US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Future of Food Delivery: Costco Finally Dips Into Curbside Click-and-Collect With Tests in New Mexico

With growing concerns about community spread where infection rates are particularly high coupled with the rise of COVID-19 variants that are more easily spread, more people are asking if even weekly grocery shopping trips are too risky. As a result, even holdouts are putting options back on the table to make customers comfortable and limit in-store traffic.

For instance, Costco – which has long resisted curbside pickup services, suggesting they don’t need it and that their stores aren’t set up for it – is dipping their toes in the water. The company has launched a pilot program offering curbside pickup at three stores in New Mexico. Orders can be placed through Instacart and Costco employees will handle fulfillment. At this point, product pricing is the same as in the store, but order must be at least $100 and customers are charged $10 per order for the convenience.

Most stores have had success with curbside delivery or click-and-collect shopping, even if they have struggled at times with logistics and having enough capacity to meet consumer demand. This market of potential customers is substantial. According to The Freedonia Group’s National Online Consumer Survey (conducted November – December 2020), 35% of respondents noted they had used grocery store curbside pickup for the first time because of the coronavirus pandemic.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Retail Bags, Protective Packaging, Commercial Refrigeration Equipment, and Global E-Commerce Packaging. Related reports from our sister publisher, Packaged Facts, include US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Food & Beverage      Services    

Walmart & HomeValet Widen the Possibilities for Grocery Shopping from Home

Grocery pickup and home delivery has been available for years. But 2020 was the year these services went beyond early adopter demographics – such as frazzled parents and aspiring ladder climbers too busy to muck about the supermarket – and reached the mass market, as shoppers sought to minimize potential exposure to COVID-19.

As much as customers appreciate pickup and delivery alternatives, they are a trade-off. It isn’t the same as going to the store, which allows you to see things that should have been on your list or to consider new items you wouldn’t have looked for online. While ordering paper towels and canned pinto beans is pretty simple, it’s less easy to get bananas exactly as ripe as you need or the perfect cut of beef for a recipe you want to try. And even if your order contains nonperishables like canned soup and breakfast cereal, both pickup and delivery tend to be time-specific (well, maybe not exactly specific, but there are windows, and usually you need to be home for grocery deliveries from local stores.)

Walmart and partner HomeValet may be addressing some of those issues with a new service allowing for anytime deliveries to homes outfitted with HomeValet’s smart box and app. With freezer, cooler, and ambient temperature compartments, the box allows for groceries to be delivered at any time while remaining secure and at the proper storage temperature.

The HomeValet box and service allow for more convenient deliveries and could expand the list of items shoppers will purchase without entering the store. And while you may want to make that trip to choose the beef tenderloin worthy of an anniversary celebration, it could be just right for bags of frozen vegetables, packages of bacon, and loaves of the only kind of bread your kids will eat.

This development is also part of companies such as Walmart beginning to map out their way in a post-pandemic world. Someday, most members of a household will be back at school and working away from home, but they will still want to maintain new shopping habits and take advantage of the convenience offered by online grocery shopping and home delivery.

This market of potential customers is substantial too. According to The Freedonia Group’s National Online Consumer Survey (conducted November – December 2020), 29% of respondents noted they had used a grocery store’s own delivery services for the first time because of the coronavirus pandemic and 35% used grocery store curbside pickup for the first time. Additionally, 30% of respondents noted they were using third-party grocery delivery services (e.g., Instacart and Shipt) more because of the coronavirus pandemic.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Protective Packaging, Commercial Refrigeration Equipment, Global E-Commerce Packaging, and Global E-Commerce, as well as titles from our sister publisher Packaged Facts, including U.S. Food Market Outlook 2020: Home Cooking, Grocery Shopping, & Food Trends in the Age of Coronavirus; U.S. Beverage Market Outlook 2020: Grocery Shopping & Personal Consumption in the Coronavirus Era; Global Food E-Commerce; and Online Grocery Shopping. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Food & Beverage      Packaging      Services    

Latest Retail Sales Report Shows Challenges & Opportunities for Building Materials Distributors

The release of the December retail sales report showed that sales by building materials and garden equipment and supplies dealers rose modestly in the month. While this was a bright spot compared to retail sales as a whole, many expected that the segment – which had been a pillar of strength throughout the year – would have shown stronger gains.

However, a closer look reveals a number of reasons while sales were not higher:

  • Most of the US was spared severe weather events in December, which depressed sales of rock salt, shovels, snow blowers, and other related products used to combat winter.
  • Many leading retailers began selling Christmas decorations earlier this year (a point mentioned previously in this COVID-19 Economic Impact Tracker series). While this boosted sales in October and November, it served to reduce sales opportunities later in the year.
  • Instead of such items as tools and lawn care products, some consumers – looking to treat themselves after a trying year – opted to buy televisions, gaming systems and games, and personal electronic devices (as evinced by strong growth in sales at electronics and appliance stores).
  • The high level of consumer interest in DIY projects throughout the year meant that items given as Christmas gifts (such as power tools and lawn care products) were purchased earlier in the year.

