Lockdowns change where consumers spend their money; expenditures are more evenly spread in space, write Martin Brown, Matthias Fengler, Rafael Lalive, Robert Rohrkemper, and Thomas Spyche

Brown, Martin

Fengler, Matthias

Lalive, Rafael

Rohrkemper, Robert

Spycher, Thomas

English

LSE Research Online

Spreading	out:	COVID-19	and	the	changing	geographyof	consumptionAn	important	message	throughout	the	COVID-19	crisis	has	been	to	“stay	home”.	Our	analysis	based	on	debit	cardpurchase	data	until	15	June	shows	that	this	has	a	profound	impact	on	where	consumers	spend	their	money.	Citieshave	been	hit	hard,	while	in	peripheral	commuting	zones,	consumption	expenditures	have	been	even	higher	than	in2019.	An	interesting	side-effect	of	staying	at	home	is	that	expenditures	are	now	more	evenly	spread	in	space;	i.e.they	are	“spreading	out”.Measuring	the	consumption	impact	of	COVID-19	in	SwitzerlandThe	Swiss	Federal	Council	declared	an	“extraordinary	situation”	on	16	March	and	closed	all	shops	and	serviceproviders	except	supermarkets,	food	shops,	and	pharmacies	from	17	March.	On	27	April,	first	shops	(e.g.	gardencentres)	and	service	providers	(e.g.	hairdressers)	reopened.	From	11	May	all	shops	and	restaurants	were	allowedto	reopen.	Our	analysis	is	based	on	debit	card	purchases	at	points	of	sale	in	Switzerland	(see	data	details	at	theend)	which	we	observe	by	region	and	merchant	category.	We	aggregate	the	daily	data	to	calendar	weeks	andcompare	turnover	(in	million	CHF)	to	that	of	the	same	calendar	week	in	2019.Figure	1.	Year-on-year	comparison	of	debit	card	purchase	volume	by	canton	in	Switzerland1A.	Lockdown	period:	calendar	weeks	12-17	(17	March	–	26	April)LSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 1 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/1B.	Partial	reopening	period:	calendar	weeks	18-19	(27	April	-10	May)LSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 2 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/1C.	After	reopening	of	all	shops:	calendar	weeks	20-24	(11	May	–	15	June)LSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 3 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/Notes:	2020	vs	2019	percentage	change,	calculated	by	transaction	volume	in	CHF	for	same	calendar	weeks.	Domestic	debtcardholders	only.	Purchases	measured	at	merchant	location.Cantons	with	large	cities	are	hit	harder	and	recover	more	slowlyThe	Swiss	Confederation	is	made	up	of	26	cantons,	each	with	its	own	legislature,	executive	and	courts.	Cantonsthat	host	the	large	cities,	such	as	Zurich	(ZH),	Geneva	(GE),	Basel-Stadt	(BS),	or	Vaud	(VD)	display	comparativelylarge	declines	in	consumption	expenditures	during	the	lockdown..	and	weak	recoveries	thereafter	(Figure	1).	Takethe	city-canton	of	Basel-Stadt	(BS)	as	an	example.	During	the	lockdown	(calendar	weeks	12-17),	this	cantonexperienced	the	strongest	decline	in	consumption	expenditures	across	Switzerland	(-40%	compared	to	2019).Basel-Stadt	also	displays	one	of	the	weakest	recoveries	when	the	lockdown	is	partially	lifted	in	(calendar	weeks	18-19:	-25%)	and	then	fully	lifted	(calendar	weeks	20-24:	+24%).	By	comparison,	the	neighbouring	canton	Basel-Land(BL)	displays	purchase	levels	similar	to	2019	during	the	lockdown	and	one	of	the	strongest	rebounds	when	thelockdown	is	lifted.	(calendar	weeks	20-24:	47%	compared	to	2019)The	comparison	of	Basel-Stadt	and	Basel-Land	illustrates	how	differently	consumption	expenditures	are	impactedby	COVID-19	and	related	policy	measures	in	cities	compared	to	peripheral	regions.	The	two	cantons	display	verysimilar	developments	in	debit	card	purchases	in	January	and	February	2020	(both	in	absolute	levels	as	well	ascompared	to	2019).	Then,	they	sharply	diverge.	(Figure	2)Figure	2.	Debit	card	purchases	by	canton:	Basel-Stadt	(BS)	vs.	Basel-Land	(BL)Notes:	Volume	in	million	CHF	by	year	and	calendar	weekLSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 4 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/Working	from	home…	shopping	in	the	neighbourhoodWhy	do	urban	cantons	like	Basel-Stadt	experience	such	a	strong	negative	shock	during	the	lockdown	and	weakrecovery	thereafter?	One	reason	seems	to	be	the	reduced	flow	of	commuters.	As	a	major	regional	city,	Baselattracts	a	large	number	of	domestic	and	cross-border	commuters	for	work.	Importantly,	many	of	these	commuterswork	in	professions	that	can	also	be	done	from	home.	