RANCHO CUCAMONGA, Calif.– If credit union member card spending is an indicator, 2021 ended on a high note, as members overcame concerns with the rise in omicron cases to drive spending over the extended holiday shopping season back to pre-pandemic levels, a new report shows.
“This behavior signals a strong start to the new year once consumers and retailers are able to recover from the current winter surge,” CO-OP Financial Services said.
CO-OP said analysis of its member credit union credit and debit portfolio data for December showed numerous merchant classifications month-over-month saw spending increases, including strong growth in the Amazon/bookstores, digital goods, grocery, medical, and retail and travel categories, along with more mixed growth in categories such as education, computers, office, home improvement and sports & recreation.
The dining & entertainment and gas categories were flat, while lodging was the only category that fell in both debit and credit for the month.
Key spending trends CO-OP said its SmartGrowth consulting team are watching include
Retail Finishes Year Strong
Despite an early and extended holiday shopping season that began back in mid-fall, December retail spend stayed robust. Although the Commerce Department reported that retail sales declined by 1.9% for the final month of the year, overall sales for the fourth quarter grew a healthy 17.1% over the same period in 2020, CO-OP said.
CO-OP credit union spending data showed increases of 18% in debit transaction count and 17% in debit transaction amount, while credit posted growth of 21% and 23%, respectively, versus November.
December’s credit spending in the Retail category was even more impressive, with transaction counts up by 60% and amounts up by 53% over the prior December.
“These results align closely with industry trends, as Mastercard SpendingPulse data showed that spending during the 2021 holiday season rose 8.5% compared with the same period in 2020. Moreover, in-store sales rose by 2.4% over 2019, while online sales exploded by 61.4% over the pre-pandemic period,” CO-OP said.
Inflation Drives Grocery Spend Higher
In December, the grocery category grew moderately in transaction count within both the credit and debit portfolios, although transaction amounts grew by double-digits in both channels. Both COVID and inflationary effects contributed to this trend, as many consumers were content to eat more meals at home as omicron cases rose rapidly following the Thanksgiving holiday. In contrast, the dining & entertainment category was basically flat for the month.
“Inflation will continue to be the hot topic in 2022 across most anything consumers buy,” said John Patton, CO-OP senior payments advisor. “Because of this, I expect more families will cook at home and the spend on weekly groceries will naturally rise. During this inflationary period, credit unions need to focus their marketing messages on highlighting value and financial benefits.”
A Very Good Year in Credit
According to CO-OP, although it was sometimes hard to tell on a month-to-month basis, credit spending enjoyed a strong rebound in 2021 – not only in comparison to the depths of 2020, but also as compared with results from 2019, with many merchant categories surpassing their pre-pandemic levels. It’s a trend that indicates that consumers are returning to previous spending behaviors and are comfortable making purchases both large and small on credit and paying off balances over time, CO-OP stated.
The total number of transactions in 2021 grew 22% over 2019, and outpaced 2020’s transaction totals by 2%. In transaction amount, the story was very similar, the analysis shows.
“Not surprisingly, credit rebounded in 2021 from its significant 2020 declines in both transaction counts and amounts,” said Beth Phillips, CO-OP director of strategic portfolio growth. “All key categories surpassed their 2019 pre-pandemic levels with the exception of travel (-29%) and lodging (-1%). In addition, the total amount of transactions in 2021 grew by 35% over 2019, and outpaced 2020’s total by 10%.”
Among specific merchant categories, digital goods grew most rapidly, increasing by 200% in count and 231% in amount over 2019, and 69% in count and 71% in amount over 2020.
For interchange, gas was the big category winner in 2021, with a 132% increase over 2020 and 104% increase over 2019.
The retail category grew in transaction count by 50% over 2020 and 61% over 2019.
Other Top Categories
Computers remained a top category in 2021 with an increase in count of 113% over 2019 and 60% over 2020, CO-OP reported.
Amazon/Bookstores transaction count grew by 6% over 2020, but also posted the biggest deceleration in growth following the prior year’s 55% annualized increase. Unsurprisingly, the biggest losers over the past couple of years are found in the travel-related categories, as travel purchase counts declined by (-34%) and Lodging dropped by (-11%) from 2019, CO-OP said.
Month-Over-Month Category-Level Spending (Comparing December 2021 to November 2021)
| Credit | Debit | |||||
| Count | Amount | Interchange | Count | Amount | Interchange | |
| Category | Monthly Change | Monthly Change | Monthly Change | Monthly Change | Monthly Change | Monthly Change |
| Amazon/Bookstores | 31% | 30% | 31% | 28% | 29% | 29% |
| Digital Goods | 8% | 2% | 3% | 5% | 3% | 5% |
| Dining and Entertainment | 0% | 3% | 3% | 0% | 1% | 1% |
| Education | -14% | 8% | 6% | -17% | 5% | -5% |
| Gas | 0% | -1% | 0% | -1% | -1% | -1% |
| Grocery | 7% | 14% | 14% | 6% | 15% | 7% |
| Lodging | -6% | -9% | -10% | -6% | -4% | -5% |
| Medical | 7% | 7% | 8% | 5% | 5% | 5% |
| Retail | 18% | 17% | 18% | 21% | 23% | 19% |
| Travel | 20% | 13% | 13% | 31% | 27% | 28% |
| Computers | -3% | -14% | -14% | 18% | 12% | 13% |
| Office | 18% | 12% | 16% | -22% | -10% | -13% |
| Campers & Camping | 15% | 4% | 6% | -3% | -6% | -4% |
| Home Improvement | -11% | -3% | -3% | 39% | 38% | 34% |
| Sport/Recreation | -4% | -8% | -7% | 22% | 22% | 20% |
More information on the CO-OP SmartGrowth Consulting Team can be found here.