Personal Hygiene and Travel Products Are in Demand

Consumers Swap Toilet Paper for Teeth Whitener

As Americans receive COVID-19 vaccines, some aspects of life are returning to normal. This is prompting consumers to spend more on personal hygiene products. Retailers like Walmart (WMT), Target (TGT), and Macy’s (M) are seeing surging demand for deodorant, teeth whitener, nail polish, and apparel.

During the onset of the pandemic more than a year ago, consumers rushed to buy cleaning supplies, hand sanitizer, and toilet paper. Brands saw sales of these products double and even triple almost overnight. Meanwhile, the pandemic was causing supply chain issues which resulted in shortages. Though a rush is underway to buy grooming products at the moment, fortunately there is enough supply to meet consumers’ needs.

Demand for Luggage and Apparel Surges

Consumers’ habits are changing and so are their shopping lists. Walmart is seeing strong sales of teeth whitening products as states begin to lift mask mandates. The chain is also experiencing increased demand for alarm clocks as people return to work, and more demand for luggage as travel resumes. The retailer said that its luggage sales are up 400%.

Meanwhile, Macy’s and Target both posted strong sales for the first quarter driven by sales of apparel, travel products, and beauty/hygiene items. Target reported that apparel sales jumped 60% year-over-year in the quarter. Other hot items at Target include cosmetics, sun care items, activewear, and sporting goods.

Baked Goods’ Day in the Spotlight Waning

Meanwhile, sales of baking supplies, cleaning products, and paper and plastic goods have declined in recent weeks as people spend less time at home. Sales of paper and plastic products, which includes toilet paper, fell 18.3% in the four weeks leading up to May 1 compared with a year ago. Sales of baking supplies fell 35.6%.

With vaccinations widespread and pandemic restrictions easing, consumers are returning to their normal activities. As they reenter the world, people are spending billions of dollars on personal hygiene. It will be interesting to see how much this trend lifts the fortunes of consumer brands and US retailers supplying these products.

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Is Real Estate an Inflation Safe Haven?

Real Estate Investments Are Not Without Risks

With fears of inflation reverberating through the financial markets, investors are eyeing real estate as a potential safe haven. Residential real estate has been considered by some to be a safe investment during past inflationary periods. For example, in the 1970s home prices appreciated but stock prices fell.

Owners of residential and commercial properties tend to do better than stock and bond investors during periods of high inflation, largely because rents typically rise with inflation. Inflation also makes it more expensive to construct new homes and buildings, which means less competition for property owners. That scenario only plays out if the inflationary environment is protracted, which some economists do not think is the case this time around.

Inflation Expected to Be Short-Lived

With April consumer prices up 4.2% year-over-year, it is not surprising that investors are somewhat concerned about inflation. But many economists believe the increase in inflation will be short-lived.

Some analysts say current inflation trends are the result of government stimulus, production delays, and pent-up demand. Once these trends become less pronounced and the economy recovers from the pandemic more fully, it is likely that normal spending patterns will return, which should keep inflation at bay. If these predictions are correct, the trends could cause challenges for investors who have poured into real estate. To see real estate investments appreciate, part of the equation involves landlords raising rents.

The Takeaway

Real estate has long been a way to hedge against inflation. In order for the strategy to work, generally the inflationary environment has to be long-lasting. It will be interesting to see whether that environment is short-lived as many analysts predict, or proves to be more protracted.

Geico Will Use AI to Speed Up Claims

Geico Partners With Tractable

Geico, the Berkshire Hathaway (BRKB)-backed insurance company, has inked a partnership with a London-based AI startup called Tractable. Geico hopes to accelerate the way it processes vehicle repairs and accident claims using Tractable’s technology. Photographs of damaged vehicles will be analyzed by Tractable’s AI software to provide accurate estimates to insurers.

Tractable is one of several startups applying AI to eliminate some of the hassles of filing a vehicle accident claim. Under the plan, the autobody shop would first send images of the vehicle and a repair estimate to Geico. Geico would then use Tractable’s technology to confirm the estimate in minutes.

State Farm Already Uses AI

Using AI to confirm accident repair estimates may become the norm in the insurance industry. State Farm Automobile Insurance already uses AI in its claim process. When a customer files a claim, machine learning technology will predict whether it is a total loss or if repairs are in order. State Farm still uses human claims adjusters.

Geico will also rely on human adjusters, even as it rolls out the AI software. If the AI software notices an issue with the estimate provided by the auto shop, the claim will be sent to a human adjuster.

Insurance Companies Incorporate More Technology

Geico hopes that by embracing AI it can eliminate some of the frustration of filing claims for its policyholders. Currently, the process can take significant time and can cause stress for policyholders. Though AI will not solve everything, it may streamline processes and help people receive money more efficiently.

AI and machine learning are being incorporated into a wide variety of industries, including insurance. It is likely that other insurance companies will follow State Farm and Geico’s lead and will incorporate more AI and other technology into their business models in coming years.