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.

6 Trends Altered Because of the Coronavirus Pandemic

2019: The sharing economy is on the rise, particularly for transportation.

2020: Ownership is king; no one wants to share.

2019: Tariffs are causing companies to rethink their supply chains.

2020: Pandemic closures and trade restrictions are accelerating that trend.

2019: Innovation happens among smaller, more nimble companies.

2020: The big get bigger, as they are the ones with resources to ride the recession out, purchase from troubled competitors, or finance R&D operations.

2019: Online grocery shopping is a niche.

2020: Online ordering and curbside pick-up are considered necessary parts of doing business.

2019: One-day or same-day delivery is expected for e-commerce orders.

2020: Deliveries of non-necessities might take a week or more.

2019: Single-use plastic bags are out; they generate a lot of waste and are a litter problem.

2020: Single-use plastic bags are in; they are seen as more hygienic than reusable bags, which are brought from home and rarely cleaned.

For more information, see The Freedonia Group’s coverage of global e-commerce, retail bags, packaging industry, machinery and equipment, as well as our sister publisher Packaged Facts’ reports on Online Grocery Shopping, The Amazon Food Shopper, Amazon Strategies and the Amazon Shopper, and Global Food E-Commerce. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19    

COVID-19 Pandemic to Provide Lasting Bump to Online & DIY Sales For Major Home Improvement Retailers

Among the recent earnings call transcripts of Home Depot and Lowe’s were the following points of interest:

  • strong growth in online sales
  • increasing sales to DIY consumers

This was not surprising, as millions of US consumers adhered to various stay-at-home orders promulgated by government officials and avoided going out. Furthermore, many consumers opted to use this time spent at home to complete various renovation and repair projects – from painting rooms to installing decks.

While the COVID-19 pandemic was the primary driver of these sales, there’s nothing to suggest that this will be a one-time occurrence. Online sales growth will continue to climb as both homeowners and construction professionals use online platforms to easily and more safely order the building materials they need. Like many grocery stores, Home Depot and Lowe’s both offer curbside pickup, a feature that saves time for busy contractors that is better spent on completing jobs.

DIY construction activity is also expected to rise going forward, even without the spectre of the coronavirus hanging over homeowners’ heads. In addition providing a sense of achievement to those who successfully complete projects, even minor improvements and repairs can enhance the value, efficiency, and beauty of a residence. Indeed, homeowners who successfully accomplish one or more smaller projects while sheltering in place may feel like trying a larger or more ambitious project, such as installing flooring, cabinets, or even a new kitchen or bathroom.

For more information, see The Freedonia Group’s collection of research and analysis on construction and building product industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Trio of Articles Indicate Continuing Uncertainties in Home Remodeling Market

Three articles – published within days of each other – each had a slightly different take on the effects of the COVID-19 pandemic is having on the home remodeling market:

  • One article indicated that dealers and contractors in the kitchen and bathroom remodeling industry were seeing the effects of the coronavirus pandemic lessen as more consumers expressed an interest in these projects.
  • Another article stated that home renovation activity fell sharply between March and April of 2020 as consumers cancelled many projects in the wake of the coronavirus outbreak.
  • Finally, a report which that while many homeowners had put off home renovations because of the pandemic, they expected to undertake home repairs going forward.

The home remodeling market – as the above articles indicate – is in a great deal of flux right now. On the one hand, states are “re-opening” and consumer spending is increasing, and some of that will spill over into the construction market. Others, noting that unemployment and financial uncertainty remain high, expect only marginal improvement in the home improvement segment.

The Freedonia Group predicts that construction spending – including that of the home improvement market – will contract in 2020 but will post rebounds in 2021 and the years beyond as the economy improves and more consumers feel confident enough in their own finances to invest in their residences.

For more information, see The Freedonia Group’s collection of research and analysis on construction and building product industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Frozen Foods Are Hot Right Now… So Are Canned Foods

There are a few key factors behind the rise in frozen and canned food sales:

  • Comfort Foods. 58% of respondents in the new Freedonia Group National Online Consumer Survey noted that they are buying more comfort foods because of the coronavirus pandemic.
  • Stocking Up. This is trend is largely done – as seen in the big decline in April grocery sales compared to those in March – but replenishing will continue as long as we’re eating primarily at home.
  • Easy Meal Prep. If, like me, you’re prepping family meals three times per day, you’re looking for quick options. 
  • Feeding Picky Kids. Parents are not interested in battling food choice right now, so they are offering more foods that they are confident their children will eat.

However, despite the general negative perception of frozen and canned foods as full of preservatives, salts, and other unhealthy ingredients, there are canned and frozen items that do not count as processed foods or that are minimally processed. Such products as frozen vegetables, frozen chicken breasts, canned beans, canned vegetables, canned fruit without syrup all do not automatically count as unhealthy eating simply because of their formats. They do provide short-cuts, but they aren’t necessarily unhealthy. These versions will just last longer than their fresh cousins. Canned versions are also shelf-stable, saving precious refrigerator space for other food items.

Fighting against the perception of canned and frozen foods as highly processed food is a distinction that packaged food companies will want to make when possible. Only 36% of respondents in The Freedonia Group proprietary survey noted that they were buying more processed food because of the coronavirus, and only 29% reported that they were reducing their purchases of fresh produce.

For more information, see The Freedonia Group’s coverage of the packaging industry and analysis of the food and beverage industry from our sister publisher, Packaged Facts.

  Consumer Goods      Covid-19      Food & Beverage    

Near Sourcing & Rebuilding Local Stockpiles of Critical PPEs Will Require Support

Near sourcing is a trend that will change the supply chains for medical masks, critical personal protective equipment (PPE), and the materials needed to make them.

Governments and industry are seeing the value of following the model common in hygiene nonwovens markets, producing the nonwovens close to the converters and placing converters closer to where the masks and other critical PPE will be needed. This serves as a hedge against future pandemics or similar supply chain disruptions. 

As more companies adopt near sourcing tactics, they will place a certain amount of upward pressure on global average prices for these goods. More suppliers will set up production capacity in places like North America and Europe, which lack China’s cost advantages in economies of scale and low labor costs. A combination of strategies such as a push toward greater automation in production or government subsidies will be needed to support these higher-cost producers if near sourcing is to remain a priority.

Don & Low’s recent investment in meltblown production capacity in Forfars, Scotland, is one such example. The company reportedly received 80% of the cost to acquire and install the new line from the Scottish government. This capacity will make the company one of only a few companies in Europe that can make the material needed for respirator masks. The government saw value in having local capacity to produce PPE for healthcare and other frontline workers.

For more information, see The Freedonia Group’s coverage of the textile and nonwovens industries, including a new COVID-19 Impact Analysis report for Global Disposable Masks & Respirators.

  Consumer Goods      Covid-19      Textiles & Nonwovens