Consumers returning to 2019 behavior? Travel now compared to then? Netflix & others dropping?
American Consumers Are Shopping, Traveling and Working Out Like It’s 2019
People have returned to their old habits in many ways, while pandemic stars like hand sanitizer and stationary bikes have faded
By Rachel Wolfe and Sharon Terlep, WSJ
May. 4, 2022 10:16 am ET
In early 2020, many companies said the pandemic would change everything for consumers. And it did—for a while.
Now many Americans are resuming their prepandemic habits: rocking out at crowded concerts, doing deadlifts next to strangers at the gym and stocking a standard supply of toilet paper. Airlines, restaurants and child-care centers, which relied on government loans to stay afloat during Covid-19’s peak, can now hardly keep up with demand.
Live Nation, which owns Ticketmaster, said concert ticket sales were up 45% as of February 2022 compared with the same period in 2019, the last full prepandemic year. As of February, the company had 30% more concerts planned for 2022 than 2019.
Membership levels at gym chain Planet Fitness in January surpassed prepandemic levels following a stretch in which some 25% of the nation’s gyms closed, according to industry data.
Over two million people traveled by plane each day on average between April 17 and 23, according to the Transportation Security Administration. That figure averaged about 2.4 million in 2019.
At the same time, some pandemic stars like Peloton Interactive Inc., Netflix Inc. and Instacart Inc. have taken hits. From hoping that consumers had permanently shifted their behavior, the companies are now considering previously unthinkable changes. Netflix, hit with its first membership decline in a decade, is considering offering a lower-priced ad-supported version. Peloton, losing money and saddled with excess equipment, is lowering the price of its stationary bikes. Instacart slashed its valuation.
The resiliency of the American consumer has been a hallmark of modern history. After events such as Hurricane Katrina in New Orleans or the attacks of 9/11, people have shown they will snap back to doing many of their favorite things, given time.
Rarely has it happened so broadly and rapidly as now, two years after a devastating global pandemic began. In the past few months, American consumer tastes have changed rapidly, again, and companies are scrambling to catch up.
Emily Chan avoided gatherings of more than five people after the pandemic hit. The 22-year-old public-relations account coordinator now has booked tickets for a Keshi concert, a Brooklyn rave and a flight to Berlin—where she plans to enjoy the city’s club scene—over the next two months. She went on her first date since college last month.
“I have two years to catch up on, and this is the time,” she said.
Other consumers and many parts of the country returned to normal months or even a year ago. Attendance at college football games was robust last fall. Ohio, Michigan, Texas, South Carolina and Massachusetts all dropped mask requirements in schools late last year. The latest “Spider-Man” movie has earned more than $800 million at the domestic box office since its release in December, although analysts don’t expect ticket sales for the year overall to hit prepandemic levels.
Clearly, the pandemic brought changes that will be long lasting. Teleconferencing is still a big growth industry, the future of commercial real estate in some large cities remains uncertain, the child-care sector has yet to recover and demand for pandemic favorites including online workouts and grocery delivery remains high. But alongside those long-term shifts, companies are also witnessing a general reversion to a 2019 mode of living.
The financial results of Clorox Co. are a case study in consumers’ changing habits.
In the first year of the pandemic, Americans bought a record amount of household mainstays such as paper towels, toilet paper, flour and spices, and sales at Clorox soared more than 20%. The company rapidly increased production of cleaning wipes, bleach and surface cleaners. A new chief executive, Linda Rendle, had the almost singular priority of ramping up production to meet demand.
With sales returning to more normal levels, the company is reducing overtime and ending some contracts it made with third-party manufacturers at the height of the pandemic, Ms. Rendle said in an interview. Though demand is still higher than before the pandemic, she is cutting costs and predicting sales will fall 1% to 4% for the fiscal year ending June 30.
“The U.S. has really exploded open in the last 30 days,” Ms. Rendle said. “Behaviors and attitudes toward cleaning are still increased, but it’s more normalized. People have a more endemic-level routine.”
Some had expected hygiene to be a yearslong obsession. Hand sanitizer sales are down more than 50% year-to-date compared with a year ago, according to IRI data.
When Covid crept into Merrick, N.Y., Lauren Antin didn’t take any chances. The 36-year-old advertising executive had learned that she was pregnant in February 2020. She wiped down grocery deliveries with Clorox wipes, drank immune-boosting teas and washed her hands obsessively.
Ms. Antin’s husband, a restaurant owner, closed his businesses. Her then 2-year-old son, Harrison, went months without seeing his grandparents or great-grandfather, who live nearby. To keep Harrison entertained, she helped organize a makeshift masked and socially distanced summer camp for the neighborhood children in families’ backyards.
She said that version of herself wouldn’t recognize the one who booked Harrison’s fifth birthday party this month at Chuck E. Cheese—ball pit and all.
“I invited a lot of kids thinking a lot of people would say no, and I have 30 kids coming,” Ms. Antin said.
