New findings from a software and business-services provider that examined what happened at thousands of small businesses last week show the damage the coronavirus, or Covid-19, is inflicting on merchants.
San Francisco-based Oto Analytics Inc., which does business as Womply, looked at payment card data from its merchant-acquiring partners, data generated nationwide from merchants that included 48,000 restaurants, 10,000 grocery stores, 4,600 bars, 64,000 retail shops, and 6,400 lodging businesses. Most of the businesses are not Womply clients. For many, things were pretty ugly.
Revenue at lodging establishments was down 62.7% year-over-year on Friday, March 13, and for the week was off 25%. “A bigger drop is on the way,” Womply said in a report issued Wednesday.
Revenue at restaurants on Friday was off 19.6% from a year earlier. Since then many states and cities have forced restaurants to close for on-site dining, with only drive-through, pick-up, and delivery orders permitted. Bars saw revenues slip 16.1% on Friday, but, like restaurants, many are now closed or open only for takeout.
In the transportation sector, weekly revenue was down 85% from a year earlier. Arts-and-entertainment merchants saw a 37% revenue decline for the week, but revenues plunged 72.5% on Friday from the same day a year earlier.
In striking contrast, as almost any American who has gone shopping for food or household goods in the past week knows, grocery stores are experiencing an unprecedented boom. “Driven by consumer panic, grocery stores saw their highest daily revenues for 2020 last Friday, with consumer spending up 87.4% [year-over-year],” the report says.
Womply says many other local retailers “hadn’t yet felt the full force of social-distancing measures” as of last Friday. Revenue for the day was off 1.6% from a year earlier, with weekly revenue up 4%.
A Womply spokesperson notes that no one yet can say how long the nation’s partial shutdown, imposed to slow the spread of the virus, will last. “If things continue as they are, we can expect to see a lot of businesses go under,” the spokesperson tells Digital Transactions News by email. “We surveyed business owners a while back and found that one in five would have to shut their doors for good within 30 days if sales stopped completely. Additionally, we found that only 21% have disaster insurance, and only 14% have business-interruption insurance to maintain cash flow during a stoppage.”
Womply says its merchant-acquirer partners include Worldpay, TSYS, Paysafe, Elavon, First American, and North American Bancard, among others. On Tuesday the company announced a merchant-funding program with FundRocket LLC that it says can provide qualified businesses with $1,000 in capital at no interest and no fees.
Jared Drieling, senior director of consulting and market intelligence at Omaha, Neb.-based merchant-acquiring consulting firm The Strawhecker Group, says the damage the coronavirus is inflicting on consumer spending shows that now might be a good time for acquirers, independent software vendors and other payments providers that have specialized in lucrative but narrow merchant niches to consider diversifying.
“What we’re seeing today is that a lot of those folks that had specialization in certain industries are taking the brunt of it,” Drieling tells Digital Transactions News. “I think they’re going [back] to the drawing board pretty quickly, trying to understand how to pivot in this environment.”
—With additional reporting by Kevin Woodward