CardFlight Small Business Impact Report: April 1, 2020

Sales down 50% — but the decline varies by industry vertical, level of urban density, time-of-day, and more.

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Introduction

‍Coronavirus and COVID-19 have dominated the nation’s attention, with the World Health Organization declaring the situation a pandemic on March 11, 2020.

As of this report, disruptions in society and communities continue to rapidly change and expand. At CardFlight, we are closely monitoring the developing situation and its impacts. This report is intended to provide insights into the impacts of coronavirus/COVID-19 on small businesses across the United States.

In this week's report:

Methodology

To create this report, we analyzed a representative sample of hundreds of thousands of transactions processed from March 2–29, 2020, by:

  • 60,000 small businesses 
  • in all 50 states 
  • using CardFlight’s SwipeSimple software to accept credit and debit card payments

This report can be useful in understanding the impact of COVID-19 on small businesses at a hyper-local perspective and across the US. It is updated on a regular basis tracking specific indicators including: shifts in consumer spending among local businesses; impacts across different industries, and across cities and states. 

The SwipeSimple small business owner 

The typical SwipeSimple merchant has one to ten employees and less than five locations or mobile service points. The average active merchant represented in this data set processes approximately $130,000 in credit/debit card payments annually. The merchants are a mix of professional and personal service providers, specialty retail establishments, and food and drink purveyors.

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Update: Small business sales down 12.6% week-over-week

Over the weeks of March 23–29, 2020, total dollar sales at small businesses fell for the third straight week: down 12.6% week-over-week and 26.9% from the baseline comparison week (March 2–8).

The total number of transactions processed by small-business merchants using SwipeSimple has fallen at a faster clip, down 20.8% last week and 49.8% compared to the baseline (March 2-8). The following chart shows week-over-week changes compared to the pre-shutdown baseline level of week March 2–8, 2020. 


More than a quarter of small businesses closed their doors since March 2

Since the beginning of the coronavirus shutdown (our baseline comparison week of March 2-8), 26.1% of merchants have closed entirely and posted no new sales.

Since just last week, an additional 14.2% of small businesses in our sample closed entirely.

Of the remaining merchants, the number of transactions per merchant has decreased by 32% since the beginning of March.

Which business types were most impacted?

Coronavirus/COVID-19 isn’t affecting all US small businesses in the same way. In this section of the report, we dissect the differences between small business performance by vertical.

  • Food and drink establishments (bars and restaurants) remain the hardest hit category. Total sales are down 36.9% since the beginning of March.
  • Service providers (general contractors, healthcare providers, and professional service providers) were hit hard again, down 16.6% in the past week, this category’s largest percentage-point decrease since we started this report
  • Retail sales (sporting goods, specialty retail, home furnishings, automotive, and more) continued its steady decline, down 18.5% since the week of March 2


Deep dive: Merchant category

Noteworthy decreases

While the categories of salons, barber shops, and health and beauty (spas, massage parlors, etc.) held strong in early March, overall sales volumes are now running less than 20% of the early March level.  

The clothing and apparel category was even harder hit, down 85.9% since the baseline week of March 2–8.

On-site technical services (which includes businesses such as plumbing, heating, electrical, and trade contractors) remains one of the steadiest categories, down only 8.1% from early March.

Sales continue to slide at businesses that accept tips

Many small businesses include a tip prompt in their transaction flow. This makes it easy for customers to show their appreciation for good service by adding a tip right to their credit card.

Our data show that sales at tip-accepting merchants is down over 30% over the past week, compared to sales at businesses who do not accept tips, which are down 12.6%.

Changing behaviors: We’re all early birds now

One of the ways coronavirus/COVID-19 is changing the small-business landscape is by a marked shift in shopping activity by time of day, measured by transaction volume.

Small businesses are doing more business early in the day, with sales between 5–11am (local time) up during each one-hour block of the day, when compared to the beginning of March. Meanwhile, sales volume made between the hours of 6pm–2am are down more than 50% from the beginning of the month.

Change in sales: Rural areas hit the hardest

Next we examine how urban density affects the change in sales due to coronavirus/COVID-19.

We break down urban density into four buckets:

  • Large cities: Metropolitan areas with a population of 5 million and above
  • Medium cities: Populations of 1-5 million people
  • Small cities: Urban areas with fewer than 1 million people
  • Rural areas: Everything that's left

Our small business data show that population density is related to the percentage decline in sales. Large cities have fared the best, and rural areas have been hit the hardest.

Changing behaviors: Card-present payments

Card-present payments are those when a credit or debit card is physically swiped, inserted, or tapped at a merchant location.

Card-not-present payments are those made over the phone or online. This category of payments also includes invoices and those merchants who save cards of their frequent customers on-file.

For our purposes here, the comparison of credit card transactions made in-person versus card-not-present methods gives us some insight into the extent to which social distancing guidelines are affecting sales at community small businesses.

Here’s what we learned:

  • Card-present sales have fallen fast, with a 49.4% decrease since the beginning of March
  • Card-not-present sales were down by 15.2%

Thanks for reading the CardFlight Small Business Impact Report

Do you have questions, feedback, or press inquiries? Contact us

You may also view past issues of the CardFlight Small Business Impact Report

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