That said, retail sales at building materials and garden equipment and supplies dealers did rise in December, bolstered by:

  • the mild start to winter, which allowed contractors and other construction professionals to continue work, boosting sales of lumber and related building materials
  • strong sales of appliances as homeowners upgraded refrigerators, ovens, and other kitchen necessities – reflecting continuing interest in domestic meal preparation
  • continuing strong sales of cleaning and disinfecting products, as many retailers in this segment have expanded their offerings of these products

Home improvement activity has remained strong. According to The Freedonia Group’s National Online Consumer Survey (conducted November – December 2020), 39% of respondents said they were currently undertaking home improvement projects because of the coronavirus pandemic (in what is often an off-season for home improvements through the holiday season), while 32% indicated they were delaying home improvement projects because of the pandemic.

Going forward, many believe that the momentum of 2020 will carry over to 2021 and that building materials retailers will continue to post strong sales numbers. Freedonia Group will continue to monitor retail sales in this market segment – and others – to gauge how the economy will fare in the upcoming year.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19    

Increased Home Outdoor Living Investments & Gardening Activity Expected to Extend into 2021

One of the biggest impacts of the pandemic in 2020 was the increased amount of time people spent in their yards. Not only was there was a huge jump in the number of people exploring home gardening, but they also spruced up their yards by investing in new decks and outdoor living areas. According to The Freedonia Group’s National Online Consumer Survey, which was in the field from mid-November to early December:

  • 39% of respondents indicated that they were spending more time on projects for their home’s outdoor spaces because of the coronavirus pandemic.
  • 26% indicated that they had planted a food garden because of the coronavirus pandemic.
  • Overall, 44% indicated that they maintained a food garden in beds, pots, or containers at home, in community gardens, or a friend or family member’s yard.
  • 26% of respondents purchased power or hand tools to use in their yard or garden.

This focus on outdoor living is expected to rise even higher in 2021. In the same survey by The Freedonia Group, 65% of respondents who were employed full or part time were set up to do at least some of their work from home, and more than half of those respondents were working from home more than they had previously because of the pandemic. In light of many companies amending their work policies to allow more frequent work from home even beyond the pandemic, consumers expect to maintain their outdoor leisure and home nesting activities at elevated levels for the near term at least.

As a result, lawn and garden product suppliers are looking to position themselves to make the most of the opportunity. For example, CRH’s Oldcastle APG unit – a supplier of landscaping and gardening products such as pavers, composite decking, bagged concrete, masonry supplies, mulch, soil, and potting mixes – recently bought CST, a regional producer of bagged mulches and soils in the Midwest.

For more information and a discussion of market opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research related to the lawn and garden industry, including Lawn & Garden Consumer Insights: The Home Gardener, Lawn & Garden Consumables, Lawn & Garden Seeds, Lawn & Garden Fertilizers, Home & Garden Insecticides, Home & Garden Pesticides, Lawn & Garden Mulch, Lawn & Garden Growing Media, Global Power Lawn & Garden Equipment, Lawn & Garden Robots, and Lawn & Garden Watering Products (an update of US Power Lawn & Garden Equipment is coming soon). Our sister published Packaged Facts has also recently released a report titled Home Food Gardening: US Market Trends & Opportunities. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Services    

Manufacturing Finishes a Bad Year on a Good Note

When the COVID-19 first struck in early 2020, there was an extreme and near immediate negative impact on the global manufacturing sector. Uncertainty on how best to navigate this new reality, and on how long the world would be in the grasp of the pandemic, resulted in the temporary closure of nonessential businesses and a slowdown in general business investment. By April 2020, the PMI – a measure of economic trends in the manufacturing and service industries – reached its lowest point in a decade.

However, the world started to get back on its feet a few months later and steady gains in manufacturing activity through the second half of the year culminated in a December measurement that, in many countries, was the highest mark in years. Through most of 2020, the global manufacturing sector has shown that it was able to withstand many of the disruptions caused by the pandemic, though it was not a smooth journey:

  • The service industry has not recovered to nearly the same extent as manufacturing. Travel in particular – both business and personal – is still struggling, which has continued to hurt airlines, hotels, and restaurants, as well as industries that supply them.
  • Even within the manufacturing sector, the size of the recovery has varied considerably. In December, for instance, the Printing and Nonmetallic Minerals Products industries in the US contracted. Consumer goods producers also registered a weak December as consumer spending slowed.
  • Although it did show a recovery from the sharp drop in manufacturing activity early in 2020, the manufacturing sector in Japan continued to register contractions through nearly all of 2020 before flattening in December.
  • Input prices have risen sharply in some industries as supply chains evolved, production was shut down or limited by physical distancing, and demand changed.

One of the bigger issues early on in the pandemic was the disruption of supply chains as countries enacted different measures to combat the spread of the virus at different times. While there remain sporadic supply chain issues, the US has generally reported that there is stability among inventory levels and that supply chains are satisfying at least short-term demand requirements in many industries.

However, this improvement could still be upset by a resurgence in coronavirus cases if the rollout of the COVID-19 vaccine falters, upsetting normal supply chains and the ability of manufacturing facilities to operate at full capacity. In the second half of 2021, however, many of these challenges to manufacturing could be resolved if much of the world has the chance to be vaccinated and restrictions to movement and operations are lifted.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Material Handling Equipment, Global Packaging Machinery, and Global E-Commerce Packaging. Related reports from Freedonia Focus include coverage of various US manufacturing and service industries, such as Fabricated Metal Products, Steel Mill Products, Audio & Video Equipment, and Employment Services. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Industrial Components      Machinery & Equipment      Packaging