Merchants that sell needs-based products, such as food, building materials or vehicle-repair supplies, have experienced less decline in transaction volumes during the recession than have merchants that sell less-necessary goods, such as luxury or entertainment items, observers note.
“There are certain merchant categories that are more susceptible to having failures during a recession, like general-merchandise stores,” says Nicole Schrader, a senior consultant with First Annapolis Consulting, a Linthicum, Md.-based payments advisory firm. Less-susceptible merchants include grocery stores, building-supply stores and healthcare businesses, she says.
Auto-repair stores, for instance, are doing relatively well during the recession. Fewer consumers want to purchase a new car, so they are spending funds to make their vehicles last longer, says Schrader. Similarly, consumers who cannot sell their homes may instead pay to replace broken appliances or fix ailing structural elements, she says.
Merchants selling high-priced luxury items have taken a significant hit to their transaction volumes, agrees Erik Verryden, president of National Processing Solutions Inc., a Phoenix-based independent sales organization. “Some of our biggest payers used to be furniture stores. They have taken a significant hit,” says Verryden. Stores that do not sell products that consumers need are experiencing a larger drop in sales.
“Stores without needs-based purchases are declining.”
Verryden also has noticed drops in transaction volumes at many of his restaurant clients, while grocery-store volumes have stayed the same or increased.
The sources did not provide data to support their observations.
