While many Americans have used their stimulus checks to cover basic needs such as groceries and paying off their mortgage or rent, there’s evidence people are also spending the money on non-essentials including electronics, clothes and toys, according to major retailers.
“Call it relief spending, as it was heavily influenced by stimulus dollars, leading to sales increases in categories such as apparel, televisions, video games, sporting goods and toys,” Walmart CEO Doug McMillon said during the company’s earnings call Tuesday.
Target and Best Buy Co. also saw increased consumer demand for discretionary goods in mid-April as the stimulus payments from the $2.2-trillion CARES Act flowed into Americans’ bank accounts, the companies’ CEOs said this week. Apple saw an uptick in demand for its products “across the board,” CEO Tim Cook said April 30.
At Walmart and Target, shoppers bought more TVs, electronics, gaming equipment and apparel. Walmart also saw increased demand for adult-sized bikes.
At Best Buy, customers used their stimulus checks to buy computing and gaming equipment, Corie Barry, the company’s CEO, said on it Thursday earnings call.
“Like many other retailers, we saw sales benefit during the last three weeks of the quarter as customers undoubtedly chose to spend some of their government stimulus money on the products and services we provide,” Barry said.
(Best Buy did not respond to a request for a further comment.)
The different phases of the pandemic have shaped shoppers’ choices. As stay-at-home orders were enacted across the country, “parents became teachers,” McMillon said on Walmart’s earnings call. “Adult bicycles started selling out, as parents started to join the kids. An overlapping trend then started emerging related to DIY and home-related activities.”
Consumers also bought sewing machines and bandanas to make their own face masks, he said.
Sales took off in mid-April when many Americans began to receive their $1,200 stimulus checks. Within 10 days of receiving their stimulus checks, households spent around one quarter to one third of it, research shows.
Before the checks were issued on April 15, there was “not as much demand” for discretionary goods at Walmart, said spokesman Randy Hargrove, adding that sales increased “towards the end of the quarter.”
Target Corp. also experienced “a rapid increase in traffic and sales” for discretionary goods driven by the distribution of stimulus checks, CEO Brian Cornell said on the company’s Wednesday earnings call. “We certainly saw an uptick as we reported starting on April 15, as those checks arrived across America,” Cornell said on the company’s call.
Customers, he said, are “still seeing the benefits of the stimulus check.” People are shopping across all categories including apparel, which has been especially hard hit by the coronavirus-driven economic downturn.
(Costco declined to comment on whether it has experienced the same trend in sales related to stimulus payments.)
Phone maker Apple also saw sales increase after stimulus payments went out, Cook said on the company’s April 30 earnings call. “A part of it is due to just our new products,” Cook said. But another part of it is also “due to the stimulus programs taking effect in April.” (Apple did not respond to MarketWatch’s request for a further comment.)
Unlike Target and Walmart, which have remained open during the coronavirus outbreak and can sell apparel in-stores, “non-esential” clothing retailers including Gap, Nordstrom and Nike have been forced to close many stores across the country. As a result, retailers in the apparel industry have offered consumers online deals comparable to Cyber Monday.
Still, many Americans have used their stimulus checks to stock up on essentials. That’s especially true for those who received their checks in the first wave of stimulus payments, said Stuart Sopp, CEO and founder of Current, a New York City-based mobile-banking startup.
In mid-April when payments were initially distributed, “most people immediately spent on groceries,” said Sopp. Many Current members, he said, also took cash out of ATMs to “pay friends back and pay their bills.” He added, “People were struggling for basic life essentials and the stimulus payments really helped them, which I think is what it was all about.”
In the next wave of payments, which occurred towards the end of April, more people used the funds “for everyday means,” Sopp said. That included ordering more food delivery and takeout, and gas.
The $3 trillion coronavirus aid package the House of Representatives passed last week, dubbed the HEROS Act, calls for a second round of stimulus checks. President Donald Trump and Senate Majority Leader Mitch McConnell indicated that they are in no rush to sign the relief package to law. Trump has shown support for a second round of stimulus checks.
If people do end up receiving a second stimulus check, Sopp predicts most will use the money for the same purposes.
Best Buy’s Barry said Thursday that “the impact of current to potential future government stimulus actions” is something the company will keep an eye on “for the remainder of the year.”
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