Loss Prevention Research Council Weekly Series - Episode 68 - Second Half 2021 Forecasts and Trends Six Months On
With Dr. Read Hayes, Tony D'Onofrio, and Tom Meehan
Global Economic Outlook Q3 / 2021
https://blog.euromonitor.com/global-economic-outlook-q3-2021/
New forecast for Q3 this year from Euromonitor. The global economy is now experiencing a fast recovery with growth likely to approach 6% in 2021 and continue at 4.6% in 2022. The 2021 global real GDP growth forecast has remained unchanged relative to Q2, but this reflects a 0.4 percentage points upgrade for advanced economies, offset by a 0.4 percentage points downgrade for developing economies. Global output is estimated to have returned to its pre-pandemic level in mid-2021, but it is expected to remain 2% below the pre-pandemic forecast level even in 2023.
USA GDP is expected to grow an amazing 6.7% this year getting close to China’s high growth level projected this year of 8.6%. Eurozone has slowest projected growth in 2021 at 4.3%.
For 2022, globally GDP will grow 4.6%. USA to grow 4.3%, China 5.5% and Eurozone 4.3%.
Global Retail Sales RoundUp
https://chainstoreage.com/retail-sales-solid-june
https://www.focus-economics.com/countries/china/news/retail/annual-retail-sales-growth-eases-to-six-month-low-in-june-but-underlying
https://www.reuters.com/business/retail-consumer/euro-zone-retail-sales-rebound-more-than-expected-may-2021-07-06/
As previously reported, June USA retail sales were up 0.8% from May and 12.1% year-over-year. For the first six months of the year, sales were up 16.4% compared to the year-ago period. According to NRF’s revised forecast that 2021, retail sales are expected to grow between 10.5% and 13.5% over 2020.
China Retail sales expanded 12.1% in year-on-year terms in June, which was a deterioration from May's 12.4% increase. June's result marked the worst reading since December 2020. China 2021 retail sales are expected to grow 14.7%.
Europe retail sales in the 19 countries sharing the euro increased 4.6% month-on-month in May and were 9.0% higher than a year earlier. In April Europe retail sales fell 3.9% on the month, although they rose 23.3% on the year.
Salesforce projects retailers will pay $223 billion extra for goods in the second half
https://www.cnbc.com/2021/07/20/salesforce-retailers-will-pay-223-billion-extra-for-goods-in-2h.html
Salesforce also forecasts U.S. retailers will experience a labor shortage of about 350,000 workers heading into November and the holiday shopping period.
Retailers in the U.S. will spend $223 billion more in the second half of 2021 than in the same period in 2020, according to a Salesforce forecast released Tuesday.
The amount represents a 62% increase from last year. It’s comprised of an additional $12 billion spent with suppliers, $48 billion more in wage expenses and $163 billion extra in logistics costs.
Trends that will define 2021 and Beyond: Six Months On
https://www.mckinsey.com/industries/public-and-social-sector/our-insights/trends-that-will-define-2021-and-beyond-six-months-on?cid=app#
From McKinsey, here what they see as the key trends for rest of 2021
Two consumer trends seem to be sticking. One is “home nesting”—the nationwide do-it-yourself and clean-up binge. Almost three in ten US households renovated their homes or added fitness equipment during the pandemic; the same percentage plan to treat themselves to more home improvements. The other is the disruption of consumer loyalty. About three-quarters of Americans changed their shopping habits in 2020, and 40 percent of these changed brands—twice the rate in 2019. Younger people were more likely than older ones to switch. The implication is that, more than ever, companies can’t take their customers for granted. Loyalty must be earned time and again.
Americans want to get moving again—to see friends and family or just to have a little fun outside their four walls and immediate neighborhoods. In 2020, spending on travel fell more than 40 percent and on business travel around 70 percent.3 Now more than 60 percent of Americans feel comfortable taking a vacation.4 Many are already doing so: travel around the July 4 holiday was near record highs. In the second half of June 2021, almost two million passengers a day traveled through US airports, roughly four times as many as during the same period in 2020 but still well down from 2019.5 The pace of future recovery is unclear, but a recovery in domestic travel is certainly under way.
In January 2021, we noted the surge in new business applications in the third quarter of 2020—more than double the level for the same period in 2019. That included a 50 percent increase in applications for “high propensity” businesses, which are the kind most likely to employ additional people.
The number of start-ups couldn’t keep on doubling indefinitely. But what’s encouraging is that their growth is still going strong. Since the US Census Bureau started keeping statistics on the subject, in 2005, no month recorded as many as 340,000 new businesses—until June 2020.8 Since then, every single month has at least matched that level (Exhibit 2). And the momentum is positive. The first five months of 2021 saw an average of 472,000 new business applications a month, many more than in the last five months of 2020 (410,000), even as the unemployment rate continued to fall.
Our point about the Fourth Industrial Revolution—the application of AI, analytics, digitization, and other technologies to all phases of economic activity, from design to production—was speculative back in January 2021 and remains so now. What can be said is that digitization will be everywhere, and it will be critical to both national productivity and the success of individual companies and sectors. The COVID-19 pandemic sped up digitization by three to seven years; what was considered best in class in 2018 is now below average. Digitization happened that quickly.
Executives know that this is only the beginning. In a survey conducted earlier in 2021, only 11 percent of respondents believed that their current business models would be economically viable through 2023, and almost two-thirds said their companies needed to invest in digital technologies to adapt. This wasn’t just talk; funding of digital and tech initiatives has risen over the course of the pandemic, even as businesses made painful cuts elsewhere. An in-depth study by the McKinsey Global Institute projects that current trends could raise productivity by one percentage point over the next few years. With investment in digitization, telehealthcare, and other rising technologies coming back strongly, productivity improvements could follow.
The big change in consumer behavior during the COVID-19 pandemic has been the shift to e-commerce and remote options. In the United States, e-commerce grew more than three times as quickly from 2019 to 2020 as it had during the previous five years, and many Americans even proved willing to buy cars without literally kicking the tires. Mass retailers’ online sales rose 93 percent in 202012 ; among apparel, fashion, and luxury retailers, online penetration rose to 26 percent, from 16 percent. These changes are sticking—mostly. People are still shopping online much more than they did before the pandemic but at lower levels than they did during its depths.
So far, so good—for those doing the buying. For consumer-goods companies and retailers, not so much. Cost cutting can go only so far. Moreover, e-commerce is often less profitable than is in-store shopping. Instead, businesses will need to develop whole new capabilities (including data-driven marketing, distribution management, and sustainability) to create long-term value. E-commerce can drive rather than dilute profitability if companies consider their marketing investments, revenue-growth management, and warehousing and supply-chain costs. And yes, scale helps. While there has been substantial growth among small companies and niche products, bigger is often better.
Omnichannel isn’t just the future. It’s the present, so it needs to be integrated into strategy in a way it often isn’t. A McKinsey survey of retail executives found that two-thirds of them don’t consider the omnichannel implications when they make decisions for stores.
