Gen Z Deserves Some Credit for Responsible Card Use

By Charlotte Principato All U.S. consumers are grappling with inflation, but the country’s youngest adults are doing so while also trying to establish their financial footing. While this certainly presents challenges for Gen Z adults, recent Morning Consult data indicates that when it comes to credit, the kids are all right: Not only are Gen Z adults accessing credit through credit cards at the same pace as older generations, but they’re managing their debt better, too. Gen Z adults are not credit-shy There’s a misconception that younger adults are reluctant to use credit cards. This narrative originated after the Great Recession, when millennials were the youngest adult generation, but it has been extended to Gen Z as they have entered adulthood. However, as of early 2023, Gen Z adults’ use of credit cards is on par with their Gen Xer parents: 63% of each generation own at least one credit card, and the majority of credit card owners report that they have more than one. A lot has happened since millennials were the youngest adult generation and were said to be shying away from credit. The Credit Card Accountability Responsibility and Disclosure Act of 2009 limited the marketing and issuing of credit cards to young adults. Additionally, millennials emerged from the Great Recession’s high unemployment and entered midlife and parenthood, life stages that are associated with more expenses and a greater need for credit. Gen Zers, by contrast, are entering adulthood without being bombarded by credit card offers the way millennials were, with a heightened understanding of the dangers of credit card debt after seeing its impact on older generations, and in the midst of a tighter labor market that can make responsible credit use much more achievable and less daunting. Less than a third of Gen Z adults have credit card debt Compared with other generations, Gen Z adults are less likely to say they have outstanding credit card debt. Less than a third of Gen Z adults (30%) report having any credit card debt, meaning most are not carrying an outstanding balance on their cards from month to month. This is a considerably smaller share than the roughly 40% of millennials, Gen Xers and baby boomers who report the same. Not only are Gen Z adults less likely to have any credit card debt, but the debt they do have is much lower than that of older generations. The median credit card payment for the months of January and February was $400 for all U.S. adults; boomers’ median payment was higher at $500, and Gen Z adults’ was roughly half that at $244. These young adults aren’t just chipping away at their outstanding balance each month — they’re also prioritizing paying off their entire credit card debt more than older generations. Gen Z’s median outstanding credit card debt is $303, so their $244 median monthly payment covers nearly all of their debt. The same isn’t true of older generations, for whom the gap between total balance and payment last month is much wider. Gen Xers report the widest gap, with a median outstanding credit card debt of $2,000 and a median monthly payment of $400. Many factors contribute to Gen Z’s comparatively lower credit card debt: fewer fixed expenses in general at this stage of their lives, lower credit card limits that are typical of younger borrowers who are still establishing creditworthiness and leftover savings from pandemic stimulus payments that have helped them keep debt at bay. However, Gen Zers still deserve credit (pun intended) for staying on top of their debts. The youngest generation of adults seems to understand how to responsibly use revolving credit — that is, by effectively treating it as debit, or paying off as much of their balance as possible each month. They likely learned about the dangers of compound interest and are especially wary of carrying a balance in a rising-rate environment. Gen Z’s credit card management is a bright spot amid wider financial concerns Financial services leaders must remember that it’s not all sunshine and roses for Gen Zers as they begin their financial lives. The current macroeconomic environment and the toll of the coronavirus pandemic are still evident in Gen Z’s financial well-being struggles. Gen Z adults feel their financial security is tenuous at best. Morning Consult’s Financial Well-Being Scale reveals that only 22% of them believe they could handle a major unexpected expense, and 39% say their finances control their life as of January. Their long-term outlook is suffering as a result: Less than a third of Gen Z adults (31%) say they are securing their financial future, and 32% believe that because of their money situation, they will never have the things they want in life. Perhaps Gen Z adults are being too hard on themselves when thinking about their financial future. They appear to be starting off on the right foot in their credit journey, but leaders should nevertheless remain empathetic to the anxiety the youngest adults feel about their finances overall.