The	University	of	Basel’s	home-office	index	reveals	that	forjobs	located	in	the	cantons	of	Basel-Stadt,	Geneva	or	Zurich	the	likelihood	is	particularly	high	that	that	job	can	bedone	from	home.To	capture	the	impact	of	changed	commuter	flows	on	consumption	we	compare	debit	card	purchases	by	municipalurbanisation	on	workdays	only.	This	comparison—for	the	whole	country—reveals	that	city-centres	experienced	amuch	more	significant	decline	in	consumption	during	the	lockdown	(calendar	weeks	12-17:	-37%	compared	to2019)	than	municipalities	in	commuting	zones	(+5%).	Even	after	the	full	reopening	of	shops,	the	catching-up	effecton	consumption	has	been	much	weaker	in	cities	(calendar	weeks	20-24:	+23%)	compared	to	commuting	zones(+39%).	See	Figure	3.Weekend	city	centre	shopping…	catching	up	slowlyCity	centres	not	only	attract	commuters	for	work…	they	also	attract	significant	flows	of	(weekend)	shoppers.	Ourdata	suggests	that	the	decline	in	city-centre	shopping	during	the	lockdown	was	particularly	strong	on	Saturdays(calendar	weeks	12-17:	-50%	compared	to	2019).	After	shops	fully	reopened,	the	increase	in	spending	wasparticularly	mild	for	weekend	city-centre	shoppers	(calendar	weeks	20-24:	+	22%).	In	commuting	zones	around	thecities,	Saturday	shopping	also	declined	during	the	lockdown	(calendar	weeks	12-17:	-18%	compared	to	2019),revealing	that	consumers	increasingly	spread	out	their	purchases	across	the	days	of	the	week.	But	again,	after	allshops	reopened,	the	rebound	in	consumption	has	been	much	stronger	in	commuting	zones	(calendar	weeks	20-24:+	31%)	than	in	city	centres.Figure	3.	Debit	card	purchases,	by	urbanisation	of	municipalityNotes:	Lockdown	and	reopening	(calendar	weeks	18-24).	2020	vs	2019	percentage	change,	calculated	by	transaction	volume	in	CHFfor	same	calendar	weeks.	Domestic	debit	card	holders	only.	Purchases	measured	at	merchant	location.	Ctr	=	city	centre	ComZ	=commuting	zone;	RurM	=	rural	municipalityLSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 5 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/Authors’	notes:	The	data	underlying	this	analysis	reports	the	point-of-sale	(PoS)	transactions	of	debit	cards	issuedby	banks	to	their	customers	in	Switzerland.	PoS	transactions	are	payments	with	a	debit	card	at	a	point	of	sale,	e.g.a	shop	or	a	service	provider	(hairdresser,	restaurant,	petrol	station).	Data	provider:	SIX	BBS	AG.	Data	availablehere:	http://monitoringconsumption.org/data♣♣♣Notes:This	blog	post	is	based	on	Monitoring	Consumption	Switzerland,	a	joint	initiative	of	the	University	of	St.Gallen,	the	University	of	Lausanne,	and	Novalytica,	together	with	Robert	Rohrkemper	(senior	data	scientist,Worldline).	expresses	the	views	of	its	author(s),	not	the	position	of	LSE	Business	Review	or	the	London	School	ofEconomics.Featured	image	by	Nathan	Queloz	on	UnsplashWhen	you	leave	a	comment,	you’re	agreeing	to	our	Comment	PolicyMartin	Brown	is	professor	of	banking	at	the	University	of	St.	Gallen.	His	research	is	focused	onmoney	and	banking,	household	finance	and	payment	behaviour.		Matthias	Fengler	is	professor	of	econometrics	at	the	University	of	St.	Gallen.	He	works	in	financialeconometrics,	asset	pricing,	volatility	modeling,	and	risk-management.		Rafael	Lalive	is	professor	of	economics	at	the	University	of	Lausanne.	He	works	on	questionsrelated	to	social	economics	and	labour	economics,	and	how	COVID-19	affects	these	areas	ofresearch.		Robert	Rohrkemper	is	a	senior	data	scientist	and	distinguished	expert	at	Worldline.	He	implementsmachine	learning	and	AI	capabilities	to	enhance	fraud	detection	and	to	enable	novel	data-driven	usecases	in	the	electronic	payments	industry.		Thomas	Spycher	is	partner	and	co-founder	at	the	data	analytics	company	Novalytica.	He	focuseson	the	analysis	and	modelling	of	local-level	data	for	clients	in	real	estate	and	marketing.				LSE Business Review: Spreading out: COVID-19 and the changing geography of consumption Page 6 of 6		Date originally posted: 2020-06-30Permalink: https://blogs.lse.ac.uk/businessreview/2020/06/30/spreading-out-covid-19-and-the-changing-geography-of-consumption/Blog homepage: https://blogs.lse.ac.uk/businessreview/

Spreading out: covid-19 and the changing geography of consumption

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Spreading out: covid-19 and the changing geography of consumption

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