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10 COVID-fueled consumer trends that will endure, from pet adoptions to D.I.Y. home improvement



10 COVID-fueled consumer trends that will endure, from pet adoptions to D.I.Y. home improvement

As Americans have hunkered down amid the continuing pandemic, the unable to engage in travel or their usual social activities, they’ve sought different outlets for their energies, and by extension, their spending.

Millions people across the country, lonely looking to occupy bored kids, adopted pets in record numbers. Others figured they might as well fix their roof or set up a new home office in their basement. Another cadre of people doubled down on streaming entertainment into their home while theaters were closed, or set up their own home gyms. Legions of shoppers discovered they are happy to go to a store to pick up an online order without having to go inside, or pay without having to touch anything other than their own phone.

“The way consumers want to shop has permanently shifted, and it’s not going back,” Sonia Lapinsky, a managing director at AlixPartners, tells Fortune. Services like curbside pickup and contactless payment are now “table stakes.”

While a lot of consumer behavior could revert to what it was pre-COVID, some of these shifts are here to stay. Here are some of the consumer trends Fortune thinks will endure after most Americans are vaccinated and the pandemic has eased.

Puppy love

Americans have gone wild for dogs (and, to a lesser extent, cats), leading to a surge in adoptions that has fueled the pet industry. Petco, which aims to return to the stock market soon, said sales were up 16% last quarter, while Chewy saw business spike by nearly 50%. The legions of new ‘pet parents’ will only accelerate the pre-pandemic trend toward the humanization of pets, so expect the rise of fido-oriented to spending to continue.

Home is where the spending is

In November, consumers did what they’ve been doing since the pandemic broke out: spending less on fashionable clothing—but much more on home projects. With analysts expecting home values to hold steady, and more Americans working from home at least part of the time even once it’s safe to venture out into the world again, home improvement projects will continue apace and solidify Lowe’s and Home Depotas two of retail’s biggest winners.

Handmade crafts

Etsy has thrived during the pandemic, partly by selling enormous quantities of face masks ($130 million-worth in the first quarter alone); the company’s revenue doubled in the first nine months of the year. The handmade goods e-commerce site, which has made big strides in improving the reliability of its sellers’ delivery of orders, has attracted many new entrepreneurs, including more than a few needing to supplement their incomes during a brutal recession. Along the way, it has tapped into a significant cultural shift that is seeing many consumers seeking more customized products than what they can find at big-box stores.

Curbside pickup

It might seem like pedestrian service for shoppers, but curbside pickup has made all the difference in determining retail’s winners and losers are this year. Chains like Petco and Ulta Beauty that didn’t offer the service before the pandemic but quickly stood it up as spring lockdowns limited retail options immediately saw the benefit. And now that shoppers have gotten used to the convenience of retrieving online orders in a way that doesn’t even require them to leave their car—and with a speed that makes it hard for even Amazon to compete—expect customers to make curbside a regular part of how they shop.

Casual and cozy are in, dressy is out

Work from home turned sweatpants into office wear and deepened the so-called “casualization” of the American wardrobe. With workers not so concerned about professional attire—at least from the waist down—and fewer events for people to get fancy for, 2021 saw overall apparel sales plummet. The exception to the rule: retailers specializing in athletic wear or casual clothing. To see that schism playing out in companies’ bottom lines, just compare the results of struggling fashion retailers like Banana Republic, Macy’s or Nordstrom with those of those of Lululemon Athleta or Old Navy. Expect the trend toward casual wear to continue into 2021, with American offices unlikely to be teeming with people again anytime soon.

E-commerce for the little guy

In March, as non-essential retailers like Kohl’s and Old Navy were ordered to close stores indefinitely, they were least able to fall back on big and established e-commerce businesses. Not so for countless small local stores. That has led to a surge in such companies going the Shopify route to quickly build a digital business. Shopify, which provides the tech needed to operate an e-commerce site, said sales on websites using its technology rose 76% over the Black Friday-Cyber Monday period—with much of that growth fueled by companies new to online selling.

Who needs a gym?

Peloton’s sales skyrocketed as gyms closed for weeks nationwide and the more affluent sought other ways to stay in shape. (The stationary bike maker’s sales more than tripled last quarter.) But many Americans also gravitated toward less expensive means of staying fit, creating a new cycling and running boom. That has now translated into surge in ski equipment sales for the colder months.