US Consumer Confidence Declined in January

Source: January 2023 Consumer Confidence Survey® The Conference Board Consumer Confidence Index® decreased in January following an upwardly revised increase in December 2022. The Index now stands at 107.1 (1985=100), down from 109.0 in December (an upward revision). The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 150.9 (1985=100) from 147.4 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 77.8 (1985=100) from 83.4 partially reversing its December gain. The Expectations Index is below 80 which often signals a recession within the next year. Both present situation and expectations indexes were revised up slightly in December. “Consumer confidence declined in January, but it remains above the level seen last July, lowest in 2022,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board. “Consumer confidence fell the most for households earning less than $15,000 and for households aged under 35.” “Consumers’ assessment of present economic and labor market conditions improved at the start of 2023. However, the Expectations Index retreated in January reflecting their concerns about the economy over the next six months. Consumers were less upbeat about the short-term outlook for jobs. They also expect business conditions to worsen in the near term. Despite that, consumers expect their incomes to remain relatively stable in the months ahead. Meanwhile, purchasing plans for autos and appliances held steady, but fewer consumers are planning to buy a home—new or existing. Consumers’ expectations for inflation ticked up slightly from 6.6 percent to 6.8 percent over the next 12 months, but inflation expectations are still down from its peak of 7.9 percent last seen in June.” Present Situation Consumers’ assessment of current business conditions improved in January. Consumers’ appraisal of the labor market was also more favorable. Expectations Six Months Hence Consumers became more pessimistic about the short-term business conditions outlook in January. Consumers were less upbeat about the short-term labor market outlook. Consumers’ short-term income prospects held steady.

Inflation is cooling, but prices on many items are going to stay high for months.

