The COVID-19 pandemic has created difficult challenges we’ve all had to face, and over the past year most people’s daily lives have undergone drastic changes. The questions that have been on everyone’s mind are “When will things get back to normal?” and “What can we expect going forward?”
Our industry analysts hear these questions from companies on primary research calls, and they are a main focus for our customers. They are also top of mind for our team at The Freedonia Group, a premier international industrial research company and division of MarketResearch.com.
The Challenge of Market Forecasting
Forecasting the future is always difficult, especially when people are involved. Humans don’t always act in rational ways. They don’t always make the logical choice. And basic human nature is difficult to change. The same is true of corporations. While they may diverge from their business plans for a variety of reasons in the short term, they will eventually get back to their main goal of profitability.
When you listen to people talking about the impact of the pandemic or read articles about how it will change the future, some imply that COVID has rewritten the basic structure of society and how businesses operate. Our Industry Studies team has followed the development of global industries for 36 years, and we understand the cyclicality of businesses and what motivates consumers.
When we look at the pandemic, we see it as a catalyst that is accelerating change that was already taking place. It is bringing to light existing problems that businesses or people have swept under the rug to be addressed sometime in the future and forcing them to deal with them today.
Some of the most highly publicized impacts of the COVID-19 pandemic are:
- Failing manufacturing supply chains and product shortages
- Soaring e-commerce retail sales
- The remaking of the foodservice industry
- Greater numbers of people working from home
In all of these cases, the COVID pandemic has accelerated trends or uncovered issues that were already in place.
Supply Chain Issues and Product Shortages
While many countries are reopening and getting virus levels under control, issues with product shortages are growing. Some of these shortages have been due to short-term spikes in demand caused specifically by the pandemic, such as increasing spending on home renovation or new home purchases by consumers with government stimulus money to spend and who are now working at home and see changes they want to make.
However, in other cases the shortages are highlighting problems with modern supply chains and the problematic combination of just-in-time manufacturing models with supply chains that have production concentrated in just a few countries in the world, often in China. This situation is the result of decades of movement in manufacturing to lower-cost developing countries as companies chased profitability. And while these systems are efficient and maximize profitability, they also increase risks of shortages if the producing countries have issues—a problem the COVID pandemic continues to bring to light.
Soaring E-Commerce Retail Sales
The move of retail to e-commerce and the shift in the foodservice industry toward take-out and home delivery were also trends already in place over the last decade but that have seen significant acceleration due to the pandemic. The foodservice industry in particular was impacted as restaurants expanded their takeout and delivery options and consumers who would not have tried food delivery services in the past jumped on board the trend during the pandemic. Restaurants changed their menus, their buildings, and their staffing—and delivery services like DoorDash and GrubHub proliferated.
The Rise of Remote Work During COVID
Finally, one of the most significant changes in some industries is the move toward an at-home workforce, a trend that has implications for a number of products and services used by businesses and consumers. However, even this trend was already in place prior to COVID. Before the pandemic started, the US Census Bureau estimated that up to a third of all US employees and over half of “information workers” had the ability to work at home. And the ability to work at home was often listed in surveys as one of the key wishes or benefits that workers wanted.
With the pandemic, companies who were reluctant to allow employees to work at home in the past were forced to move their workers home in order to stay in business. What they found was that in many cases the transition was nearly seamless. Workers in general were happy with the change, and some companies were able to save money.
As a result, it is likely that when the pandemic ends the new normal will be a higher level of employees working from home than ever before. That level depends on finding the equilibrium between corporate profitability and human nature.
Avoiding the Trap of Overgeneralization
The bottom line that we have learned as we’ve tracked changes over the past year is that you can’t generalize about the impact of the COVID-19 pandemic, as it has affected individual people and industries differently.
Even within industries, specific products or markets have different stories. While looking at trends in GDP, consumer income, or construction spending show the net impact of the virus on these sectors, they hide the unique issues that individual people and businesses must resolve to move forward.
For all of these things that have changed because of COVID, how many of these changes will be enduring is the question that we have to think about as we work on short- and long-term forecasts. And the answers will continue to change as the pandemic progresses and the recovery gains momentum in regions around the US and the world.