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.

August Retail Sales Report: Still Seeing Improvements But at Slowing Rates

The August advance monthly retail sales report was released on September 16. One thing worth noting – for the uninitiated – is that this information is linked to sales by type of retail outlet, but that doesn’t fully align with sales of product categories in some cases. For instance, sales of sporting and recreation goods might be lower than one would expect because the data only count sales at stores that primarily sell these products and do not include items in this category that are sold at mass merchants like Walmart and Target, whose sales are classified elsewhere.

The August report shows an evening out across most categories, as those that had seen rapid gains during the pandemic are slowing or even declining and those that have done poorly are seeing a bit of an uptick. As a result, differentials between 2020 and 2019 retail sales levels on a comparable-month basis are continuing to narrow in many cases. This month reflects the impact of back-to-school spending, even if school is online throughout much of the country.

The big winners overall for the year continue to be the same ones from last few months. However, even as they continue to show strength against same-month 2019 sales, they are increasingly off pandemic highs:

  • grocery/food retail stores – August 2020 was down 1.2% from July 2020, but August 2020 was still up 10% from August 2019 (a trend grocers and other food experts expect to continue as consumers continue to eat and cook at home more than pre-pandemic)
  • building materials/garden equipment dealers – August 2020 was only up 2.0% from July 2020 but still up 15.4% from August 2019 (this elevation may falter as the seasons change and weather cools in much of the country, but industry experts expect the DIY trend to hold)
  • retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores) – August 2020 was flat from July 2020, but August 2020 was still up 22.4% from August 2019 (the convenience of e-commerce will make this trend sticky beyond the pandemic)

These are retailers that, for the most part, remained open during stay-at-home orders because they were considered “essential” businesses. Additionally, their product mix includes categories that continue to benefit from the shift toward staying home – e.g., home cooking over eating out and DIY home and garden improvements. Consumers are still largely limiting their shopping to these types of retail outlets.   

Sales at sporting goods, hobby, musical instrument, and book stores – which saw rapid gains in June 2020 – experienced declines from that spike during July and August. This category is down 10.8 % from June 2020, even as revised June retail sales were up 27.6% from May 2020. Still, sales at these retail outlets in August 2020 were up 11.1% from August 2019.

None of the categories saw particularly large gains over previous month sales levels. Food services with drinking places had the best month, with sales levels 4.7% higher than those of July 2020, even though they are still seriously lagging 2019 same-month sales (-15.4%).

A few other highlights:

  • furniture stores – August 2020 was up 2.1% compared to July 2020. This category has moved into positive territory year-over-year as August 2020 sales were 3.8% greater than in August 2019. Setting up virtual classrooms likely contributed to gains here.
  • gas stations – August 2020 was up 0.4% from July 2020 but still down 15% from August 2019. People continue to leave home less often, and a reduced level of commuting and road-tripping is keeping sales at gas stations low.
  • clothing stores – August 2020 was up 2.9% from July 2020, but still down 20.4% from August 2019. The monthly boost was likely due to back-to-school shopping and the coming change of seasons. Still, bankruptcies are continuing in this market.

Economists and other interested parties – including Freedonia analysts – will be closely monitoring next month’s retail sales report to see the strength of sales in September, looking for the impact of the continued easing and the elevated infection levels in parts of the country that had been previously less affected.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the COVID-19 with a comparison to historical recessions. Food- and beverage-related reports are also available from our sister publisher, Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage    

Changing Consumer Spending: Less About COVID-19, Specifically, & More About the Economy & Spending Priorities

Recent surveys indicate that consumer spending trends have become less linked to pandemic conditions and news and are increasingly linked to recessionary conditions – including unemployment, economic uncertainty, and declining consumer confidence ­– that resulted from the pandemic:

  • Consumers are still staying home, prioritizing spending on their homes, products needed for use in the home, and self-service options over going out.
  • They have expanded the number of products seen as “essential” and worthy of stocking up on.
  • As able, they are spending on certain luxuries within consumer packaged goods – e.g., skin care, home care products, and special food items – since they are not spending on luxuries within travel, entertainment, and eating out.
  • Additionally, risk-averse customers are looking for value, not just a low price, as a way to limit waste and best allocate their resources, particularly if they are still reluctant to go out for frequent shopping trips.

For more information and discussion of opportunities, see Packaged Facts’ food- and beverage-related reports, including US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, US Beverage Market Outlook 2020: Grocery Shopping & Personal Consumption in the Coronavirus Era, and Food Carryout & Delivery as well as the companion report with timely consumer insights from our in-house survey capabilities. The Freedonia Group’s extensive collection of off-the-shelf research provides a strong complement to packaged food industry analysis, the including the Consumer Goods category and Global Foodservice as well as packaging industry titles such as Foodservice Single-Use Products and Global Foodservice Single-Use Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Services    

Survey Shows Effects of COVID-19 Pandemic on Restaurant Industry

A recent survey by the National Restaurant Association showed that 100,000 US restaurants – approximately 1 in 6 nationwide – had closed due to the pandemic. Furthermore, numerous other restaurants will face closure going forward, as the renewal of stimulus funding and aid to small business fade along with the prospect of outdoor dining.