by Melissa Repko & Amelia Lucas Inflation may be cooling. But, for most Americans, the price of a cup of coffee or a bag of groceries hasn’t budged. In the months ahead, the big question is whether consumers will start to feel relief, too. Over the past few months, many of the key factors that fueled a four-decade high in inflation have begun to fade. Shipping costs have dropped. Cotton, beef and other commodities have gotten cheaper. And shoppers found deeper discounts online and at malls during the holiday season, as retailers tried to clear through excess inventory. Consumer prices fell 0.1% in December compared with the prior month, according to the Labor Department. It marked the biggest monthly drop in nearly three years. But cheaper freight and commodity costs won’t immediately trickle down to consumers, in part due to supplier contracts that set prices for months in advance. Prices are still well above where they were a year ago. The headline consumer price index, which measures the cost of a wide variety of goods and services, is up 6.5% as of December, according to Labor Department data. Some price increases are eye-popping: The cost of large Grade A eggs has more than doubled, while the price tags for cereal and bakery products have climbed 16.1%. “There are some prices, some goods for which prices are falling,” said Mark Zandi, chief economist of Moody’s Analytics. “But broadly, prices aren’t falling. It’s just that the rate of increase is slowing.” Retailers, restaurants, airlines and other companies are deciding whether to pass on price cuts or impress investors with improved profit margins. Consumers are getting pickier about spending. And economists are weighing whether the U.S. will enter a recession this year. Sticky contracts, higher wages During the early days of the Covid pandemic, Americans went on spending sprees at the same time that factories and ports shuttered temporarily. Containers clogged up ports. Stores and warehouses struggled with out-of-stock merchandise. That surge in demand and limited supply contributed to higher prices. Now, those factors have started to reverse. As Americans feel the pinch of inflation and spend on other priorities such as commutes, trips and dining out, they have bought less stuff. Freight costs and container costs have eased, bringing down prices along the rest of the supply chain. The cost for a long-distance truckload was up 4% in December compared with the year-ago period, but down nearly 8% from March’s record high, according to Labor Department data. The cost of a 40-foot shipping container has fallen 80% below the peak of $10,377 in September 2021 to $2,079 as of mid-January, according to the World Container Index of Drewry, a supply chain advisory firm. But it is still higher than prepandemic rates. Food and clothing materials have become cheaper. Wholesale beef prices dropped 15.6% in November compared with a year ago, but are still historically elevated, according to the U.S. Department of Agriculture. Coffee beans fell 19.7% in the same time, according to the International Coffee Organization’s composite global price. Raw cotton’s cost plunged 23.8%, according to Labor Department data. However, to protect against unpredictable spikes in prices, many companies have long-term contracts that set the prices they pay to operate their businesses months in advance, from buying ingredients to moving goods across the world. For example, Chuy’s Tex Mex locked in prices for fajita beef that are lower than what the chain paid last year, and it plans to also lock in prices for ground beef during the third quarter. But diners will likely still pay higher menu prices than they were last year. Chuy’s plans to raise prices about 3% to 3.5% in February, although it has no more price hikes planned for later this year due to its conservative pricing strategy. The chain’s prices are up about 7% compared with the year-ago period, trailing the overall restaurant industry’s price hikes. Similarly, coffee drinkers are unlikely to see a drop in their latte and cold brew prices this year. Dutch Bros. Coffee CEO Joth Ricci told CNBC that most coffee businesses hedge their prices six to 12 months in advance. He predicts coffee chains’ pricing could stabilize as early as the middle of 2023 and as late as the end of 2024. Supplier contracts aren’t the only reason for sticky prices. Labor has gotten more expensive for businesses that need plenty of workers but have struggled to find them. Restaurants, nail salons, hotels and doctors’ offices will still reckon with the cost of higher wages, Moody’s Zandi said. A shortage of airplane pilots is among the factors that will likely keep airfares more expensive this year. The price of airline tickets have dropped in recent months but are still up nearly 30% from last year, according to the most recent federal data. However, Zandi said, if the job market remains strong, inflation eases and wages grow, Americans can better manage higher prices for airfare and other items. Annual hourly earnings have risen by 4.6% over the past year, according to the Bureau of Labor Statistics — not as high as the consumer price index’s growth in December. Yet in some categories, softening demand has translated to price relief. Several hot pandemic items, including TVs, computers, sporting goods and major appliances have dropped in price, according to Labor Department data from December. Budget pressures for families Top retail executives said they expect families’ budgets will still be under pressure in the year ahead. At least two grocery executives, Kroger CEO Rodney McMullen and Sprouts Farmers Market CEO Jack Sinclair, said they do not expect food prices to drop anytime soon. “The increase is starting to moderate a little bit,” said McMullen. “That doesn’t mean you’re going to start seeing deflation. We would expect to see inflation in the first half of the year. Second half of the year would be meaningfully lower.” He said there are some exceptions. Eggs, for example, will likely become cheaper as as Avian flu outbreak recedes. Over the past two years, consumer packaged goods companies have raised prices of items on Kroger’s shelves or reduced packaging sizing, a strategy known as

Valentine’s Day Spending Projected to Increase to Nearly $26 Billion.

