Dick’s Sporting Goods reported a blowout quarter this week. Apparently, handing out a few thousand dollars to every household in America, while at the same time closing down every gym in the country, has created a boom in at-home fitness equipment. Dick’s fitness business is basically sold out. Golf clubs are also flying off the shelves as are boats, RVs, and fishing poles.
It’s good to see consumers spending their windfalls, but are we simply looking at a one-time jolt to economic growth that will fizzle as the stimulus wears off? Has all the spending during COVID, simply pulled a few years of demand for treadmills, weight benches, golf clubs, etc. into the current quarter? Most of these products are durable goods. You buy them today and you don’t need to replace them for years.
What’s more, while a lot of spending has shifted from travel and hospitality to outdoor recreation, many of these items being purchased are manufactured overseas and the retailers selling these products don’t need to hire a ton of additional employees to fulfill what are mostly eCommerce orders.
Consider that Dick’s generates about $560,000 of revenue per employee, while Darden, the parent company of Olive Garden only generates $43,000 per employee. Marriott generates $112,000 of revenue per employee. Everything else equal, a $10 million increase in sales at Dick’s would result in 18 additional hires while a $10 million increase in sales at Olive garden would result in 232 additional hires.
If all the money Americans were spending on travel and hospitality shifts to eCommerce, there are still going to be millions of Americans out of work.