjust to the spread of the virus and growing numbers of states and cities issue stay-home orders aimed at limiting its transmission, the impact on small businesses, the backbone of the American economy, has been dire.
By analyzing changes in their sales and in consumer spending and behavior, we can better understand how these merchants are navigating this crisis. Through compiling and sharing this report week to week, we hope to quantify the effects of COVID-19 on U.S. small businesses as merchants, government officials, and the public seek to better understand the virus’ economic impact. Leveraging data from the more than 60,000 small businesses currently using CardFlight’s payment technology, SwipeSimple, our team has produced the CardFlight Small Business Impact Report. This weekly analysis of payment transactions processed throughout the country assesses changes in trends across regions, industries, and more. We encourage consumers to support their local small businesses in whatever ways they are able, while maintaining best practices for health and safety.
Our latest report, including data from March 2-29, 2020 offers sobering insight into the state of American small business. Among the key trends are:
Dropping Transactions, Fewer Active Merchants
As the pandemic spreads, small business owners are experiencing growing pressure from depressed consumer spending as more and more governors and mayors issue stay-home orders and close non-essential businesses. Across the country, total transactions and dollar sales fell last week (3/23-29) for the third straight week, posting a 49.8% and 26.9% drop, respectively, since the first week of March.
Active merchants dropped by more than one-quarter in the same time frame, with 26.1% of merchants posting no transactions at all in the past week. Of the merchants still open for business, the number of transactions per merchant fell by 32% in that time. We expect these numbers will continue dropping as more regions take steps to reduce virus transmission.
Hardest Hit Sectors/Industries
Much in line with this drop in overall transactions and sales, merchants who operate primarily via in-person payments have been hit the hardest by government-mandated social distancing. Though retail sales initially grew 7.7% from the week of March 2 to the week of March 9, clothing and apparel sales have since shrunk by a staggering 85.9%, while personal care businesses such as salons, barber shops, and health and beauty spas which remained strong through early March are now operating at less than 20% of early March sales levels.
Social gathering venues are especially hit by slowing consumer activity, with food and drink establishments (bars and restaurants) down 36.9% since the first week of March. This past week hit services businesses particularly hard, with a total decrease of 16.6% from March 23rd to 29th.
Effect of Urban Density
Highly densely populated cities with populations of over five million have remained strongest, with sales decreasing 22.5% since the first week of March. In comparison, transactions in medium sized cities, with populations between one and five million, have decreased 26.5% and those in small cities, of less than one million have seen transactions decrease by 28.7%. Rural areas have suffered the most with a decrease of 31.1% since March began.
Consistent Bright Spots
Though card-present sales have fallen 49.4% this month, card-not-present sales have only decreased by 15.2% since the beginning of March. Additionally, sales for on-site technical services such as plumbing, heating, contractors, and similar service providers remain relatively steady, decreasing only 8.1% over the March 2nd to 29th period—perhaps reflecting consumers’ need to keep their homes functioning as more and more Americans are required to work from home and limit social interaction. Interestingly, as stores have started organizing special shopping hours for senior and high-risk shoppers, and more customers look to shop outside of traditionally busy hours, sales between 5am and 11am are increasing compared to the beginning of March.
The CardFlight report will be updated to monitor and track how consumer payment behaviors change in the coming days and weeks.
About the Analysis
To create this report, CardFlight analyzed a representative sample of nearly 900,000 payment transactions processed from March 2 to March 29, 2020 by 60,000 small businesses in all 50 states using CardFlight’s SwipeSimple software to accept credit and debit card payments.
SwipeSimple is software small-business merchants use to accept payments on the go, in their store, or at their computer. The payments trends identified in this report were processed in “on the go” mobile settings, most often at a customer’s location or in a “pop-up” or open-air sales environment; in a small specialty retail or in store service location; or from a computer when the cardholder isn’t present, i.e. back-office billing, sending an invoice, or scheduled/recurring payments.