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.

FOMO & Buyer’s Remorse – Two Sides of the Housing Market

Is the market showing signs of a housing bubble? The Federal Reserve Bank of Dallas thinks it’s possible and warned this week that the market is showing “signs of a brewing US housing bubble.”

FOMO (fear of missing out) is a key factor causing concern. Buyers – both prospective owner-occupants and investors – are skipping inspections and coping with rapidly rising prices and bidding wars to make sure they aren’t left behind. As more prospective home buyers believe that prices will continue to rise even faster, they will be willing to make even more concessions to the seller out of concern that the prices will be even higher in a few months or years to come.

However, FOMO purchases that end up being rash decisions not only cause the market to overheat but lead to increased incidents of buyers’ remorse. If there is a market correction in the near future, that will be even more problematic for the home owners who are already seeing reasons to regret their purchase.

Some COVID-era buyers took money they had been spending on travel or on rent close to downtown offices and redirected to the purchase of a home, often with space for a home office, backyard entertaining, and away from city centers. However, as pandemic restrictions ease, some new homeowners regret not having that budget for travel. Others expected to be able to make renovations to improve a quickly bought home, but were surprised by the high cost and delays involved in everything from new floors to appliances and furniture.

This delayed ability to make a home the way a new homeowner would like it to be will contribute to extending the COVID-era home improvement boom. Still, the heat of the market is something to watch. Many economists agree that changes in lending practices since the 2008 recession will limit the impact if a bubble bursts. However, remodeling activity and trends in updating homes have long been a more important part of the construction industry and the willingness of homeowners to invest in their properties is crucial to the health of the market.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Construction & Building Products markets. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Fresh, Customized, & Contactless… More Robots in Foodservice

We’ve talked before about Sally, a salad making robot from Chowbotics (which was bought by DoorDash in February 2021). Sally seemed an ideal response to interest in healthy eating coupled with concerns about salad bars in the COVID-era, as consumers and businesses were more aware of germs and interested in contactless options.

But since we’re also in an era of shortages in labor – particularly in foodservice – and experiencing rising costs for labor, food, and facilities, there is additional energy behind the idea of how automation can help. Tech innovators have stepped in. The most recent example is the RoboBurger, first placed in New Jersey. This is not an April Fools’ joke – you can’t joke about National Sanitary Foundation (NSF) certification!

The RoboBurger requires human workers to stock the machine and to check it if on-board sensors report tech trouble, such as a power outage or other reason for improper heating or refrigeration. Otherwise, this 12 square foot mobile kitchen can make a fresh burger in about 6 minutes. The unit allows for 24/7 operation in places like college campuses, airports, malls, hospitals, and other such facilities where hot food demand could fall outside of conventional restaurant operating hours.

Freedonia analysts will continue to watch for ways that robots, artificial intelligence, and other innovations will enable businesses to operate more efficiently and affordably. These and other innovations will help businesses provide customers what they want and need when and where they want and need it.

For more information on discussion of opportunities, see Packaged Facts’ Food & Beverage industry coverage, including Food Carryout & Delivery (update coming in May 2022) and The Freedonia Group’s analysis of the packaging industry, including to-go containers in Foodservice Single-Use Products and Global Foodservice Single-Use Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Packaging    

Seasonal Shipments Have a Tight Window of Peak Sales, But Goods Are Stuck in Transit

Seasonal businesses are feeling the crunch. While the warming weather and the hoped-for respite from COVID-19 outbreaks is spurring rising interest in a fresh wardrobe, outdoor recreation products, and gardening supplies and equipment, supply chains are not all able to keep up. Seasonal goods, particularly those being imported from Asia, are stuck in ports, waiting for an available container ship, waiting to be unloaded, or waiting for available trucks to get them to their final destination.

Suppliers of seasonal goods face a special challenge: a limited selling season during which goods are available for consumers when they want it. In most parts of the US, there is not a year-round demand for spring and summer clothes, gardening equipment, outdoor furniture, outdoor cooking equipment, pools and related supplies, and outdoor sports and recreation equipment.

Therefore, retailers and wholesalers must either store any products that are not sold during the peak window of sales or sell them in off-peak periods at what could be steeply discounted prices. The potential need to discount the price of products that do not arrive in time is particularly problematic as companies have often paid a premium (due to still sky-high shipping costs and inflationary pressures on materials and production in general) for these goods. Warehousing is also a challenge as warehouse space is costly for many and there is no guarantee that they will be able to sell the goods in the next season for the price necessary to cover the high costs associated with this current season.

Plus, as spring is seen by many as a period of awakening from our winter slumber, this is often the time of year that people are looking to refresh their homes, their wardrobes, their yards, their gardens, and their habits. As a result, many consumers are in the mood for something new, and styles warehoused from the previous season may not be attractive to consumers.

Therefore, suppliers and retailers are left with the challenge of ordering (how much and when) as well as with what to do when the goods don’t arrive when needed.

Many expect that supply channels will remain delayed for at least the next year or so. Shipping continues to be costly and will likely remain elevated, although not at the unprecedented levels experienced over the last few years. This, along with other inflationary pressures, makes season products a challenge as businesses and retailers ask themselves “how much is enough and will high prices deter customers in what has been a hot market?”

The threshold remains to be seen as consumer interest in outdoor living goods and a freshened wardrobe is still there. Freedonia analysts will continue to watch these trends for indications of directional change.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19    

Starbucks: New Plans to Adopt More Sustainable On-the-Go Foodservice Packaging

Where big companies step in, innovations tend to happen faster. We’ve long seen that retail-level and fulfillment innovations take off when giants like Walmart and Amazon adopt a process or policy. Starbucks is one of those foodservice giants propelling more eco-friendly foodservice packaging innovations.

Starbucks announced this week that it will be making additional steps to reduce single-use plastics in its restaurants and will increasingly incorporate ways to reduce single-use products altogether as it develops improved processes for reusable cups and plates.

There are a lot of different ways that restaurants and coffee shops are testing greater use of reusable cups, plates, and utensils:

  • Borrowing programs are being tested by a number of salad/sandwich places and coffee shops. In these programs, if you don’t use the plate or cup for dining on-site, you bring it back to the restaurant or an authorized collection bin and then get a fresh one with your next order. Some programs require the use of a loyalty card that tracks the cups and plates, while others use deposits that are returned or credits that are applied when the cups and plates are logged in as returned.
  • The development of on-site washing services is another potential avenue as customers can bring in their own cups, plates, and utensils. Sometimes this washing is done by the foodservice facility itself and other times they offer a low- or no-touch self-service wash station.

Each have their own challenges in areas such as logistics, costs, water-use, heath-code compliance, and speed of order fulfillment. The bigger logistical challenge is always going to be how to use a customer's own cup in a drive-thru line without holding up the line.

However, where there's a will (and there is), there's a way. Solutions will be created and those who develop them stand to make a lot of money by solving a widespread problem.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly Packaging industries, as well as Food & Beverage industry analysis and consumer insights from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Packaging    

Close the Loop: Turning One Industry’s Waste Into New Products

Most of us know the old phrase “One person’s trash is another person’s treasure”, and this article about a company that converts decommissioned airplane cabins into pod-style units for home offices, children’s play space, and guest spaces illustrates that old adage still holds.

In a world where “green cred” is often a marketing advantage, building a business or product line using some sort of waste product has its advantages. In many cases, there are cost advantages too. For industries that see the material as waste, it’s a cost. They must pay for the waste to be taken away to a landfill or recycling facility. In those cases, it can be an advantage to give companies seeking to repurpose the waste a very good deal to take it away. Doing so also helps the company that created the waste to be able to show customers and shareholders that it is responsibly dealing with its materials or products at the end of their useful lives, something that is increasingly part of how a company is evaluated. If a business operates under an extended producer responsibility law, the need is ever more urgent.

In the end, creativity is the name of the game as firms seek to reduce landfilled waste and create business opportunities from waste.  

Freedonia analysts will continue to stay on top of ways industries reduce their waste and track their products through the end of their useful lives, sometimes creating new business opportunities.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Industry Studies