- Companies from United to Nestlé have spoken of a slowdown in sales due to the presidential election.
- Experts say some shoppers are holding off until after November 5 – but not all.
- A particularly narrow choice that takes weeks to decide can weigh on consumers.
Companies are preparing for people to shop, travel and drink less on Election Day.
Executives at several major brands have said in earnings calls in recent weeks that they expect their financial results to take a hit by the time voters decide between Vice President Kamala Harris and former President Donald Trump. They range from Constellation Brands, the maker of Modelo, which expects fewer people to go out drinking during the election, to airlines like United and Delta, which often see passenger numbers drop on Election Day.
Some companies have already found that political news distracts customers. When a gunman died after wounding Trump at a rally in Butler, Pennsylvania in July, for example, Amazon saw some people postpone purchases on the website, CFO Brian Olsavsky said in August.
“Many times, purchases will be delayed and people will go back and buy what they were going to buy,” Olsavsky said on a call with reporters. “And other times – it won’t happen.”
Other companies have called the election, but have not provided details about the dynamics that make consumers withdraw. Anna Manz, Nestlé’s CFO, said in the company’s earnings call last week that it is facing a slowdown in the US and “concerns around the election are emerging”. Nestlé did not immediately respond to a request for more details from Business Insider.
Research suggests that some consumers – though not all – actually cut back on shopping around the event.
Some shoppers are delaying shopping until after Nov. 5, according to a September survey of 400 Kroger shoppers by 84.51, the grocer’s marketing arm. Eighteen percent of respondents said they were holding back on buying big-ticket items like electronics or appliances. Slightly smaller percentages said they were holding back on an investment decision or buying a car.
Consumers may be holding off on big purchases because they need credit and hope interest rates will drop more in the months after the election, said Alex Trott, director of insights at 84.51. But some may not care as much about the election as the seasonal promotions that tend to follow in November and December, she added. “We’re also facing a holiday season where there are always sales,” Trott said.
People under 34 were also more likely than older consumers to put off a major financial commitment until after the election, 84.51 found.
Older consumers, such as Baby Boomers and members of Gen X, “can make some of these bigger decisions,” Trott said. “Young people don’t have that spending power. They are sensitive to these smaller price changes.”
Most people – 53%, according to 84.51 – said they were not delaying any major purchases as a result.
This election in the US is taking place after years of inflation has squeezed consumers. The economy is a top concern, voters told BI this week. Deutsche Bank said inflation will remain more stable than expected.
Many companies are also predicting that demand will return after Trump or Harris wins the election. Modelo maker Constellation, for example, said it expects demand for the beer to pick up again.
Ron Hill, a professor at American University’s Kogod School of Business, said consumer appeal could take longer if it takes weeks to determine who won.
Polls show the race between Trump and Harris close to a tie just over a week before Election Day. If the race comes down to a single evenly split state, as it did in 2000, when it took five weeks beyond Election Day to determine that George W. Bush had won the White House, buyers may spend more time focused on that news and less. time to shop cheap, Hill said.
“That will be hell to pay” if that happens, he said.