The Impact Coronavirus is Having on Corporate Spending
Every quarter, we publish the Coupa Business Spend Index (BSI), a leading indicator of economic growth based on analyzing business spend decisions of hundreds of companies that use the Coupa platform. We do this to provide businesses with insights into where the economy is going over the next three-to-six months because we believe the collective wisdom of the global business community should be shared openly to help all businesses achieve success.
It was during the time that we were developing the Q1 2020 Report that the COVID-19, better known as the Coronavirus, emerged. Given our access to nearly $1.7 trillion of aggregated and anonymized business spend transactions globally, we wanted to see if any patterns were emerging that could be indicative of the potential impact the Coronavirus will have on the economy.
So we looked at real-time purchasing patterns of select categories of goods and services to evaluate how those trends compared with consumer purchasing behaviors during the same time period.
Maybe not surprisingly, the data showed some interesting trends during the month of February 2020. Similar to consumers, business spend patterns showed what I will refer to as the Corporate Costco Effect, meaning businesses increased their corporate spending on certain items. For instance, businesses spent nearly 32 percent more on office sanitizing goods (wipes, antiseptics, detergents, etc.) year over year. Additionally, businesses spent 76.1 percent more on personal protective equipment, including masks and gloves year over year.
*Measured as change in the proportion of total spend in the category
On the other hand, businesses demonstrated what I will refer to as the Corporate Uncertainty Effect in several other areas. For example, in February 2020, businesses spent 46 percent less on travel and lodging and 21 percent less on durable goods (vehicles, appliances, electrical, lab equipment, etc.) during the same month the prior year. In addition, property, building, and engineering services decreased by 62 percent and transportation, logistics, and fuel spending decreased by 58 percent year over year.
To continue showing how companies are responding to this global pandemic, we will provide monthly updates across a number of affected categories on the Coupa blog.