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Stifel’s latest spending survey shows consumers are growing increasingly more willing to get a coronavirus vaccination and are spending their stimulus checks, significant factors in a resurgence of activities such as vacation planning and shopping.
Nearly nine out of 10 respondents (87%) with a household income of more than $100,000 have decided to get the coronavirus vaccine. Almost half of respondents (41%) earning less than $50,000 say they will.
Thirteen percent of respondents say they won’t get the vaccine, down from 18% in the previous three surveys.
More than two-thirds of respondents (68%) said they received a check from the latest round of government stimulus efforts, with 76% of those people saying they plan to spend it.
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“Respondents claim to feel most comfortable with flying and indoor dining, our proxy for resuming a new normal, when they and others have been vaccinated,” Stifel analysts led by Mark Astrachan wrote in the survey report.
Fifty-three percent of respondents said they would feel more comfortable flying when they and others have been vaccinated. And 38% said they would be more comfortable eating indoors when vaccinations have been more widely distributed. Vacation planning is already on the rise, with 38% saying in late-January they have booked a trip or plan to.
“We view overall stimulus spending as favorable for most retailers and CPG [consumer packaged goods] companies, and we have seen an overall increase in spending in scanner data across measured categories,” Stifel said.
Restaurants and the travel industry have been hit hard by COVID-19, while other areas such as groceries have done well.
“[S]pending on consumer durable goods has accounted for an above-average share of total consumer spending during the pandemic due to the restrictions placed on other retail categories such as the restaurant industry,” explains a Morning Consult report.
Retailers selling essentials, home goods and other items tied to shoppers COVID-19-impacted lives have done well, along with those providing services that help with social distancing, such as curbside pickup and swift delivery.
Stifel upgraded Target Corp. TGT, +0.18% to buy from hold as use of same-day services like Drive Up have increased. Stifel has a $225 price target on Target shares.
“Target consumers are ~40% more likely to be users of at least one same-day service compared to overall survey respondents,” the Stifel report said.
“This is notable as same-day has increasingly become a driver of Target comp growth, accounting for ~42% of digital sales in 2020, up from 30% in 2019 and 20% in 2018.”
See: Target’s holiday sales show the importance of stores even as COVID-19 drives business online
Target’s most recent earnings showed a 102% increase in comparable digital sales, with 95% of sales for the holiday period filled in stores, when taking into account sales in stores, same-day services and ship-from-store.
The pandemic has driven increased use of same-day services, according to Adobe Inc. ADBE, +0.46%
Stifel analysts say these sorts of same-day services have a high recurrence rate because of their convenience.
Target also has a number of other factors going for it.
One of the features of President Joseph Biden’s $1.9 trillion American Rescue Plan is a federal minimum wage hike to $15. Cowen analysts say Target and Costco Wholesale Corp. COST, -0.08% are best positioned for that move since both have already begun moving wages in that direction. Walmart Inc. WMT, +0.55% and others have also raised pay.
“Cost inflation along with a tight labor pool has been a significant headwind across retail for a number of years,” Cowen analyst Oliver Chen wrote.
Watch: Movie industry in a post-COVID-19 vaccine world: A guide for investors
“Ultimately as the labor market rebounds, we expect starting wages at other retailers will continue to catch up to the leaders which will pressure SG&A in the near term and will need to be offset with savings elsewhere. With this in mind, we expect an ongoing push for automation including a greater emphasis on self-checkout, cleaning, inventory management, and unloading products.”
Target also continues to grow its private-label brands. On Monday, the retailer announced that All in Motion has soared to a $1 billion in the year after its launch. All in Motion sells athleisure gear for men, women and kids.
This is the 10th billion-dollar brand for Target. Other private labels include kids clothing brand Cat & Jack and Casaluna, a bedding and bath label.
Athleisure isn’t just for comfort. During the pandemic, Target says it has also sold 21,000 pounds of hand weights and kettlebells, enough steel for another Eiffel Tower, and 7 million square feet of yoga mats, which could cover 122 football fields.
Target stock has increased 68% over the last year. The S&P 500 index SPX, -0.11% is up 17.5% for the past 12 months.