by NRF WASHINGTON – Consumers are expected to spend $25.9 billion on Valentine’s Day this year, up from $23.9 billion in 2022 and one of the highest spending years on record, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics. “Valentine’s Day is a special occasion to shop for the people we care most about,” NRF President and CEO Matthew Shay said. “This year, as consumers embrace spending on friends and loved ones, retailers are ready to help customers celebrate Valentine’s Day with memorable gifts at affordable prices.” More than half (52%) of consumers plan to celebrate and will spend an average of $192.80. This is up from $175.41 in 2022, and the second-highest figure since NRF and Prosper started tracking Valentine’s Day spending in 2004. While spending on significant others and family members is in line with last year, many consumers are looking to show appreciation for the other meaningful relationships in their lives. Of the $17 increase in per-person spending, $14 comes from gifts for pets, friends and co-workers, along with classmates or teachers. Those aged 35 to 44 plan to outspend other age groups, allocating $335.71 on average for gifts and other Valentine’s Day items, approximately $142.91 more than the average consumer celebrating the holiday. Similar to recent years, the top shopping destination to purchase Valentine’s Day gifts is online (35%), closely followed by department stores (34%), discount stores (31%) and specialty stores (18%).  The top gifts include candy (57%), greeting cards (40%), flowers (37%), an evening out (32%), jewelry (21%), gift cards (20%) and clothing (19%). Americans plan to spend more than $5.5 billion on jewelry and nearly $4.4 billion on a special evening out. About one-third (32%) plan to give a gift of experience, up from 26% last year and the highest since NRF and Prosper started asking this question in 2017.  “Men, in particular, are more likely to give a gift of experience compared with last year,” Prosper Executive Vice President of Strategy Phil Rist said. “Another notable finding is more than half of consumers say they will take advantage of sales and promotions as they celebrate Valentine’s Day this year.” Even among those who don’t plan to celebrate Valentine’s Day, 28% will still mark the occasion in some way, seeking non-Valentine’s gifts, treating themselves to something special or planning a get-together or evening out with single friends and family members. As the leading authority and voice for the retail industry, NRF conducted this survey of 7,616 U.S. adult consumers Jan. 3 through Jan. 11. The survey has a margin of error of plus or minus 1.1 percentage points.

Growing Consumer and Business Interest in the Metaverse Expected to Fuel Trillion Dollar Opportunity for Commerce, Accenture Finds

Consumers eager to become active users of the metaverse and show high interest in problem-solving experiences related to fitness, retail, healthcare, travel and media Growing consumer and business interest in the metaverse as a creator economy and tool to enhance day-to-day tasks is expected to fuel a $1 trillion commerce opportunity by the end of 2025, according to findings Accenture released at the Consumer Electronics Show (CES) in Las Vegas. According to the research, more than half (55%) of the roughly 9,000 consumers surveyed see the metaverse as a business opportunity for creating and monetizing content. Most (89%) C-suite executives also believe the metaverse will have an important role in their organization’s future growth, according to a parallel survey of 3,200 C-suite executives. The findings estimate 4.2% of company revenues, or a total of $1 trillion, could come from metaverse experiences and commerce by the end of 2025. The findings indicate 55% of consumers want to be active users of the metaverse and nearly all of them (90%) want to do so in the next year. The top features consumers want are easy-to-use interfaces (cited by 70%) and access to a wide variety of applications (68%), which outperformed more “form” features, such as flashy headsets (55%) and the ability to personalize avatars (55%).  While gaming is appealing for 59% of metaverse users, only 4% of consumers see the metaverse as just a gaming platform. In fact, 70% say they intend to use the metaverse to access products and services across media and entertainment, fitness, retail, travel and healthcare. These preferences vary by age, with younger consumers more interested in media and fitness and those older in accessing health services in new ways. Still, what all have in common is a desire to enhance the things they already do every day, such as the experience of working-out at home (cited by 60%) or improving interactions with health professionals (55%). To fully capture the opportunity, businesses should be strategic about business model changes being enabled by the metaverse while engaging with all stakeholders to inform the experiences they create: 

