During periods of economic downturn, it is generally a safe bet to expect declining demand for big-ticket discretionary purchases. However, if the past year has demonstrated anything — along with Twitter posts, talking heads and click-bait articles — it is that conditions have been “unprecedented.” So, it should not come as a surprise to learn that some economic trends amid the height of the COVID-19 (coronavirus) pandemic were similarly unprecedented.
Some unlikely outperformers in 2020
- Boat Dealership and Repair in the US
- Swimming Pool Construction in the US
- Home Improvement Stores in the US
- New Car Dealers in the US
Take to the sea!
Vehicles dealerships generally brace for bumpy roads when economic recessions are on the horizon. As consumers find themselves in less favorable financial standing, demand for high-priced items, such as new vehicles, generally declines. This trend is especially true for vehicles that are considered largely or wholly discretionary, such as boats.
Boats are notoriously expensive and depreciate relatively quickly, costing owners large sums on a yearly basis. In short, these are not recession-friendly purchases. Yet, due to the unique circumstances amid the pandemic — think reduced travel abilities and lock-down measures — consumers craved escape, and boats provided what many were looking for. Revenue for the Boat Dealers and Repair industry increased 6.8% in 2020 alone as consumers flocked to dealers in an attempt to take safer vacations or change lifestyles all together.
Baby you can drive my car (or buy your own!)
At the height of lockdown measures in the United States, new car dealerships experienced drastic declines in revenue. According to the US Census Bureau, between January 2020 and April 2020 revenue for the New Car Dealers industry was down more than 12.0% compared with the same period in 2019. With the reality of the pandemic’s longevity coming into focus, most assumed the worst for car dealers.
Yet, similar to other vehicle dealers, the industry experienced a robust rebound in the second half of the year. Between July 2020 and December 2020, revenue for the New Car Dealers industry increased 5.6% during the same period the year prior. Pent-up consumers craved escape, and low interest rates coupled with dealers ready to make buyer-favoring deals enticed consumers. Thus, while the industry’s revenue still experienced a modest decline in 2020, the industry far outperformed initial expectations.
Lost control? Improve what you can
For consumers unwilling or able to make big purchases and escape their lockdown situations, another option emerged, likely from all the time spent staring at the same walls: home improvement. In 2020, the Retail Trade sector experienced revenue decline 10.7%, as consumer spending curbed or moved primarily to e-commerce platforms. However, home improvement stores experienced a substantial increase in 2020, with revenue rising 13.0%. Similarly, swimming pool construction revenue increased 3.7% in 2020 as consumers opted to create more leisure options at home rather than risk more lavish trips amid the pandemic.
Differing circumstances
The coronavirus pandemic resulted in a different economic downturn than experienced before. However, some key trends emerge when considering the aforementioned industries’ performance. These industries thrived because certain Americans retained their jobs and were in financially beneficial positions capable of such spending. Gig economy workers and those in part-time, service-based jobs experienced far harsher economic conditions than those in jobs that could accommodate work-from-home arrangements.
The former customer class cut spending across the board significantly; the latter spent more in select areas to make their pandemic experience slightly more comfortable. While this isn’t unheard of, especially since the wealthy generally weather economic disruption better, the divergent experiences are startling and produced a unique, and dare say, unprecedented situation.
