Consumers spent $53B more in e-commerce sales amid coronavirus, survey reveals

Mastercard Senior Adviser and Former Saks Chairman and CEO Steve Sadove joins Yahoo Finance’s Heidi Chung to discuss how consumer spending habits are changing amid the coronavirus outbreak.

Video Transcript

HEIDI CHUNG: It's no secret that online sales have been surging as of late. But according to Mastercard's Spending Pulse Report, US e-commerce sales were up more than 92% in May. And we're now joined by Steve Sadove, who is Mastercard's senior advisor and former Saks chairman and CEO. Steve, it's so great to have you back on with us. I want you to, first, walk us through this report. What were some of the big findings.

STEVE SADOVE: Thanks, Heidi. It's great to be here. Mastercard's Spending Pulse has come out with a recovery insights report to help cities and states better understand what's happening on a local basis as well as, overall, the changes with the consumer in this really evolving consumer environment. As you said, e-commerce is the name of the game. It's the story.

You saw a 93% increase in e-commerce sales in the month of May. And that's accelerating dramatically. It was in the 60% type of growth rate in April. What you're seeing right now is e-commerce sales representing more than 20% of all of retail, about double. It was 11% a year ago.

So as the consumers hibernate, and as they're staying at home, e-commerce has taken over. It is in all-- first, it was in the need categories. It was, people were at home. They had to get all the basics. But it's evolved in terms of the wants are growing faster in e-commerce, as well. But the real growth's in things like hardware and the basics. And so those categories growing dramatically online.

HEIDI CHUNG: And Steve, I don't think it's fair to say that all of retail has been struggling this year. Because the companies that had invested in e-commerce before COVID-19, before the protests, they started to reap the benefits, as you mentioned, as people started to stockpile and shift towards online spending. But that being said, we've also noticed a lot of bankruptcies, namely J.C. Penney, Neiman Marcus. And at one point, you were head of Saks. And so I want to get your thoughts on the losers and winners in this retail landscape. And how are department stores essentially going to survive after this?

STEVE SADOVE: Well, I think that you start with the overall retail environment. And it is a shift to digital. But it's also a shift, as you said, the companies that were well positioned, the large companies that have made the technology investments, that had the ability to buy online, pickup in store. You see this resurgence of things like curbside pickup. Or the companies that had the technology to have a single view of the customer, and be able to play with the online, understand the behaviors, and use artificial intelligence, and personalization. So the large companies like the Amazons, and the Walmarts, and the Targets were clear winners coming out of this environment, starting with the fact that they were providing a lot of the needs.

Grocery sales booming even-- in the Mastercard's Spending Pulse Report, you see a 9% growth in overall grocery store sales, hardware, the Home Depot, it's not just the Targets and the Walmarts, the Home Depots, the hardware stores of the world, growing enormously well. People are nesting right now. They're at home. They have nothing to do. So what do they do?

They're cooking. They're fixing up their homes, home improvement. But you also have the losers. And you talk about, not so much individual companies, but sectors. When people are in the not-- they're focusing on the basics in their home, apparel, other than athleisure, which is-- and people are wearing their tops and focused on buying tops. But they're wearing shorts. You're probably wearing shorts or something while you're doing your television show.

So at the apparel space, especially on the inside of a mall-- you asked about department stores in malls because of social distancing, because of the fact that people aren't yet comfortable-- remember, we're just in the first few weeks of opening up the retail environment. And it's encouraging. We've got a lot of uncertainty. But the numbers are encouraging.

People are out shopping again. Many retailers are talking about numbers that are beating their expectations. Now, I may never have, in my career, thought I'd feel good if I had a minus 40 or 50 when I thought I was going to have a minus 70. But the reality is, the consumer is coming back, the numbers are getting a little bit better. But some categories are tough.

The malls have been-- especially an indoor mall is going to be a slower recovery, probably, than an outdoor mall. Stores that are on the inside of the perimeter of the mall-- it used to be that you went there, to the mall, for the experience. Now, you have purposeful shopping. You know what you want. You go in.

Conversion is very high right now. Because people know what they want to get. But you're not going to wander around a mall. So apparel inside of a mall, and you see it in the apparel numbers which have been trouble. But what to me is encouraging, and why I love what Mastercard is doing in terms of providing a series of insights, recovery insights-- this is the first one that really gives you a sense in breaking it down, where is it the consumer's going? What are they doing that's different? Because the world is changing. We're in a different environment. And it's not going to go back to exactly the same way as it was.

And I think nobody-- I never bought my online groceries before this. Now, hey, this thing isn't so bad. I go, and click, and it's delivered to the house. So you're going to find a lot more of-- it's all customers. This isn't just the millennial customer. I'm going out there and using a lot of these tools. And think about it. Who would've ever thought we'd be using Zoom the way that we're doing, or any of the technology tools?

So a lot of this is changing behavior. But back to your original question the winners are the ones that are making those technology investments to be-- because if you don't have curbside pickup, if you don't have the technology tools and an investment in that, you're going to be left by the wayside. And I think you really have to have a much deeper understanding of your customer.

I think that the is not just the technology. It's the analytics. I look at what Mastercard does in test and [INAUDIBLE], the kinds of things that different companies have done to help the retailers understand better who the customer is, what they want. Amazon wins, not because they offer everything, but they have a deep understanding of the customer.

HEIDI CHUNG: Yeah, absolutely. Certainly going to be winners and losers in the retail space. But Steve Sadove, Mastercard senior advisor and former Saks chairman and CEO, thank you so much for your insights.

STEVE SADOVE: Thanks.