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.

Packaging Values: Sustainability in a Shelter-in-Place World

Consumers who stocked up their pantries to ahead of the stay-at-home orders or to reduce their shopping trips found themselves with more packaging than they normally have. Even consumers who have been trying to reduce their waste footprint are stocking their homes with canned food and food ensconced in layers of plastic and paperboard, waxed or otherwise. Households are also inundated with countless boxes from increased e-commerce deliveries.

Must sustainability be sacrificed to extended food shelf life?

Must sustainability fall victim to our need for delivery as we reduce in-person shopping?

Are these truly either/or situations?

Must consumers and packaged food companies choose between their sustainability values and the needs of our current situation in a world still largely sheltering in place?

There are answers to these questions. With some creativity and continued dedication to systemic change, packaging firms and consumer packaged goods companies can still answer both needs:

  • Amazon continues to move vendors toward frustration-free packaging and e-commerce ready packaging that can be shipped as-is and does not need to be placed inside another box or mailer.
  • Innovative types of film can be used to better protect the food inside.
  • Single-material packaging is better positioned for recyclability.

The problem for sustainably minded consumers is that their options aren’t as widespread as they should be and the available options are still too often priced for better off consumers.

A functioning waste infrastructure – including municipal composting facilities and recycling capacity that covers a more diverse array of materials and forms – is also needed. Such a public investment would pay off in reduced landfill and a more circular economy.

For more information, see The Freedonia Group’s catalog of packaging research, including Food & Beverage Packaging Innovation and Global E-Commerce Packaging, as well as our sister publisher Packaged Facts’ food and beverage industry research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Packaging    

Sustainability: What Is the Long-Term Effect of this Pause on Greener Business Practices?

Companies have pressed pause on  their greener business practices for a number of reasons. For instance, Starbucks eliminated its program that allowed customers to bring their own reusable cups for hygiene purposes, and General Motors ended its car sharing and long-term rental programs because many people have been sheltering at home rather than traveling or commuting.

Recessionary economic conditions have companies tightening their belts as revenue has been sharply reduced and uncertainty remains as to how long that will last. The challenge for companies – big and small – will be to spend strategically, where it is needed, to ensure that long-term goals are not side tracked. Executives such as General Electric’s CEO Larry Culp noted in an interview with CNBC, “We don’t want to spend one dollar more than we need to this year, all the while making sure we don’t shortchange the long term.”

Sustainability focused investor groups understand the complexity of the current situation but are continuing to watch and report on what companies are saying and doing with regard to their sustainability pledges.

It’s worth understanding that sustainability is still a business opportunity. If people come out of the crisis living and working differently (e.g., online school, increased online shopping, more work from home, video conferences over in-person business travel, virtual trade shows, greater concerns about complex international supply chains), how can businesses respond in a way that reduces waste and energy usage? Packaging and power supplies are significant costs in many businesses.

BP is one such company that is keeping its eye toward that future. BP Chief Executive Bernard Looney noted in a recent conference call that the long-term outlook for the company must be an ongoing turn toward renewable options. He said, “The pandemic I think only adds to the challenge for oil in the future.”

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

  Covid-19    

Once Promising Home Improvement Market Threatened by COVID-19 Pandemic

2020 was supposed to be a good year for the home improvement market as low unemployment, wage growth, and rising property values were set to encourage thousands of homeowners to undertake significant renovation projects – remodeling kitchens, adding bathrooms, replacing roofing or siding, or installing new flooring. Instead, the home improvement industry faces a period of decline due to the COVID-19 pandemic.

As indicated by a number of reports, home remodeling spending in the US expected to decline throughout the rest of 2020 and into the first part of 2021. While construction has been classified as an “essential” business by both the US Department of Homeland Security and by the majority of state governors across the US, the home remodeling industry will still face a number of challenges going forward that will limit sales opportunities, such as:

  • homeowners dealing with unemployment (even if temporarily) and thus unable to invest in home renovations
  • consumers more broadly concerned about their future economic well-being and thus putting off home improvement projects
  • homeowners unwilling to let people into their homes to make estimates due to concerns about spreading coronavirus
  • slowdowns in the pace of work due to social distancing on job sites and other mandates (such as those regarding cleaning equipment) that add to the time needed to complete a job
  • potential shortages of building materials as suppliers adjust operations in the face of reduced demand
  • delays in the shipment of ordered materials due to a shortage of truckers carrying materials or logjams in ports

Q1 Financial Reporting Confirms Paint Is a Highlight in This Challenging Home Improvement Environment

Paint. That’s what’s in right now.

Why?

  • It’s easy – most people don’t need to hire a professional to paint an interior space.
  • The impact is fast – most rooms can be painted in a few hours.
  • A color change can freshen a space at a lower price than buying new furniture or flooring.

Masco noted this trend as well in its Q1 2020 earnings call transcript on April 29. The company’s president and CEO Keith Allman addressed the probable reasoning behind this bright spot:

  • “As shelter-in-place orders were issued throughout March, we saw a significant acceleration in the sale of Behr paint as more and more do-it-yourselfers took advantage of the time at home to undertake painting projects.”
  • “Homeowners may take on more do-it-yourself projects themselves, especially easy to do projects such as painting as opposed to having other people in their homes.”

For more information, see The Freedonia Group’s coverage of the Global Architectural Paint industry.

For detailed information about the effects of the COVID-19 pandemic, see The Freedonia Group’s:

Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Construction & Building Products      Covid-19    

States Are Loosening Business Restrictions, but That Doesn’t Mean Consumers Are Ready to Come Back

You can lead a horse to water, but you can’t make it dine on-site or go bowling or see a movie or travel on an airplane or get a haircut…isn’t that how the saying goes?

Despite more and more states announcing plans to loosen stay-at-home restrictions, it is reasonable to expect that consumers will be slow to return to normal, pre-crisis spending patterns due to:

  • the overwhelming share of the population that reports they approve of the physical distancing orders and shelter-in-place policies
  • continuing consumer concerns about their personal health or the health risks to family members due to the coronavirus
  • recessionary conditions leading consumers – even those who are still employed and seeing minimal financial impact due to the crisis – to curtail discretionary spending, regardless of their desire or need to purchase items or make household investments
  • consumers still working from home not yet needing to get lunch away from home, buy work clothes, or get items dry cleaned

On the positive side, a number of key factor will likely boost consumer interest in getting out of the house and participating in activities that reopen, including:

  • Bored, stir-crazy consumers will be looking for an excuse to leave their homes.
  • Creature comforts such as haircuts, massages, and manicures may help some consumers handle
  • Websites have allowed consumers to browse, if not shop, during the stay-at-home period, leading to wish lists and shopping carts urging consumers back into stores to make final purchases.

Marketing, operational processes, and product or service offerings that appeal to the positive factors and minimize concerns about the negative factors will help service and retail businesses slowly open to the best possible outcomes until consumers feel confident enough to return in full force.

For more information, see consumer analysis from The Freedonia Group and our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19