People walk into a house for sale in Floral Park, Nassau County, New York, the United States, on Sept. 6, 2020. Home buyers eying for cozy backyards and more office space are staging bidding wars in the suburbs surrounding New York City amid the spread of the COVID-19 pandemic.
Wang Ying | Xinhua News Agency | Getty Images
As some Americans flee cities and move into suburban or rural areas during the coronavirus pandemic, some analysts are predicting home projects and repairs will shift from a trend to long-term habit.
That could add up to more sales for Home Depot, Lowe’s and other retailers with a wide variety of home improvement items, from paint and tools to kitchen appliances, according to a Wells Fargo Securities research note. Those retailers have already seen strong sales and growing profits during the pandemic, as Americans spend more time in their homes and dollars they would have otherwise doled out for restaurant bills or summer vacations.
The suburban shift could also benefit auto-focused retailers, such as Carvana, AutoZone, O’Reilly Automotive and Advance Auto Parts, according to the note.
In the research note, Wells Fargo senior equity analyst Zachary Fadem spelled out factors that have driven some people out of cities. Among them, he said, about 65% of early Covid-19 cases were concentrated in dense cities. People have sought out more space as they work and learn at home and as aspects of city life from public transit to high-end restaurants are unavailable or unappealing.
He pointed to recent earnings reports by retailers that soared past Wall Street expectations, citing de-urbanization as one of the causes.
A survey of about 1,000 consumers by the Wells Fargo analysts found that more than 88% planned to increase their retail spending in the second half of the year