Zooming in

As much as we talk about “Zoom fatigue,” videoconferencing has been an essential way for people to stay connected, professionally and socially. It remains to be seen whether Zoom itself will maintain its overwhelming popularity as security-minded corporations are increasingly gravitating toward services like Microsoft Teams and Google Meet. But with videoconferencing technology vastly improved and work-from-home likely to remain a popular option, this way of remotely connected isn’t going away any time soon.

Movies from the comfort of home

Netflix, HBO Max, and similar services have become a lifeline for tens of millions of Americans during the pandemic, allowing them to binge watch programs at a time of their choosing. Unless people miss audience members talking or eating loudly during a movie, it’s hard to see viewers reverting en masse to movie houses—with the likely exception of seeing blockbuster movies that demand the big screen. And at least some of the Hollywood studios seem to be signaling that they agree: Warner Bros said this month it would release all of its 2021 movies in theaters and on HBO Max simultaneously.

Contactless payment

Even before the pandemic, more and more businesses were going cashless, despite misgivings from some local government regulators that this excludes America’s sizable “unbanked” population. But with COVID-19, the ability to conduct a transaction without touching anything—via ‘tap-and-pay’—became a selling point for many stores and restaurants. By mid-2020, the use of contactless payment had nearly tripled in the U.S. compared to spring 2019. The convenience and ease of this touch-free option will make it a fixture in U.S. consumer spending.

More must-read retail coverage from Fortune:

  • Could Biden finally get the national minimum wage to $15?
  • Inside the cottage industry trying to revive Aunt Jemima and other brands with racist roots
  • Poshmark, newly profitable, files for IPO
  • How FedEx, UPS, and Amazon prepared for holiday shipping deadlines this year
  • Why Adidas is finally putting Reebok up for sale


Coinbase’s near-term outlook is ‘still grim’, JPMorgan says, while BofA is more positive about firm’s ability to face crypto winter



Coinbase's near-term outlook is 'still grim', JPMorgan says, while BofA is more positive about firm's ability to face crypto winter

Coinbase is well positioned to successfully navigate this crypto winter and take market share, Bank of America said in a research report Tuesday. It maintained its buy recommendation following the exchange’s second-quarter results.

The results warrant “a muted stock reaction,” the report said. Net revenue of $803 million was below the bank’s and consensus estimates, while its adjusted $151 million loss before interest, tax, depreciation and amortization was better than the street expected. Importantly, the company remains “cautiously optimistic” it can reach its goal of no more than $500 million of adjusted EBITDA loss for the full year, the report added.

Coinbase shares fell almost 8% in premarket trading to $80.74.

Bank of America notes that Coinbase had no counterparty exposure to the crypto insolvencies witnessed in the second quarter. The company also has a “history of no credit losses from financing activities, holds customer assets 1:1, and any lending activity of customer crypto is at the discretion of the customer, with 100%+ collateral required.” These rigorous risk-management practices will be a “positive long-term differentiator” for the stock, the bank said.

JPMorgan said Coinbase had endured another challenging quarter, while noting some positives.

Trading volume and revenue were down materially. Subscription revenue was also lower, but would have been much worse were it not for higher interest rates, it said in a research report Wednesday.

The company is taking steps on expense management, and in addition to the June headcount reductions, is scaling back marketing and pausing some product investments, the note said.

The bank says the company’s near-term outlook is “still grim,” noting that the exchange expects a continued decline in 3Q 2022 monthly transacting users (MTUs) and trading volumes, but says Coinbase could take more “cost actions” if crypto prices fall further.

JPMorgan is less optimistic than Bank of America about the company in the near term, saying pressure on revenue from falling crypto markets will have a negative impact on the stock price. Still, it sees positives including higher interest rates, from which the firm will generate revenue. It also sees opportunities for the exchange to grow its user base, leveraging almost $6 billion of cash. The surge in crypto prices in July, and the forthcoming Ethereum Merge are also seen as positive catalysts, it added.

The bank maintained its neutral rating on the stock and raised its price target to $64 from $61.

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Elon Musk sold $6.9B in Tesla stock in case he’s forced to buy Twitter



Elon Musk sold $6.9B in Tesla stock in case he's forced to buy Twitter

Elon Musk sold $6.9 billion of his shares in Tesla Inc., the billionaire’s biggest sale on record, saying he needed cash in case he is forced to go ahead with his aborted deal to buy Twitter Inc.

