Spending in a time of crisis: What the Italians’ love of food can teach us about doing business during a pandemic
During the past few months, there has been much debate about the differences in government policies for addressing the COVID-19 pandemic.
Is it better to leave economies open or lock them down? What does the economic impact of each strategy look like? How do consumers behave in either case? How do businesses adapt to remain successful?
It is becoming clear we can begin to answer some of these crucial questions by analysing spending habits, based on Visa data in March and April, in nations that have been locked down, and comparing them with those that haven’t – something we visited last month. Great innovation is often sparked by huge challenges, and it appears this crisis is no different.
Take food and dining out in Italy and Sweden.
Italy was among the first European nations to implement a strict lockdown, and you can clearly see the effect it had on both fast food and restaurants. Spending dropped more than 80% in March and April, compared with the same time last year.
In Sweden, where restrictions were light touch and restaurants remained open, you might think that fast food and restaurants saw little impact, but this isn’t the case. Each saw volumes reduce by a quarter to almost half respectively year-on-year. It’s likely this is at least in part due to a wider drop in consumer spending as diners opted to save instead of spend. However, there was a distinct difference in the behaviour of restaurants in each nation as a result of lockdown.
Face-to-face payments in Italy shifted to online transactions as restaurants found new ways to cater for their customers. The proportion of transactions that were online went up 10 fold in fast food and 7 times for restaurants. Downloads of food delivery apps in Italy increased. A range of delivery services all initiated ‘no contact’ drop offs, and gave users the option to have food left at the door. Restaurants worked to protect sales and prepare for a post-lockdown world with new safety measures.
It wasn’t just large companies adapting to the new environment. Smaller restaurants across Milan adopted procedures to minimise human contact. In the city centre, customers were able to order and pay without entering the restaurant, before waiters delivered trays of drinks and ice cream to outdoor tables. Others, in Rome, designed menus optimised for home delivery, and started delivering local favourite dishes for a fee.
Scope of change
The impact in Sweden was much less marked and the mix between online and face-to-face purchases changed little during the period, perhaps because Swedish diners were still able to eat out should they wish.
When comparing the two, it looks clear Italian fast food operators and restaurants made quick changes to make online sales. Unlike the Swedes, this may be because they had no other option, or because those smaller restaurants recognised the need to evolve to serve their local consumers and were able to adapt. This looks particularly prominent among smaller restaurants and bars, which took a larger share of spending as Italians chose to order locally during the lockdown.
This aligns to what we’ve all been hearing from consumers elsewhere – that they are increasingly keen to shop locally and support merchants closer to home. It’s clear that small businesses are pivoting to make the most of this opportunity, responding to their customers’ requests and accepting a broader range of payments. The ability of all businesses – particularly smaller companies – to respond to challenges in their path is something that we will always support. It’s vital we continue to enable them to thrive by providing the resources and expertise to adapt for the future.
If we get this right, Italy’s restaurants prove that the restrictions of the pandemic can be used to accelerate positive business transformation.
All data in this article reflects processed transactions through Visa systems.