3 Questions Retailers Must Be Asking Themselves This Holiday Season

By Rohit Shrivastava The last three holiday seasons have each been unique as the pandemic first roiled consumer behavior and then unleashed pent-up demand, all the while playing havoc with the economy. This year, with inflation rising and discretionary spending squeezed, retailers are already preparing for a slower holiday shopping season, and a new set of challenging dilemmas. For leaders in the industry, key decisions abound in what is — without question — the most important selling season of the year. Inventory planners are weighing their options. “Should we fill shelves in anticipation of holiday demand or continue liquidating and risk losing sales to stockouts?” Merchandise planners and marketing leaders are wondering, “Are the right promotions in place or are discounts too steep?” And HR leaders are asking, “What about seasonal staffing?” Retailers need data to answer these questions strategically. Beyond past transactions, external signals like inflation, labor, and market data, consumer behaviors and trends, and supply chain, weather, and currency data can give retailers an edge in both preparing for known challenges and addressing unexpected ones as they arise. In this environment, a data-driven approach to merchandise planning, active demand management, and sales and marketing execution is more critical than ever. So which questions are most important? And how can retailers leverage data to find the right answers? Here are three questions retailers should be asking and addressing right now to gain a holistic, real-time view of the levers that can be pulled to optimize demand while protecting margins and unlocking cost savings this holiday season. 1. What can be done to shape demand now? surprised shoppers in October with a second Prime Day — a strategy intended to boost controlled demand, prepare their warehouses, and move excess inventory ahead of Black Friday. Riding the consumer interest, major retailers including Best Buy and Target quickly mounted competing sales. With the industry closely watching the impact of these initiatives on year-end sales, retailers considering deploying similar demand-shaping strategies should take care to rely on point-of-sale data, social media trends, and other market signals to get a clearer picture of where and how to link pricing and promotions to shape the most beneficial activities this season. 2. What product mix, at what price, will drive the most revenue? There’s a give-and-take in promotions that analytics can help you fine-tune. By accounting for things like shipping costs, demand projections, and the price of production, retailers can make smarter decisions about the products they’re pushing in each location during key moments this holiday season. For example, which SKUs are your biggest sales drivers? Is there an opportunity to swap products with high production costs with cheaper options? Do bundles or promotions offer opportunities for revenue? Which SKUs are unique and therefore allow for price increases? That kind of insight can give you confidence as you experiment with pricing and assortment planning, something Bath & Body Works is doing as it adjusts its bundled soap promotions this year to protect margins in an inflationary climate. 3. Are the right resources in the right locations to make it all work? Overstaffing can carry massive costs, yet underestimating holiday staffing needs could mean failing to fulfill orders, disappointing customers, and losing out on revenue opportunities. Lockstep collaboration between HR, finance and supply chain teams can ensure the right resources are in place to deliver value to customers while also protecting profit margins. Are there certain hires that need to be expedited, made in specific locations to meet strong floor traffic, or at specific times in order to get products to customers quicker from warehouses? A data-driven approach to seasonal staffing can help ensure resources meet business demand, and that labor costs aren’t carried unnecessarily into the new year. While retailers likely planned for a complex fourth quarter, this year’s holiday challenges are sure to be formidable. Retailers need to leverage data in their decision making so they can pivot quickly and strategically when change occurs. Asking the right questions now, and then leveraging those questions to inform nuanced scenarios and plans, can put retailers in position to succeed in the weeks — and months — ahead.