Chuck E. Cheese parent CEC Entertainment Inc. filed for bankruptcy protection back in June 2020. The company declined to provide sales figures, but said it has seen an increase in birthday party bookings and is returning to normal operations.
In March, the Antins flew to Orlando, Fla., for a 300-person wedding. They also went to Walt Disney World, where Ms. Antin said the lines were longer than she had ever seen them. They weren’t able to get tickets to any of the parks other than Magic Kingdom. The others were sold out. A Walt Disney Co. spokeswoman said the company is still limiting capacity at theme parks.
With people primping to go out in public, they are spending more on deodorant, teeth whiteners, razors and cosmetics, according to IRI. They’re less enthusiastic about cooking and baking at home. Craft beer sales at groceries are down, while bars and restaurants are doing more business.
In March, just 9% of doctors’ appointments were done through telehealth, according to Zocdoc. In May 2020, almost 30% had been.
Streaming service Netflix, now forced to compete with the return of live events, dinners out and kids’ birthday parties, posted its first subscriber loss in a decade in the most recent quarter. It expects to lose another two million global subscribers in the current period. The company said password sharing is a part of the problem.
Peloton has lowered its revenue forecasts for several quarters in a row. New Chief Executive Barry McCarthy is working to make the company more reliant on subscriptions to its connected workout classes and digital offerings, and less dependent on sales of exercise equipment.
Peloton has slashed prices of its namesake bikes. He said the biggest question facing the company is figuring out how many people want to work out at home in a postpandemic world. “We’ll know the answer to that question when we can look in the rearview mirror,” he said.
Since January, visits to fitness chains and exercise studios like Pure Barre and CorePower Yoga, LLC have nearly doubled. Even hot yoga, with its deep breathing and mutual sweat exchange, is back.
Instructor Gina McKiernan said most of the classes she teaches in Nassau County, N.Y., have been filled to their still slightly reduced, 26-person capacity in recent weeks, and that participants no longer have to wear a mask. With three children 5 and under and a husband working from home, she hadn’t been able to find space in her home to teach classes remotely—which she didn’t find ideal anyway.
“It’s not the same as giving sweaty hugs to your friends,” she said.
Atlanta money manager Daniel Morgan started thinking about how to invest in the return to normal consumer habits late in 2020. Reading through annual reports and talking with management, two firms jumped to the top of his list: TJX Cos., owner of T.J. Maxx, HomeGoods and other stores, and Olive Garden-owner Darden Restaurants Inc.
Both companies had faced financial hardship during the depths of the pandemic, suspended their dividends and seen their stocks nosedive. By 2021, Mr. Morgan thought both were ripe to surge higher and added to his positions.
“People were like, T.J. Maxx is never going to come back. But there is always a market for people that want a deal,” said Mr. Morgan, a senior portfolio manager at Synovus Trust Co.
In its most recent quarterly earnings report, TJX’s profit more than doubled from a year earlier, while its revenue rose 27%.
The Direxion Work From Home ETF—which aims to track dozens of companies benefiting from the shift to remote work, such as cloud-communications company Twilio Inc. and Zoom Video Communications Inc.—is down about 5% in the past eight weeks, while the U.S. Global Jets ETF, which tracks airlines, has rallied about 20%.
Number of travelers passing through TSA checkpoints, January to May each year, seven-day rolling average
Jodi Giovino, an insurance agent from St. Pete Beach, Fla., wasn’t comfortable flying during the pandemic and relied on daily video calls to connect with her grandson and 4-year-old granddaughter. The 56-year-old almost got to Buffalo, N.Y., to see them several times, but said that whenever she made a reservation, Covid-related regulations would change.
She was finally able to meet her grandson, who is about to turn 2, for the first time last month.
“Seeing me, it’s like they’d been watching Mickey and Minnie on TV, and then they came to Disney in real life,” Ms. Giovino said.
March brought a pronounced shift in Americans’ lifestyles and buying patterns, said Selin Malkoc, associate professor of marketing at Ohio State University. Less news coverage of Covid was a big factor, Ms. Malkoc said, as was the decision from many schools to drop mask mandates.
A Walmart worker unloaded an order for home delivery.
PHOTO: TRENT BOZEMAN FOR THE WALL STREET JOURNAL
People had favorable views of face coverings through January, according to a study that Ms. Malkoc is helping run. By March, even many of those who had held tight to mask wearing throughout the pandemic said they believed masks were no longer necessary.
She expects that habits people picked up that are enjoyable or convenient, like streaming entertainment, grocery delivery or remote meetings, would outlive the pandemic, although at a lower intensity. Habits related to hygiene and safety, which add more work to people’s routines, are more likely to fade, she said.
She knows firsthand how people are packing their calendars to make up for lost time. Ms. Malkoc said she and one of her best friends, whom she saw regularly during the pandemic, can’t get their schedules to align.
“We thought, ‘How is this possible?’ ” she said.
Geoffrey Rogow contributed to this article.