Did you know that the sale price for dress shoes can indicate how well the economy is fairing? It makes sense if you think about it, you don’t wear patent leather loafers or four-inch pumps around the house. Activities that take place outside of the house, like a day at the office or a formal event, necessitate a pair of dress shoes. Of course, the pandemic effectively eliminated any need to buy a pair for quite a while. Of course, COVID-19 didn’t just affect footwear. It was a scourge that ruined lives, disrupted market sectors, and changed how we live our lives. Though human mobility data can’t identify what shoes people are wearing as they go places, it can illustrate human mobility patterns.
Human mobility data can allow organizations to understand patterns of where people go, which stores they frequent, and the routes they take to get there. Researchers and healthcare professionals leveraged this data to draft risk maps for policymakers to understand where the virus would spread. Yet, human mobility data is also critical to understand the subsequent impact that COVID-19 inflicted. Unacast, a company that gathers aggregated GPS data from smartphones and mobile apps (with opt-in consent from users), researches foot traffic trends for a variety of purposes, ranging from advertising to competitive landscaping. Lately, most of their research has examined the ripple effects that the COVID-19 pandemic has levied on human foot traffic across the globe, such as the influx of foot traffic in major European metro areas that followed the vaccine rollout.
Some foot traffic norms that stemmed from the persisting virus included retailers who saw more tumbleweeds than visitors, mass migration from urban cities to suburbs along the Sunbelt, etc. However, there have been a few interesting situational ironies that foot traffic data highlighted.
Before the pandemic, stadiums were usually a giant trojan horse for the surrounding area. For instance, whenever an NFL team wanted to build a new stadium, they would usually promise that the stadium would work economic magic for the local economy. Yet, stadiums would rarely, if ever, stimulate spending in their surrounding areas, or even create a significant number of permanent jobs. Roger Noll, a Stanford professor emeritus in economics and an expert on sports economics, maintains that that is not the case. “NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city,” said Noll to Stanford News. Surrounding businesses often found that their foot traffic plummeted during game days, unlike the sales pitch they had been given. Furthermore, because NFL stadiums are used so infrequently (only a handful of games depending on the time of year, and a few more if the team advanced into the playoffs) Noll is adamant that stadiums do not provide a significant economic advantage from those games alone.
Stadiums and arenas in downtown areas have a large and favorable impact on foot traffic and, as a result, economic opportunities in a variety of industries. Cincinnati is a perfect example, especially considering that the Cincinnati Bengals had made it all the way to the Super Bowl. While there were obvious pinpoints around game days where foot traffic spiked 2-4 times for hotels, restaurants, and local retailers, stadiums and arenas in downtown areas have a large and favorable impact on foot traffic and, as a result, economic opportunities in a variety of industries.
Essentially, in this intermediary period where COVID is beginning to wane (emphasis on “beginning”), these downtown stadiums are now fulfilling their economic promise. Though now that football season has come to a close, it remains to be seen if these downtown areas will continue to defy Roger Noll’s stance that stadiums, in general, are an economic drain.
Apparently, the purchase of a Peloton bike or the phenomenon of “pandemic yoga” wasn’t enough to keep people Namaste-ing in their homes when gyms opened up. People are running back to the gym in droves. Low-cost gyms in particular have witnessed a surge of memberships as people eagerly embrace exercise after being bored of working out (or attempting to work out before getting too frustrated to continue) at home. Planet Fitness, for instance, had recaptured 97 percent of its pre-Covid membership peak last November, and, according to Unacast’s visitation data, has “scored the number-one spot in foot traffic performance since January 2020 in each of the country’s five most populated metro areas: New York City, Los Angeles, Chicago, Dallas, and Houston.”
As pandemic-related limitations loosen, most budget gyms in the US fitness industry are seeing a strong revenue return from pandemic-related lows in 2020 and early 2021, compared to the mid-tier and higher-end boutique gyms, according to Fitch Ratings. Given the likely permanent closure of midtier and boutique gyms with weak or regional brands, the strong value proposition offered by budget gyms has positioned them to win market share throughout the recovery.
The irony of the fact that low-cost gyms are seeing the highest rate of foot traffic in the country is that low-cost gyms count on their members not showing up. Low-cost gyms are typically not conducive to working out, something that’s evident in both their membership model and the fact that they’re typically designed to look like a lounge more so than a place to sweat. “The reason gyms can charge so little is that most members don’t go,” writes Stacey Vanek Smith of NPR’s Planet Money. “If you are not going to the gym, you are actually the gym’s best customer.” Typically, fitness chains that only have a $10-$20 monthly membership have a few thousand members for each location, but most of their gyms have a capacity limit of a few hundred. But the enticingly cheap membership is one of the reasons for that, forgetting to go to the gym for a whole month doesn’t sound so bad if you’re only losing the monetary equivalent of a Chipotle burrito. Gyms that have a membership of a few hundred dollars a month, like Crossfit, have baked guilt into their business model (one because community-building is a driving factor, and two because many of their workouts are named after fallen soldiers who died in active duty), so the weight of the sunken cost stings all the more.
So now we have a sector that intrinsically relies on low foot traffic suddenly experiencing a perfect storm of heightened foot traffic, but before you add that lyric to your Alanis Morisette parody, that may not be the case for long. Many budget gyms are following office trends and going hybrid by offering at-home workouts via their company apps. Whether or not that will be enough to quell incoming foot traffic once the novelty of reopening wears off remains to be seen, but commercial investors may not want to look into gym-anchored retail just yet.
The donation of secondhand clothing and home goods to thrift stores has skyrocketed over the course of the pandemic. But what’s interesting is that so has the shopping. COVID-19 decimated the retail sector, yet thrift stores have had an easier time bouncing back, especially Goodwill. Visits to Goodwill in the U.S. have risen so much that Unacast predicts a foot traffic gain of about 30 percent by the end of 2022, compared to October of 2018.
For anyone who’s been trying to order from Ikea recently, buying second-hand furniture in the name of “vintage aesthetic” is becoming an increasingly attractive option. Goodwill’s hyper-localized supply to meet demand makes it immune to the global supply chain woes. There’s no waiting period that lasts for months on end to buy a couch that’s sitting in Goodwill.
Another factor that’s kept Goodwill afloat over the economic downturn caused by the pandemic is its low prices. The pandemic saw record job loss, and people still needed access to good-quality items like winter clothing and cookware (and the ubiquitous Thomas Kinkade painting).
This bout of sky-high demand for Goodwill’s merchandise relied exclusively on the mangled supply chain and the economic anguish caused by the pandemic. The situational irony that Goodwill’s increased foot traffic highlighted is that COVID-19 fueled in-person visitation, something that certainly wasn’t felt in the rest of brick-and-mortar retail.
Foot traffic fluctuations, like dress shoes, can be an indicator of economic well-being. The pandemic effectively lowered foot traffic as it forced people into their homes, which almost shattered market sectors beyond repair. Now that vaccines are widely available and mandates have eased, the economy is stepping up, just like human mobility.