On Tuesday, Bank of America Merril Lynch had some more bad news for the mall stalwarts. No one wants to buy goods anymore.
Using the aggregated data of Bank of America debit and credit card holders, US Economist Michelle Meyer identified a growing trend in customers’ spending habits: Instead of purchasing goods, more and more Americans are putting their incomes towards experiences.
“We show an assortment of categories in the Chart of the Month and observe the following themes: softness in housing-related items; continued shift away from department stores and teen & young adult clothing; strength in sporting goods; and an increase in spending on travel and restaurants,” wrote Meyer and her team in a note to clients on Tuesday.
Now this is certainly something we’ve pointed out before, but the BofA data is especially interesting as it tracks actual spending at point of sale rather than relying on a survey.
Based on their data, spending at department stores such as Macy’s and Nordstrom has declined 4.0%, reiterating the downward trend for the group. This follows survey data last month from Morgan Stanley that found retail sales were down 3.9% from a year ago in May.
Spending is also down 4.6% at teen and young adult stores, 3.6% on home goods, and 3.0% on electronics.
Meyer pointed to the home goods sales as particularly interesting considering that the housing market has seen some strength in the past few months, with existing home sales hitting a 9-year high in May despite supply issues percolating in the market.
“We see continued evidence that spending related to the home has weakened — sales at furniture and home goods stores are declining on a year-over-year basis, down 0.5% and 3.6%, respectively, after solid gains over the prior five years,” wrote Meyer.
“Similarly, spending at home improvement stores has been sluggish since the start of the year, although there was a tick higher in June.”
The big winners in the BAML data were businesses associated with activities and experiences, according to Meyer.
“On the upside, sporting goods stores look strong and the travel-related components — airlines and lodging — are seeing continued gains,” wrote Meyer.
“People are also still going to restaurants and bars, with spending up 5.8% year-over-year, compared to the prior five-year average of 6.7%. It seems that consumers are prioritising spending on experiences.”
While Meyer doesn’t speculate on the reason for this shift, the trend is fairly clear: people don’t want stuff; they want stories.