Winners and losers of Black Friday 2022

By Dani James As COVID-19 pandemic restrictions cooled off in 2022, many retailers may have hoped for a less complicated Black Friday this year. But brewing up a new battle for both brands and consumers, inflation took the stage months before the shopping event began. Heading into the holiday, some estimates showed that while in-store shopping could make a return, inflation (which was up 7.7% in October according to the Consumer Price Index) could thwart consumer spending, as shoppers expected to get less for more money.  Predictions showed higher-income shoppers tightening their budgets, and discretionary spending at some big retailers decreased throughout the year as consumers dealt with rising grocery bills. Several retailers lowered their outlook for this quarter before the shopping event even started. Target tightened its Q4 outlook in November after earnings came in below expectations, and e-commerce native ThredUp did the same despite its focus being on secondhand goods — a category that could normally do well for consumers looking to save. All of this laid the groundwork for a not-so-joyous holiday season for shoppers. That said, Adobe Analytics data shows that online spending on Black Friday this year reached $9.12 billion, up 2.3% year over year.  The picture of how the retail industry performed is more complex than a single number. Given the macroeconomic pressures consumers face right now, it is hard to say that any winners in retail will remain so for the rest of the season. But some trends stood out. Here’s how retailers actually fared during the industry’s most highly-anticipated holiday. Winner: Buy now, pay later … sort of Thanksgiving and Black Friday may have been great days to be a buy now, pay later service provider. Given the economic pressures many shoppers face right now, BNPL payment options offered a way for consumers to still get the goods they wanted. Black Friday predictions from Deloitte projected increased use of these services, with 48% of survey respondents saying they planned to use credit cards and 37% expecting to use BNPL. On Thanksgiving Day, online BNPL revenue increased by 1.3% year over year and orders were up 0.7%, according to Adobe data. More telling is that some shoppers are using BNPL for lower-priced goods instead of high-ticket items, with the average order value for BNPL purchases decreasing in the U.S. by 6% on Thanksgiving, according to data from Salesforce.  Orders using BNPL rose by 78% the week of Nov. 19 to Nov. 25 when compared to the week before, according to Adobe. Additionally, overall revenue from BNPL is up 81% during the same period. “It’s a positive sign in the immediate term, that consumers are looking to extend their wallet further and do more,” Rod Sides, global leader at Deloitte Insights, told Retail Dive. But that immediate-term positive is a red flag in the long term, according to Sides, who added “we now have much higher interest rates, and they’re gonna start to hit any credit card balances. With buy now, pay later, it tells you the consumer is challenged … in the long term, it’s a warning sign.” Loser: Long lines The days of long lines and fights over highly sought-after products may really be dead. While in-store shopping was more in focus this year due to loosening COVID-19 restrictions, that doesn’t mean there was a return to the old chaos of Black Friday shopping. Several analysts noted that traffic was brisk and certainly apparent at a variety of stores, but didn’t have the long wait lines the holiday used to be infamous for. “People have been shopping today. We’d expected brisk traffic and big sales numbers. We got the brisk traffic, and we’ll soon know if that translated into positive numbers for the retailers,” Katherine Black, partner in the consumer practice of Kearney, said in emailed comments Friday evening. “In Raleigh, [North Carolina] we visited a wide range of stores (Target, Best Buy, Macy’s, Bass Pro Shop) and while all of them had shopper traffic, none of them had early morning lines, or completely full parking lots or long lines.” The avoidance of such lines this Black Friday could have contributed to the use of BOPIS, according to Salesforce, which said the service option was trending 20% higher on Black Friday compared to all other days this season. With e-commerce still strong this year, Sides thinks it can still go head-to-head with in-store shopping as consumers’ preferences settle in after the highs of the pandemic. 

