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This Week in Retail Banking | July 3, 2020

With more than two million COVID-19 cases reported and more than 127,000 deaths, there is no question that changes in U.S. consumer and corporate behavior will last for several more months. Indeed, there is a growing belief that we won’t return to “normal” until there is a vaccine. As we enter the holiday weekend, many are concerned about “super spreader” summer gatherings as people become more reckless with their behavior.

Indeed, a recent surge in cases across the country is clouding the picture for what lies ahead. A growing number of states and counties are putting restrictions back in place or halting plans to loosen up. The Wall Street Journal, for example, reported Thursday that McDonald’s is halting plans to resume dine-in services in additional locations for three weeks. Developments like this will continue to have a significant impact on traffic trends.

To get a sense of what the next three-to-six months (or beyond) could look like, Novantas analyzed the types of areas that have experienced increased traffic so far to assess what this could mean for retail banks going forward. We then also hypothesize some implications across branches, specialty sales and marketing.


While retail visitation has picked up in every major market in the U.S. over the last six weeks, the work centers in those markets have continued to see deflated traffic volume. (Work centers are defined as markets where many people work but few people live.) This is not surprising since many people are still working remotely.

It can be expected that dense markets will continue to see lower traffic until at least the end of the year due to the many workplace challenges associated with keeping employees safe, such as maintaining social distancing in public areas. There are a few major long-term implications from this prolonged decline in traffic volume.

First, retailers in these markets will see limited traffic, but still have significant rent obligations, leading to a rise in retail vacancy rates in these areas. Second, long-term traffic in work centers will likely slow at least 10-20% as remote working during the virus transforms work-from-home policies permanently. Finally, the ability to work remotely, combined with shutdowns in city nightlife, is already accelerating a flight to the suburbs. Home searches for zip codes in suburban areas jumped 13% in May, according to

Consumer Traffic Trends

(1.0 = Avg Weekly Visits from Jan. 30 – Mar. 4)

Atlanta, GA

Minneapolis, MN

Los Angeles, CA

New York, NY

Market Type Definitions (click the plus sign to learn more)

Feeder – Markets with very few businesses and daytime population (residential) is much larger than nighttime population (working)

Hybrid – Markets that have a combination of workers and residential population within the market

Work Center – Markets where more people work than live

Source: Novantas Analysis, NovaLocation, PlaceIQ


Throughout the COVID disruption, essential stores like groceries and pharmacies have maintained their visit volume pretty consistently, while other retailers, like malls and department stores, have experienced massive drops in terms of foot traffic and aren’t seeing much of a rebound yet.

What has been somewhat surprising is that some store types have rebounded well as people have tried to resume normal life. This varies significantly by market because cities like New York that still have significant restrictions are continuing to experience large declines across all categories. In markets that have loosened restrictions, many big-box stores and sporting goods stores have essentially recovered even while there is still lagging foot traffic at shopping malls, department stores, restaurants and entertainment venues.

At the same time, however, a resurgence in COVID-19 cases may create a reversal of these trends as governors put some of the initial restrictions back in place. The transition we saw over the last six weeks likely provides a fair representation of what could be expected if there is a prolonged period of social distancing.

While branch traffic has rebounded to some degree, volumes remain lower than at other retailers that are seeing more foot traffic. While most banks are experiencing surges in volumes when they open their door, the overall lower numbers suggest that some customers remain hesitant and are trying to keep retail visits to a minimum. It also indicates that only the most branch-centric folks are going to return to the branches in a normal way. With a prolonged period of social distancing, there will likely only be a continued shift toward digital transactions.

Store Visitation Trends

(0% = Avg Weekly Visits from Jan. 30 – Mar. 4)

Reopened Cities

Restricted Cities

Source: Novantas Analysis, NovaLocation, PlaceIQ


Not surprisingly, these trends have widespread implications across the bank that need to be considered and acted upon now.

In marketing, for example, banks have already changed channels for deployment, such as reducing sponsorship, out-of-home (billboards, bus shelters) and radio advertising. But some of these short-term decisions should go a bit further. Novantas sees a clear opportunity for getting smarter about targeting prospects. Many people are still experiencing key life events that could prompt them to change banks. This is a unique time, for example, to capitalize on some of the greater shifts to the suburbs for some affluent households.

On the distribution side, banks should re-visit their real estate strategies, particularly in work centers where rents are high and volumes are promising to be low for some time. More broadly, banks should be scrutinizing the number and format of bank branches in the network as some of these short-term disruptions drive long-term shifts.

For many of the retail banks, the specialty sales force relies on referrals from the branch network. It is also noteworthy that many of the best branches are located in work centers since many customers prefer to have conversations about wealth/private banking near work. At a time where lobby access is largely driven by appointment-only visits, banks will need to work harder to drive referrals from the base, focused on doing outbound calls and driving hand-offs remotely.


FICO launched a new “resilience” index that measures a consumer’s ability to withstand economic shocks.

Netflix said it will allocate 2% of its cash holdings to financial institutions and organizations that support Black communities. Of an initial $100 million commitment, Netflix said it will put $25 million into a new fund managed by a non-profit that will invest in Black financial institutions and $10 million into Jackson, MS-based Hope Credit Union.

Community bank holding company Park Financial Group, based in Minneapolis, agreed to buy Mesaba Bancshares of Grand Rapids, MI. Financial terms weren’t disclosed, but Park initially invested in Mesaba in 2018.

Investor Holding of Baton Rouge terminated its agreement to buy Cheaha Financial Group of Oxford, Ala., citing uncertain economic conditions due to the pandemic. It is the latest in several small bank deals to fall apart.

U.S. banks are facing a number of elevated risks due to the rapid decline in economic conditions as a result of the COVID-19 pandemic, according to a semi-annual report from the Office of the Comptroller of the Currency. In addition to credit risk from high unemployment and business losses, the report cites increased fraud and cyber risk as well as heightened compliance risk from employees working remotely. “The rapid decline in economic conditions will broadly affect bank earnings, credit quality, operations and capital,” the report said.

Apple said it was re-closing 30 more U.S. retail stores due to new surges in COVID-19. The company had already re-closed more than 70 stores in recent weeks. Separately, California ordered the closure of a large number of indoor businesses across 19 counties, including restaurants, wineries and movie theaters, due to rising cases of the virus.

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+1 (212) 953-4444

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