Despite the decline, the recent report indicates a positive turnaround in certain areas of the country. “The Plains region showed the strongest growth with a 2.2 percent increase in year-over-year card sales,” said Goldman.
Card sales increased by 0.1 percent in Metropolitan Statistical Areas (MSAs) with populations between 100,000 and 249,999, which is the first positive report for that category since the second quarter of 2008.
Added Goldman, “Overall, consumers appear to be spending more on their cards, but just not at Main Street businesses. Others have published information suggesting that increased gas and energy prices may account for this additional off-Main Street spending.”
Key findings of the report include:
1. “Main Street” businesses saw their same store credit and signature debit card sales decline 3.4 percent in Q2 2011 from their Q2 2010 levels. The 3.4 percent decline reflects the second straight quarter of accelerating declines for Main Street restaurants, retailers and service providers. In Q1 2011, their card sales dropped 3.1 percent.
Main Street businesses began to lose share of the available consumer credit card float nationwide, reversing the trend of the last several quarters. According to the Federal Reserve’s July 8, 2011 G.19 Release (Consumer Credit), revolving consumer debt fell 1.3 percent in April and is projected to have risen 5.1 percent in May. Main Street card sales in April fell 5.3 percent and again 1.5 percent in May. Many card processors and issuers have recently reported increased consumer credit card usage figures. Taken with the Fed release, this would indicate consumers are spending more with their cards, just not at Main Street businesses.
2. Main Street restaurants are faring better. For the third consecutive quarter, card sales at Main Street restaurants increased, although by a small amount. Restaurants saw card sales rise 0.1 percent in Q2 2011. In comparison, retail and service providers reported a 6.0 percent decline in Q2 2011.
Consumers are choosing less expensive restaurants in which to use their cards. “Fine Dining” establishments experienced a 4.4 percent decline in card sales in Q2 2011, while those with an average ticket size of less than $25 reported a 2.8 percent increase. Moderately priced restaurants reported essentially no changes in Q2 2011 (average ticket sizes between $25 to $50 decreased 0.5 percent, and those with average tickets between $50 and $100 were flat.)
3. In Q2 2011, three out of four MSA* categories continued to show declines in same store credit sales, and the fourth was essentially flat. Card sales increased marginally (0.1 percent) in MSAs with populations between 100,000 and 249,999, the first positive report for that category since Q2 2008. Consumers in the nation’s urban areas (MSA population of 250,000 to 999,999 and 1+ million) are slowing their card purchases more rapidly than other categories, with a decline of 4.2 percent and 3.7 percent respectively.
4. Seven of eight regions continued to show declines in same store card sales, posting declines ranging from 0.8 percent to 7.4 percent. The Plains region reported positive year-over-year (YoY) card sales of 2.2 percent. Q2 2011 was the first time the Plains region showed the strongest card sales results compared to the other regions since Q4 2009. The Southeast region’s card sales were hit hardest, declining 7.4 percent, followed by the Pacific Region (4.0 percent decline), and the Mideast Region (2.8% decline).
5. Newer businesses (less than 5 years in business) posted essentially flat card sales in Q2 2011, increasing 0.6 percent. The other “Time in Business” categories saw YOY card sales declines of between 1.3 percent and 4.9 percent. Businesses open less than 5 years and those in the 7-to -10 years category are trending well. Both have experienced slower rates of decline for each of the past four quarters, with businesses less than 5 years old actually crossing over to card sales growth in Q2 2011.
6. Businesses considered to represent the lowest risk band (“A” risk businesses on an “A–D” scale), were in the only grouping to experience a card sales increase in Q2 2011 (1.9 percent), their fifth consecutive quarter of YOY growth. “B” risk businesses saw a 2.9 percent decline. “C” risk businesses posted a 5.9 percent decline and “D” risk businesses lost 8.0 percent of their card sales in Q2 2011.
7. Women-owned small businesses are faring better in card sales when compared to their male-owned counterparts. While overall Main Street businesses lost 3.4 percent of their card sales in Q2 2011 compared to Q2 2010, women-owned small businesses saw an only 1.5 percent decline. For the same period, male-owned small businesses dropped 3.6 percent in card sales. This Q2 2011 Small Business Credit Sales Report is the first time CAN’s Data Services Division has reported YOY card sales broken out by the gender of the business owner.
*Metropolitan and Micropolitan Statistical Areas as defined by the Office of Management and Budget based on U.S. Census Bureau data.
