Positive signs in the reopening of business
While the Directorate-General for Health and government officials analyse the figures for the first few days of the State of Calamity so that a decision can be made on whether to open more businesses during the month of May, the REDUNIQ has just unveiled its report on the main trends in transactions during the first week of the deconfinement plan in Portugal and the first figures are encouraging.
According to the document drawn up by the knowledge solution REDUNIQ Insights, between 3 and 9 May (the first week of deconfinement), the number of transactions grew by 11% more than in the previous week to figures of around 6.2 million euros, while in the last week of the State of Emergency the figures had stood at 5.6 million.
Along with turnover, the average ticket (average value recorded in each transaction) also showed signs of recovery. With the opening of shops of up to 200m2 (mainly small businesses) and more Portuguese on the streets in the first week of lockdown, the average ticket showed signs of a sharp rise in various sectors of activity. In this area, hairdressers led the way with an average ticket of 49.51€ in the first week of May (compared to 38.30€ the previous week), stationery shops, bookshops and tobacconists reached 42.37€ (29.89€ in the last week of April), and petrol stations and government services kept their average tickets at around 24€. Still on the subject of petrol stations, on 30 April, before the long weekend of 1 May, there was an increase of 23% in their turnover compared to the previous day.
After a sharp drop in the number of total transactions in the order of 23.8% and 48.5% in March and April compared to the respective year-earlier periods, the economy is now beginning to see a reversal of this trend, with an upward trend in both the number of transactions and the value of turnover, given that since 4 May (the first day of the initial phase of deconfinement in Portugal), more than 10,000 businesses have resumed their activities and started trading again. In this way, we are gradually managing to recover our turnover, which is already at levels of 70% compared to the period before the COVID-19 pandemic.
While the average ticket for hairdressers and stationery shops were the first to benefit from the end of the State of Emergency, the average value of transactions in supermarkets, hypermarkets and traditional food retail reached its maximum value in the week of 5 to 11 April (44.70€ and 27.72€, respectively), corresponding to growth of 61% and 50% compared to the first week of March. According to the REDUNIQ report, although the data refers to the mandatory lockdown period, it seems that people went shopping less often but spent more on each trip.
Equally important in analysing these figures is the data on active points of sale. From the week of 8-14 March to 22-28 March, there was a drop of 63% compared to the number of points of sale invoicing at the beginning of March. The points of sale that continued to invoice saw a significant increase in average invoicing during the State of Emergency, on average 150% above pre-pandemic values. In some categories, such as traditional retail, this crisis, marked by deep asymmetries, represented an improvement in performance.
With the end of the State of Emergency, the trend seems to be reversing, with 10,000 points of sale reopening during this period, an increase of 37% on the previous week.
If physical shops were forced to close or work reduced hours, necessity forced consumers to turn to the online market. During the first half of the period analysed, after the 1st State of Emergency was declared, sales in physical stores saw, as already mentioned, a gradual downward trend.
In counter-cycle, for the same period, sales in the online channel showed a significant acceleration with an increase of around 20% compared to the starting point. Since the first State of Emergency was decreed in the country, sales on the online channel have increased considerably, namely 162% in April, compared to the same month in 2019.
Comparing April 2020 with the same period last year, online sales in retail shops saw a 241% increase in turnover, and a 25% increase in the average ticket (from 90.24€ to 112.73€).
As for the average ticket, when comparing April with the same period last year, there was an increase of 30% (from 74.89€ to 96.67€).
Evolution of System Billing by Channel (Physical Store vs. Online)
The need to comply with the compulsory lockdown that has driven consumers towards online commerce (e-commerce), combined with the Bank of Portugal's instructions for the Portuguese to avoid using cash whenever possible, has led to a historic increase in the use of cash: online payments e contactless payments.
So it's not surprising that contactless payments saw a historic increase during the first week of lockdown in Portugal, with 160% more transactions using this technology than in the same period in 2019. After a month of March with an increase of 113% compared to the same period last year, and April with an increase of 157% compared to the same month in 2019, contactless use rose again in the first week of May, a trend that is justified by the opening of more than 10,000 commercial establishments on 4 May. The month of April, compared to the same month last year, also shows that contactless payments have already accounted for almost 20% of all invoicing.
Evolution of Contactless Billing (total Portugal)
This evolution is a reflection of two phenomena that have taken place among merchants and consumers themselves. Firstly, businesses have reinvented themselves and moved from physical businesses to online businesses, with an increase of 333% in the number of merchants signing up to online payment solutions when comparing the period between 13 March and 25 April 2019 and 2020; secondly, because consumers have started to spend more on each purchase they make online, with the average ticket reaching almost 105€ between 13 March and 25 April this year, while in the same period in 2019 this figure was 72.74€, 44% less.
As you can see from the figures, the adaptation of businesses and consumers to online payments e contactless payments has been fast and assertive, even faster than the estimates made for this area before the Covid-19 pandemic predicted.
This report, which analyses detailed information on the different consumption profiles carried out in establishments served by the REDUNIQ network, not only shows an exponential growth in the use of the contactless technology for payment in physical shops, shows that REDUNIQ's partner merchants are prepared to accept the changes that the pandemic has brought.
In order for a wearable (smartphone, wristband, etc.) or a contactless card to be used by the consumer, there must necessarily be a automatic payment terminal (physical or mobile POS) with contactless technology for the payment to be processed. More than just a more contemporary payment terminal, the tpa contactless are, as the figures prove, a need that retailers have to fulfil in order to not only meet the recommendations of the public health authorities and the Bank of Portugal on the reduced risk of spreading with "contactless payments"They can also serve the new consumer profile that has emerged from compulsory confinement.
To access the full report REDUNIQ Insights: Retail | Before, During and After Lockdown 12 May 2020 please click HERE
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