MA Economic Institute: Latin Americans prioritize travel to short distances and don't give up on leisure time in the face of economic pressureSeptember 29, 2022 | Miami, FL
- Remote work blurred the boundaries between weekdays and weekends: outings and shopping crept into the week's schedule.
MIAMI – September 29, 2022 – Amidst an ever-changing and unprecedented global economy, the choices consumers make in what, where and when they spend today may help reveal where we are headed next. The Mastercard Economics Institute’s “Shifting Wallets” report looks at how consumers across the world are holding tight to habits that offer convenience, experience or both.
The latest Mastercard Economics Institute report applies unique and high-frequency economic measurements to answer three key questions — what, where and when — consumers are shifting their spending preferences across the world. In Latin America and the Caribbean, the countries analyzed were Argentina, Brazil, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Peru and Puerto Rico. Key findings for the region show:
What: With higher prices forcing consumers to rebalance their discretionary and essential spending, travel and food have reigned supreme in discourse in recent years, although the post-pandemic kick-started spending on leisure activities.
Consumers continue to prioritize travel. In Latin America, there is a preference for domestic and shorter distance flights. For example, short-haul flights out of Colombia, Dominican Republic, Mexico and Puerto Rico are growing roughly 2.3x as fast as long-haul flights. Specifically, in August 2022, an increase in short-haul international travel bookings was observed, compared to the same month in 2019: Colombia (+99%); Dominican Republic (+109%); Mexico (40%) and Puerto Rico (46%).
Small businesses show gains in online services. Small online services businesses—like tutoring and personal care services—grew 1.5-2x faster than large online services businesses. In Latin America, Brazil and Colombia stand out where online shopping for services from small businesses is up 124% in August 2022 vs. August 2019, compared to online shopping for services at large businesses at 53% over the same period. By comparison, global growth for small vs. large online services was 59% and 34%, respectively, highlighting rapid digitalization across Latin America.
Around the world, large retailers dramatically outperform small businesses in the shift to digital. In the retail sector, e-commerce sales for large businesses grew 66% versus 27% for small businesses in August compared to 2019. The gap is particularly evident in more developed economies like Australia, Germany, Hong Kong and Singapore.
Colombians offer a unique case. In Colombia, for both online and in-store spending across retail and services sector, both large and small businesses are up by a minimum of 73% in August 2022 when compared to August 2019. The greatest growth was in-store spending for large services businesses, up 180% in August 2022 compared to August 2019.
When: Gone are designated days for spending. Working from home and the shift to digital have blurred the lines, and date night is apparently now any night. This has significant staffing and supply chain implications for retailers, restaurants and other businesses.
Both goods and experiences spending shifts into weekdays.
- In Chile and Colombia, spending on movie and theater outings increased significantly on Wednesdays and Thursdays, each country seeing a at least 3% spending shift in total across both days from 2019 to 2022.
- In Argentina, Wednesdays have increased in popularity for eating places; the share of spending at eating places increased by 1.3% on Wednesdays, offset by declines during the weekends in 2022 vs. typical activity seen pre-pandemic.
“The shifts in spending preferences come as consumers settle in to a new rhythm,” said Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “Despite contending with rising prices, interest rates and growing economic uncertainty, consumers continue to evaluate their spending habits based on what works best for their lives.”
You can view the full Shifting Wallets: New consumer spending habits report here. Other reports from the Mastercard Economics Institute can be found here.
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About Mastercard Economics Institute
Founded in 2020, the Mastercard Economics Institute draws on unique, high-frequency and actionable economic measurement to give leaders in business and government the insights needed to make thoughtful decisions with better outcomes.
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