Heatwave_blog_2024

Strong summer tourist seasons and a record number of visitors in 2023 are benefitting the European economy, a trend seen since the pandemic. In our Travel Trends 2024 report we lay out how travel momentum remains strong in 2024, with European flight traffic and overnight stays continuing to grow above 2023 levels. Popular destinations range from Prague for the budget traveler to the Cote Azure for those seeking luxury, according to our recent blog on European summer vacations.

With summer comes heat and in our latest ‘Did you know?’ series, we examine consumer spending in European cities over the past two summers. Analyzing Mastercard SpendingPulse™ data, which estimates total retail sales across all payment types, we find that consumers adapt their spending according to the temperature.

Consumers are adaptable to varying weather conditions. At moderately warmer-than-normal temperatures, spending in several industries sees a boost, particularly in northern Europe. At much warmer-than-normal temperatures, online shopping gets a boost as consumers shift away from in-person spending. Click on a city in the map below to see how in-person spending shifts at different temperatures.

*Spending deviation from trend means the difference between the yoy spending growth rate on a given day relative to the preceding 7 days. For example, if spending on a moderately warmer than normal day grew by 6%, and the average growth rate in the preceding 7 days was 5%, then the spending deviation is 6-5=1pp, indicating that spending picked up on the day in question.

Did you know?

Consumer spending is resilient at moderately warmer temperatures

When summer temperatures are moderately warmer than normal (2-3 degrees Celsius above the 1991-2020 average), overall European consumer spending is resilient.
Across northern and southern European cities, spending on jewellery and furniture picks up as consumers shop at retailers selling items related to looking good (jewellery, for example) and enjoying the outdoors, such as barbecues or garden furniture. Grocery spending also picks up, possibly as people take the opportunity to barbecue and picnic.

*Moderately warmer than normal summer days mean 2-3 degrees Celsius above the 1991-2020 avg temperature, depending on the city. The range was defined by taking temperatures 1 standard deviation above the mean for each city.
*Spending deviation from trend means the difference between the yoy spending growth rate on a given day relative to the preceding 7 days. For example, if spending on a moderately warmer than normal day grew by 6%, and the average growth rate in the preceding 7 days was 5%, then the spending deviation is 6-5=1pp, indicating that spending picked up on the day in question.

Northern European cities see a boost to restaurant and petrol spending

In northern European cities, spending on restaurants, petrol and convenience also picks up on moderately warmer days. For restaurants, this could be consumers taking advantage of a warmer-than-normal evening to dine al fresco and enjoy the long summer daylight hours. Increased spending on petrol and convenience could reflect an increase in day trips to enjoy outdoor activities like hiking and swimming.
Why does restaurant and petrol spending only see a boost in northern European cities? This could be because northern European cities have lower summer temperatures to begin with, so a moderately warmer summer day¹ in Berlin means 28.8 degrees Celsius (83.8 Fahrenheit), 3.8 degrees Celsius above the 1991-2020 average. That makes a big difference in the appeal of outdoor activities such as swimming. But in a southern European city like Marseille, France, a moderately warmer day means 32.5 degrees Celsius (90.5 Fahrenheit), which is 2.6 degrees Celsius above the 1991-2020 average. At that temperature it’s less comfortable to do activities like outdoor dining, but air-conditioned activities like furniture, grocery and jewellery shopping are still appealing.

When summer temperatures reach extremes, consumers shift their spending online

When summer temperatures hit extremes (5-8 degrees Celsius above the 1991-2020 average), consumers adapt, shifting their retail spending online.
This is most visible in jewellery, suggesting that consumers shifted a planned in-person store visit online.

*Extreme heat days mean 5-8 degrees Celsius above the 1991-2020 avg temperature, depending on the city. The range was defined by taking temperatures 2 standard deviations above the mean for each city.
*Spending deviation from trend means the difference between the yoy spending growth rate on a given day relative to the preceding 7 days. For example, if spending on a moderately warmer than normal day grew by 6%, and the average growth rate in the preceding 7 days was 5%, then the spending deviation is 6-5=1pp, indicating that spending picked up on the day in question.

An online boost is also seen in electronics, furniture and home improvement. These industries include retailers that sell items like electric fans, paddling pools, parasols and water sprinklers which might be prioritised at higher temperatures.
Some cities also see a boost in online restaurant spending, reflecting consumers shifting from in-person dining to food delivery on the hottest days.
The e-commerce shift on extreme heat days varies by sector and by city, due to differences in e-commerce penetration, consumer preferences and infrastructure. For example, cities with fewer food delivery options or online retail would have more limited ability to shift spending online. In addition, the availability of air conditioning and the adaptability of transport infrastructure to higher temperatures would have an impact on the resilience of consumption.

To learn more about economic insights from the Mastercard Economics Institute, contact your Mastercard representative or request a demo.

Notes & Disclaimer

About the Mastercard Economics Institute

Mastercard Economics Institute launched in 2020 to analyze macroeconomic trends through the lens of the consumer. A team of economists, analysts and data scientists draws on Mastercard insights - including Mastercard SpendingPulse™ - and third-party data to deliver regular reporting on economic issues for key customers, partners and policymakers.

Disclaimer

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Footnotes

The temperature range for moderately warmer than normal summer days was defined by taking temperatures 1 standard deviation above the mean for each city.↩︎