The closure of so many restaurants – and the prospect of further shutdowns – represents a serious threat to the US economy on a number of levels, such as:

  • declines in the collection of tax revenues from sales and property taxes
  • losses in income – and potential consumer spending – for thousands of servers, cooks, and other staff
  • losses in sales throughout the restaurant supply chain – from the farmers who supply food to restaurants to purveyors of table linens, packaging, dishware, and kitchen equipment
  • declines in construction activity – restaurants often require periodic maintenance and repair, supporting demand for new flooring, plumbing fixtures and fittings, paint, drywall, and lumber used to make tables and seating
  • revenue and job losses for service providers – cleaning staffs, delivery drivers, waste management services, and other firms needed to keep restaurants operating

Freedonia experts will continue to track the rate of restaurant closures – and trends with those who remain open, albeit with limited menus or carry-out service only – to determine how the US economy will be further affected by the ongoing COVID-19 pandemic.

For more information and discussion of opportunities, see Freedonia’s USRestaurant Reopening Impact Report as well as Packaged Facts’ food- and beverage-related reports, including US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, US Beverage Market Outlook 2020: Grocery Shopping & Personal Consumption in the Coronavirus Era, and Food Carryout & Delivery as well as the companion report with timely consumer insights from our in-house survey capabilities. The Freedonia Group’s extensive collection of off-the-shelf research provides a strong complement to packaged food industry analysis, including Global Foodservice and packaging industry titles such as Foodservice Single-Use Products and Global Foodservice Single-Use Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Quick Service Restaurant Design Changes: Inspired by the Pandemic & Convenience Trends

Quick service restaurants are making and proposing a lot of changes to their facilities in the coming year. While some of these were already in development before the pandemic as a response to changing consumer preferences for on-the-go consumption, the pandemic lead to expedited time lines for the changes:

  • Multiple Drive-Thru Lanes – Drive-thru is a well-established method of reducing contact between staff and customers and its use has increased dramatically since the onset of the coronavirus pandemic.
  • Designated Parking Spots for Curb-Side Pickup – The increasing use of ordering via app draws not only those who are interested in contactless transactions but also those who want to be sure their experience will be frictionless and their food will be ready when they arrive.
  • Walk-Up Windows – With indoor dining limited, walk-up windows allows foot traffic and those who want to eat on-site to have a convenient way to order.
  • Pickup Lock Boxes – These contactless options – often opened with a QR code within the app – are intended for delivery drivers from Grubhub and other third-parties as well as individual customers
  • Pickup Lanes/Windows Dedicated to Delivery Drivers – As app-based third-party delivery services proliferate and the base of customers looking to save time and limit outings increases, more restaurants will design a service option specifically for these drivers.
  • Outdoor Dining – As more consumers feel safer dining in the fresh air, restaurants will look to add not just tables and benches, but pergolas or other protection from the weather and hedges or plexiglass dividers between tables to encourage social distancing.
  • Designated Parking Spots for Car-Hop Style Ordering – Sonic highlights group in-car dining in its advertisements, a trend that is likely to continue as people look for ways to share meals that protects their personal space.
  • Self-Serve Kiosks – Automated kiosks are another option for reducing face-to-face contact between staff and customers; they’re not new, but they are getting a second look.

To the extent that any of these design innovations spread to restaurants that previously had more extensive sit-down and dine-in business, this would also result in an increased use of foodservice single-use packaging items such as clamshells, bowls, cups, lids, and bags for away-from-restaurant consumption.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research including a variety of packaging industry topics, including Global Foodservice Single-Use Products, COVID-19 Economic Impact Report: Retail Bags,Global Single-Use Plastic Packaging Regulations,Foodservice Single-Use Products, and Retail Bags, as well as Global Foodservice. Other related titles are available from Packaged Facts’ food- and beverage-related reports, including Food Carryout & Delivery as well as the companion report with timely consumer insights from our in-house survey capabilities. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Unique Experiences Will Still Bringing Customers Back On-Site

Retail and foodservice experts have long asserted that unique experiences are the key not only to competing with e-commerce but to competing with other outlets as well. These experiences will bring customer out of their homes and into physical stores and restaurants.

Buffalo Wild Wings is one restaurant banking on that. The restaurant chain announced that it would offer a “season ticket” package at its locations in and around Cleveland, Ohio, to try to replicate the fan experience that football fans are not able to get in stadiums this year. These locations convert a section of their dining room into a Dawg Pound, meant to resemble the bleacher section of Cleveland Browns’ FirstEnergy Stadium.

The package includes a 4-seat table within the section for all 16 games of the season, along with an array of food and drinks, an orange cooler, Dawg Pound face masks, and stickers. The company is also offering a smaller package consisting of coupons to get discounted orders of wings each week of the season.

The Freedonia Group is located just outside of Cleveland, Ohio…as a Browns fan, I say “woof, woof!”

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research including a variety of packaging industry topics, including Global Foodservice Single-Use Products, COVID-19 Economic Impact Report: Retail Bags,Global Single-Use Plastic Packaging Regulations,Foodservice Single-Use Products, and Retail Bags, as well as Global Foodservice. Other related titles are available from Freedonia Focus, including Restaurant & Foodservice: Canada and Restaurant & Foodservice: United States, and Packaged Facts’ food- and beverage-related reports, including Food Carryout & Delivery as well as the companion report with timely consumer insights from our in-house survey capabilities. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage