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.

Food Retail Sales Were Way Up In March…Yes, We All Stocked Up

The most recent release of monthly sales data from the US Census Bureau reported that unadjusted retail sales at food and beverage stores posted a 30% increase from February to March of 2020, and a 26% increase over comparable sales in March 2019.

This reflects a few main factors:

  • consumers stockpiling their pantries, freezers, and refrigerators ahead of stay-at-home orders, which then led many to limit their shopping trips
  • the shift in eating patterns as schools were closed and children who had previously eaten meals from school cafeterias began eating at home
  • the percentage of consumer food spending that has shifted from eating out to eating at home, as stay-at-home orders closed dine-in operations at restaurants and other foodservice outlets throughout the country

Expect April figures to remain above same-month 2019 patterns but likely not as high as in March 2020, which included a lot of panic buying and stockpiling that will have been reduced in April, when many stay-at-home orders had already taken hold. Still, dine-in operations remain closed and a large number of consumers are feeling economically uncertain or working at home, thus still limiting away-from-home food purchases.

Still, carryout and delivery foodservice spending will likely see a bump as consumers seek more meal variety or a break from cooking. The addition of more restaurants offering contact-free payments, carryout, or delivery will also boost sales.

For more information, see The Freedonia Group’s coverage of the packaging industry as well as our sister publisher Package Facts’ coverage of the food and beverage industry.

  Covid-19      Food & Beverage    

Honey-Do Lists & DIY Projects: Strong Retail Sales but Tightening Business Restrictions in Some Places

The most recent release of monthly sales data from the US Census Bureau reported that unadjusted retail sales at building material distributors and other related sales outlets posted a 25% increase from February to March of 2020 – despite the fact that many parts of the country were under shelter-in-place orders in the second half of March. Such sales were up 10% over comparable levels in March 2019.

While this increase can be partially attributed to better weather conditions as winter turned to spring and construction professionals stocking up on supplies in expectation of an increase in work as the weather improved, another factor may also have worked to boost sales: consumers undertaking long-delayed home improvement projects.

Many homeowners – either working from home or furloughed – suddenly found themselves with plenty of time on their hands and decided to take advantage of the situation by engaging in projects around the house. Others, casting a critical eye across their home, decided now was a good time to transform their residence into something completely different. Either way, home improvement centers, hardware stores, garden centers, and other retailers – to say nothing of the manufacturers of these items – have benefitted .

Sales have increased most for products that are best suited to DIY projects, particularly paint and wallpaper, flooring (most notably easier to install types such as luxury vinyl tile, laminate flooring, and decorative tile), garden supplies and tools, and outdoor furniture and grills. Cabinets, plumbing fixtures, drywall, and lumber appeal to customers who have the skill and tools to tackle larger or more complicated projects.

However, this spike in sales has led some government agencies to close all or part of such stores, since visiting crowds were getting too big to allow sufficient social distancing and protection for the staff. For instance, Michigan’s governor has tightened business restrictions so that large discount and home improvement stores that were otherwise labeled as “essential” and allowed to remain open during stay-at-home orders must close areas "dedicated to carpeting, flooring, furniture, garden centers, plant nurseries, or paint".

In order to keep from being subject to additional restrictions, retailers must institute policies and practices that will allow safe shopping and ensure appropriate distances between customers, including limiting the number of customers allowed at a time. Greater use of online ordering and curbside pick-up services will help.

For more information about these products and the US retail sales outlook, see the following Freedonia Group reports: Live Goods: Plants, Trees & Shrubbery, Cabinets, Countertops, Outdoor Furniture & Grills, Outdoor Kitchens, Global Flooring, Global Architectural Paint, and Global E-Commerce.

How Pandemic-Related Shifts in Our Eating & Shopping Habits Will Alter the Equipment Needed to Keep it Fresh

The coronavirus pandemic has drastically shifted how we purchase foods and beverages. For example, the most recent release of monthly sales data from the US Census Bureau reported that unadjusted retail sales at food and beverage stores posted a 30% increase from February to March of 2020 and a 26% increase over comparable sales in March 2019.

This shift is also altering the landscape of cold storage equipment:

  • A sharp decline in foodservice revenues has caused food distributors to readjust their business toward retailers, increasing the need for cold storage at distribution sites and in grocery stores.
  • A spike in e-commerce food sales, long thought to be the final frontier of traditional consumer shopping, is requiring additional investment in cold storage equipment to accommodate both direct-to-consumer shipped orders and in-store or curb-side pickups.