Americans setting up for retirement failure, surveys show

By Steven A. Morelli Americans are setting themselves up for less-than-golden years if the economy slides into recession, according to findings from a few surveys. As people adjust to higher inflation and prepare for difficult times, more of them are putting off retirement and reducing retirement savings, thinking they will work into the customary retirement years. A Nationwide Retirement Institute study found that 40% of workers plan to postpone retirement because of increasing costs of living, double the number of people saying so a year ago. Fewer people have confidence in their retirement plan, with 58% feeling confident vs. 72% last year. A majority of employees (66%) said inflation is their top retirement concern. Nearly three-quarters of workers said they expect to retire later because they don’t have enough money saved. Another survey showed that inflation is causing a majority of Americans (54%) to reduce or stop their retirement savings. According to the Allianz Life Q3 Quarterly Market Perceptions Study, most respondents (80%) said they were worried about inflation having a negative impact on their income’s purchasing power. The reduction in retirement savings is hitting younger generations, setting themselves up for difficulties later. Millennials were the most likely to say they have stopped or reduced retirement savings due to inflation (65%), with 40% of boomers and 59% of Gen Xers saying so. Even if they have not cut their savings, Americans are worried inflation will damage their retirement plans, with Gen Xers the most anxious at 80%, while 76% of millennials and 73% of boomers agreed. It isn’t just inflation they are worried about, with 62% concerned that a major recession is right around the corner. Able to work? Postponing retirement would seem to be a natural consequence of the anxiety around savings and income. But people are probably overestimating their ability to remain at work. Even before the COVID shutdown, people in their 50s were being forced out of their long-term jobs, with 56% leaving involuntarily, according to a ProPublica/Urban Institute study. “This isn’t how most people think they’re going to finish out their work lives,” said Richard Johnson, an Urban Institute economist. “For the majority of older Americans, working after 50 is considerably riskier and more turbulent than we previously thought.” Another meta-analysis also found that half of the people who retired between 55 and 64 did so involuntarily, according to the Schwartz Center for Economic Policy Analysis. This is particularly true for workers in physically demanding jobs – a key reason why more Black and Hispanic people are forced into early retirement. Less health, more demands A recent book from two researchers showed that more than half of Americans don’t work consistently through their 50s, even before they reach their more challenging years. “Many people won’t be able to work even into their 60s, never mind through them,” according to one of the editors, Lisa Berkman of Harvard’s Center for Population and Development Studies. The book, Overtime: America’s Aging Workforce and the Future of Working Longer, listed three reasons for early retirement, according to a Forbes article on the research. Health is the top reason, even though people are living longer. They aren’t necessarily living healthier. “Major sections of the cohorts turning 40 or 50 now – especially groups with lower levels of education or income — are actually in worse health than their counterparts who were born two or three decades earlier were when they were in their 40s and 50s,” according to the book. Care is another primary reason, particularly women. If people are out of work caring for their parents in their 50s, it can affect the rest of their working lives. Workplaces are no better are providing flexibility for older employees to care for their relatives any more than they are for younger people caring for their children.Work itself drains employees. The physical and mental stress are grinding employees as they deal with the realities of aging. The book also has some sobering news for people in their 50s who tried retirement during COVID – if they want to return to work, it’s tough to get back to the level of career that they left. Only one in 10 ever earn as much again. Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at © Entire contents copyright 2022 by InsuranceNewsNet. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.

For Restaurants, Digital Channels Are Menu Must-Haves

The restaurant industry has gradually changed to meet customer expectations for convenient, seamless experiences. Then the pandemic hit, and this gradual shift drastically accelerated. Restaurants of all types had to embrace delivery and takeout because health concerns and lockdowns made sit-down dining impossible or undesirable. Digital sales channels, therefore, became essential to restaurants. Even as the worst of the pandemic winds down, the changes it wrought on restaurants will remain. Consumers are more accustomed to and desire digital methods when deciding where to eat and how to order and pay for meals than before the pandemic. The shift has been so profound that digital ordering and payment options are now central to the restaurant industry. In the July edition of the “Order To Eat Tracker®,” PYMNTS explores how consumers’ digital preferences are changing the restaurant industry. Around the Order to Eat Space According to a report from DoorDash, delivery and takeout are as popular as ever. The report found that, compared to 2021, 86% of consumers reported ordering takeout or pickup as much or more this year. For delivery, the share dropped slightly to 83%. The report also found that digital ordering methods were becoming more popular, with the share of consumers using delivery apps, such as DoorDash or Uber Eats, rising from 15% to 24%. A similar rise occurred in the use of restaurant websites, while the portion of consumers calling in an order dropped from 29% to 10%. As digital ordering becomes more popular, restaurants are experimenting with novel ordering methods. Taco Bell, for example, recently opened a location in Brooklyn Park, Minnesota, that overhauled the drive-thru experience. Called Taco Bell Defy, this Taco Bell’s drive-thru has four lanes, two stories and vertical lifts to bring orders from the kitchen to the customers waiting below. The goal is to decrease service times and provide customers with a seamless, convenient ordering experience. For more on these and other stories, visit the Tracker’s News and Trends section. Pizza Guys on Why Digital Ordering Is No Longer Just an ‘Option’ With more consumers seeking out online ordering and payment methods, digital channels have gone from being optional to mandatory for restaurants, according to Michael Morgan, vice president of operations at Pizza Guys. In this month’s Feature Story, Morgan explains how his company has navigated this digital transformation and how Pizza Guys is meeting customer expectations through its ordering and payment options. Payment and Ordering Options Are Key to Customer Satisfaction The disruptions caused by the pandemic and the overall growth of technology are transforming the restaurant industry. Although the pandemic has impacted all aspects of the restaurant experience, it has affected the ordering and payment experience in particular. Digital ordering, for example, is now immensely popular, with 57% of consumers preferring to order takeout or delivery through a digital app. In terms of payments, a growing number of consumers prefer a contactless or digital payment method to a physical one. Shifts like these mean that restaurants must embrace digital solutions to meet customer expectations. This month’s PYMNTS Intelligence explores how a restaurant’s payment and ordering methods are key to customer satisfaction.

