RESEARCH The Early Impact of COVID-19 on Local Commerce

Changes in Spend Across Neighborhoods and Online


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. 

Finding One: 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

Finding Two: 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

Finding Three: 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

Finding Four: 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 pecent.
  •  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

Authors

Diana Farrell: JPMorgan Chase Institute

Chris O. Wheat: JPMorgan Chase Institute

Marvin M. Ward Jr.: JPMorgan Chase Institute

Lindsay E. Relihan: London School of Economics &
Centre for Economic Performance