“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” Musk tweeted late Tuesday after the sales were disclosed in a series of regulatory filings. 

Asked by followers if he was done selling and would buy Tesla stock again if the $44 billion deal doesn’t close, Musk responded: “Yes.”

Tesla’s chief executive officer offloaded about 7.92 million shares on Aug. 5, according to the new filings. The sale comes just four months after the world’s richest person said he had no further plans to sell Tesla shares after disposing of $8.5 billion of stock in the wake of his initial offer to buy Twitter.  

Musk last month said he was terminating the agreement to buy the social network where he has more than 102 million followers and take it private, claiming the company has made “misleading representations” over the number of spam bots on the service. Twitter has since sued to force Musk to consummate the deal, and a trial in the Delaware Chancery Court has been set for October. 

In May, Musk dropped plans to partially fund the purchase with a margin loan tied to his Tesla stake and increased the size of the equity component of the deal to $33.5 billion. He had previously announced that he secured $7.1 billion of equity commitments from investors including billionaire Larry Ellison, Sequoia Capital, and Binance. 

“I’ll put the odds at 75% that he’s buying Twitter. I’m shocked,” said Gene Munster, a former technology analyst who’s now a managing partner at venture-capital firm Loup Ventures. “This is going to be a headwind for Tesla in the near term. In the long term, all that matters is deliveries and gross margin.”

At the weekend, Musk tweeted that if Twitter provided its method of sampling accounts to determine the number of bots and how they are confirmed to be real, “the deal should proceed on original terms.” 

Musk, 51, has now sold around $32 billion worth of stock in Tesla over the past 10 months. The disposals started in November after Musk, a prolific Twitter user, polled users of the platform on whether he should trim his stake. The purpose of the latest sales wasn’t immediately clear.  

Tesla shares have risen about 35% from recent lows reached in May, though are still down about 20% this year. 

With a $250.2 billion fortune, Musk is the world’s richest person, according to the Bloomberg Billionaires Index, but his wealth has fallen around $20 billion this year as Tesla shares declined.    

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The rent is too d*mn high for Gen Z: Younger generations are ‘squeezed the most’ by higher rents, BofA says



The rent is too d*mn high for Gen Z: Younger generations are 'squeezed the most' by higher rents, BofA says

Most of Gen Z is too young to remember the 2010 New York gubernatorial candidate Jimmy McMillan.

But over a decade later, they would probably agree with his signature issue (and catchphrase): the rent is too damn high.

This July, median rent payments were 7.4% higher than during the same period last year, according to a Bank of America report released Tuesday. 

The national median price for a one-bedroom apartment has been hitting new highs nearly every month this summer. It was $1,450 for July, according to rental platform Zumper. In the country’s largest city, New York, average rent exceeded a shocking $5,000 a month for the first time ever in June. 

But inflation in the rental market hasn’t hit each generation equally, and no one is getting squeezed harder by the higher monthly payments as Gen Z. Those born after 1996 have seen their median rent payment go up 16% since last July, compared to just a 3% increase for Baby Boomers, BofA internal data shows. 
“Younger consumers are getting squeezed the most by higher rent inflation,” BofA wrote.

The great rent comeback

Early in the pandemic, landlords slashed rents and gave significant COVID discounts to entice tenants to stay instead of leaving urban areas. Once those deals started expiring in 2021, many landlords suddenly raised payments once again, sometimes asking for over double their pandemic value. 

Young people across the board have been hit hard, and rent burdens compared to age can be seen even within a single generation. Younger millennials had their median rent payment grow 11% from last year, while the median payment for older millennials rose 7%. Gen X experienced a 5% median rent increase, according to BofA. 

It’s not a surprise, then, that Gen Z feels so strapped for cash. The majority of young people, 61%, said they want to receive their wages daily instead of twice a week, a practice typically reserved for workers living paycheck to paycheck, according to a report from the Center for Generational Kinetics, which specializes in research across the generations. Rising rent inflation has even priced nearly a third of Gen Zers out of the apartment search altogether. Around 29% of them have resorted to living at home as a “long-term housing solution,” according to a June survey from personal finance company Credit Karma.

It’s no wonder—the rent really is too high.

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