There is expected to be some amount of return to normal shopping habits when the pandemic passes and consumers are not restricted to certain shopping behaviors. Therefore, to some degree, this may be a short-lived bump in equipment sales to meet an immediate need.

However, this pandemic will also lead to some permanent changes in consumer behavior, reinforcing what had already been a trend toward the use of e-commerce food shopping or curb-side pickup. Therefore, in certain areas, there will need to be a strong continuation of investment in cold storage equipment – both in stores and at food warehouses – to meet sustained demand.

For more information, see The Freedonia Group’s coverage of the Commercial Refrigeration Equipment industry as well as our sister publisher Package Facts’ coverage of the food and beverage industry.


Outbreaks at Meat Processing Plants: Concerns About Worker Safety & Food Supplies

On Sunday April 12, Smithfield Foods announced its decision to close a major pork processing plant in Sioux Falls, South Dakota, after an outbreak of COVID-19 infections among at least 238 of the facility’s 3,700 employees. Other meat processors that have closed plants for the same reason include Cargill, JBS, and Tyson Foods, and more are likely to close as the infection spreads in the rural and farming area where these plants are most commonly located.

The concern isn’t for the safety of the food – as the FDA reports, "currently there is no evidence of food or food packaging being associated with transmission of COVID-19.”

The problem is the transmission of the virus among workers, many of whom work in close proximity to one another and often without sufficient personal protective equipment (PPE), particularly in light of nationwide shortages of these supplies, even for medical workers. These workers then spread the illness further into their communities.

The meat industry was already stressed by the sharp reduction in demand from the closure of the dine-in foodservice industry. Now, livestock farmers are finding the market for their animals among processors is being limited. Supplies of retail chains are likely to hampered as well; for instance, the closed Smithfield pork processing plant represents up to 5% of US pork production.

Access to more personal protective equipment, improved testing procedures, plans for disinfection and reporting if a worker tests positive, and consumer and worker confidence in plant disinfection procedures are among the measures that will get the plants open and running again. There will likely be consumer concern about the safety and ethics of big meat processing, which might propel some to shop from local butchers and direct-from-supplier shares of cows and pigs.

For more information, see the following reports from our sister published Packaged Facts – Global Meat & Poultry Trends, Eating Trends: Meat, Dairy, Vegetarian, and Vegan, and The Organic and Clean Label Food Shopper – as well as The Freedonia Group’s Meat, Poultry, & Seafood Packaging and Global Food Processing Machinery.

  Covid-19      Food & Beverage    

E-Commerce & Softening Lean Inventory Patterns Drive Need for Warehouse Space

Supply chains are changing as consumers increase the amount of shopping they do via e-commerce and more of food and supplies are being distributed through consumer – rather than commercial­ – channels as people spend more time in offices and other commercial spaces. Additionally, there is more of a consumer appetite for having stocks of goods, thus requiring suppliers to loosen their lean inventory programs.

As this Wall Street Journal article indicates, the sudden changes in the buying habits of US consumers for a handful of goods has caused demand for warehouse space to increase.

This need for millions of square feet of additional warehouse space is expected to boost demand for a wide range of building and construction materials, key among them:

  • metal roofing, siding, and wall panels
  • other low-slope roofing products and such roofing accessories as drains and liquid-applied roof coatings
  • cement and concrete used to make subfloors, flooring, and such areas as loading docks
  • insulation – especially those materials required to maintain temperatures in structures designed to store frozen and refrigerated items
  • overhead doors
  • commercial-grade HVAC systems
  • material handling equipment, including racks, conveyors, and storage and retrieval systems
  • safety equipment and burglar alarms

Furthermore, the nation’s building contractors and construction professionals would welcome a surge of warehouse construction activity. While construction has been deemed essential in most states, many firms expect at least a short-term drop in operations as home and business owners react to challenging economic conditions by delaying – if not canceling altogether – construction projects such as major home improvements or key renovations. Builders and contractors will be more than ready to assume the task of quickly erecting warehouses needed for storing such essentials as food and toilet paper.

For more information about the products listed above, see the following reports from The Freedonia Group: Low-Slope Roofing, Roofing, Roofing Accessories, Global Roofing, Global Cement, Global Cement & Concrete Additives, Insulation in the US, HVAC Equipment, Global HVAC Equipment, Garage & Overhead Doors, Windows & Doors, Global Material Handling Equipment, and Safety & Security Alarms, as well as Global E-Commerce and Packaged Facts’ Global Food E-Commerce.