Taking Stock of a Post-Pandemic Future
Rebirth marks every spring, a cycle that is even stronger in 2021. Days are stretching, flowers are blooming, and, most especially, vaccines are opening the door to normal life.
As we move into the post-pandemic future (live events, travel, and parties, oh my!), it will take time to leave the crisis behind entirely. The unfortunate truth is that a year like 2020 leaves economic scarring. Too many businesses have lost too much revenue to immediately bounce back once consumers feel safe to return to pre-pandemic habits.
The lingering impact of the pandemic is where our 2021 Q1 Macroeconomic Trends Analysis (META) report comes in. In it, we study each AV vertical market to understand how they fared in 2020. We synthesize this data with prior research and economic principles to create a guide to the hangover effects of the pandemic, including how AV businesses can address the unique needs of each vertical.
We had a few surprises when we looked back at actual performance for vertical markets in 2020. On the negative side, the performance of transportation was ugly, with just 57% of their expected total GDP output through the first three quarters of 2020. For pro AV, there are two positive mitigating factors. First, as shown in AVIXA's Market Opportunity Analysis Report (MOAR) series, transportation AV spending is largely sourced from major capital projects, whose long-term nature makes sudden spending drops unlikely. Second, transportation projects usually have public funding, which insulates them against revenue fluctuations. It was a harsh year for transportation, but its AV spending may be steadier than you would think.
Our data revealed a positive surprise for the corporate vertical market. We have data on both construction and the average rent for offices in the U.S., both of which show a market with steady demand. Rent and construction data have weaknesses as real-time indicators of demand, so we don't conclude that the market actually had perfectly steady demand. Still, the combined data is enough of a signal to reject the theory that office demand has precipitously declined.
The retail market offered a second happy surprise. There's a common narrative that retail was hit hard by the pandemic, but the data flatly negates that. The first months of the pandemic did slow brick-and-mortar retail sales, but by the third quarter, brick-and-mortar output had surpassed the levels expected pre-pandemic. Through the first three quarters of 2020, retail overall was at 99% of its expected, and brick and mortar were at 96% — not bad at all, especially considering 4th quarter data hasn't yet been factored in.
Some vertical markets aligned closely with what you'd guess. Venues and events, for example, dropped substantially. No surprise there. But just because it was unsurprising doesn't mean there aren't insights in the data. For example, from the course of the sector's GDP outputs, we see that dramatic changes continued throughout the pandemic. That's a signal to AV providers that scalability will be a key factor for venue operators. Solutions that work equally well in low-crowd pandemic conditions and packed-house post-pandemic conditions will be attractive options for venue operators.
Hospitality is another market that roughly followed expectations. (Though the restaurant segment fared better than the accommodations portion—and better than you might think!) That said, knowing how much hospitality was contracted last year gives a signal about the challenges ahead. Hotels and restaurants that closed spaces and laid off staff will be stretched thin during the recovery as they work to hire new staff and reestablish efficiency at high volumes. Leaders at such organizations will value simplicity and reliability from their AV. If you can give them clear choices that require little hands-on involvement, you will save them precious mental resources to be spent elsewhere.
The full story is much more complex than these highlights. In fact, we've left out one of the most critical hangover effects from the pandemic: diminished financial reserves. Limited cash availability will be a major influence for businesses in all the hardest hit verticals, strongly affecting their purchasing choices. And, as we cover in the full report, there are numerous ways for AV providers to assist, from risk mitigation to managed services.
Spring is taking hold in its annual burst of life. This year, that burst of life includes a return to togetherness and experiential activity as vaccines cause the pandemic to fade. But many economic sectors have faced unique trials that will create lingering
challenges for months to come. Strategic AV companies can understand those difficulties and tailor their services to address them. In doing so, you'll help your clients—and your own bottom line.
This article originally appeared in the April issue of Sound & Communications magazine. Discover more AV economic analysis here.
As AVIXA’s Economic Analyst, Peter Hansen’s job is to understand how the professional AV sector interacts with the wider economy. Peter relishes the challenge of this task, to which he brings a data-focused skillset and a passion for critical analysis. In the past, he has worked for the Federal Reserve Board and been published in RealClearMarkets, Finance and Economics Discussion Series, and The Atlantic.