Existing-Home Sales Fell 3.4% in May; Median Sales Price Surpasses $400,000 for the First Time

Key Highlights Existing-home sales declined for the fourth straight month to a seasonally adjusted annual rate of 5.41 million. Sales were down 3.4% from April and 8.6% from one year ago. At $407,600, the median existing-home sales price exceeded $400,000 for the first time and represents a 14.8% increase from one year ago. The inventory of unsold existing homes rose to 1.16 million by the end of May, or the equivalent of 2.6 months at the current monthly sales pace. WASHINGTON (June 21, 2022) – Existing-home sales retreated for the fourth consecutive month in May, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while year-over-year sales slipped in all four regions. Total existing-home sales,1, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021). “Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.” Total housing inventory2 registered at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021. “Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun added. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.” The median existing-home price5 for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record. Properties typically remained on the market for 16 days in May, down from 17 days in April and 17 days in May 2021. Eighty-eight percent of homes sold in May 2022 were on the market for less than a month. First-time buyers were responsible for 27% of sales in May, down from 28% in April and down from 31% in May 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%. All-cash sales accounted for 25% of transactions in May, down from 26% in April and up from 23% recorded in May 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, down from 17% in April and 17% in May 2021. Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in May, essentially unchanged from April 2022 and May 2021. According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate across all of 2021 was 2.96%.®’s Market Trends Report(link is external) in May shows that the largest year-over-year median list price growth occurred in Miami (+45.9%), Nashville (+32.5%), and Orlando (+32.4%). Austin reported the highest growth in the share of homes that had their prices reduced compared to last year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points). Single-family and Condo/Co-op Sales Single-family home sales declined to a seasonally adjusted annual rate of 4.80 million in May, down 3.6% from 4.98 million in April and down 7.7% from one year ago. The median existing single-family home price was $414,200 in May, up 14.6% from May 2021. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in May, down 1.6% from April and down 15.3% from one year ago. The median existing condo price was $355,700 in May, an annual increase of 14.8%. “Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties – placing additional financial strain on prospective first-time homebuyers,” said NAR President Leslie Rouda Smith, a Realtor® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “To counter this trend, policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers.” Regional Breakdown Existing-home sales in the Northeast climbed 1.5% in May to an annual rate of 680,000, falling 9.3% from May 2021. The median price in the Northeast was $409,700, a 6.7% rise from one year ago. Existing-home sales in the Midwest dropped 5.3% from the previous month to an annual rate of 1,240,000 in May, slumping 7.5% from May 2021. The median price in the Midwest was $294,500, up 9.5% from one year before. Existing-home sales in the South declined 2.8% in May to an annual rate of 2,410,000, down 8.4% from the previous year. The median price in the South was $375,000, a 20.6% jump from one year ago. For the ninth consecutive month, the South recorded the highest pace of price appreciation in comparison to the other three regions. Existing-home sales in the West slid 5.3% compared to the month before to an annual rate of 1,080,000 in May, down 10.0% from this time last year. The median price in the West was $633,800, an increase of 13.3% from May 2021. The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. # # #