As I write this, many of the states that had locked down – in one way or another – to slow the spread of the COVID-19 pandemic have started to reopen – in one way or another. At the same time, another 3.2 million Americans filed for first-time unemployment benefits, bringing the total to more than 33.5 million people since mid-March. That’s 21% of the US labor force.
If we are fortunate enough to see the number of coronavirus cases in the US seriously decline this month or next, and the testing and contact-tracing increase significantly as summer sets in, it’s still going to a slow process of getting back to “normal.”
Now this part of my post is really a step or two removed from the substrate makers, coaters, laminators, metallizers and packaging converters who are our key audience. I’m talking about consumers and the retailers they shop at. But it IS a supply chain, and without plenty of consumers to buy the brand-owners’ products stocked by all those retailers opening up again, demand for your converted materials and packaging just isn’t going to happen very fast.
According to market analytics researcher GlobalData (www.globaldata.com), the US will see the steepest slump in retail of all other countries this year, declining more than $200 billion versus last year. Such spending is forecasted to fall 5.1%, and the US retail market will perform slightly worse than next-door neighbor Canada (down 4.5%).
GlobalData’s Coronavirus Retail Tracker surveyed about 2,500 US consumers earlier this month, comparing their "confidence to spend" money versus their "ability to spend." While the results are slightly more positive than back in early April, they’re not very pretty overall.
For example, 22% of respondents said they are both least able to spend and not confident to shop. On the flip side, only 5.1% said they are most able to spend and most confident to go shopping. In the middle are the one out of seven consumers who said they are fairly able to spend and open to actually spending at retailers. And while I don’t have any stats on this, the current hike in e-commerce sales and home-delivery of goods is nowhere near going to offset what’s been lost through brick-and-mortar stores.
The potential US unemployment rate of 16% (worse than at times during the Great Depression) may only grow, especially if states must lock down again this fall. GlobalData’s numbers show the percentage of consumers with a greater ability to spend fell almost 2% to 19.1% in the past month, while those with less spending ability grew by 1.1% to nearly 43%.
These overall retailing stats can, of course, be sliced and diced a hundred ways, and converters making some products and packaging types will not be hit as hard as others. With consumers stockpiling foods, grocery and healthcare items, finished materials for these categories are actually in higher demand now and for the next few months at least. It’s obvious, but the foodservice packaging market, as well as any non-essential goods, is down and not likely to rebound until the fall.