The Question: Are Business and Consumer Behavior Changes Temporary or Permanent?
The COVID crisis has changed business and consumer behavior in many ways. But which of the changes are temporary and which are permanent? Which can we ride for a while before they peter out and which must we build into our long-range business plans? Answering correctly is essential to participating in the recovery ahead.
Recovery is ahead, although the rough patch we’ve hit suggests otherwise. Infection rates are surging, lockdowns are tightening, and we still don’t have answers to critical questions such as when limitations on in-person events will be lifted, when clients will be able to operate at full capacity, and when schools will reopen fully. Consequently, just 29.1% of participants in the COVID-19 Print Business Indicators Survey, conducted by PRINTING United Alliance and NAPCO Research, now expect business to improve during the coming month, down from 45.2% last summer, and just 38.3% plan to invest in capital equipment next year. (See Figure 1.)
Nevertheless, there is reason for optimism. As discussed in the COVID-19 Print Business Indicators Report, November 2020, two game changers are in the works. The development and distribution of vaccines, rapid in-home testing kits, and therapeutics necessary to control the virus is one. The American economy, which economists surveyed by The Wall Street Journal expect to grow at the fastest rate in two decades next year, is the other.
We expect growth to begin for the printing industry during the second quarter of 2021 and accelerate through year end. For all of 2021, we expect our industry’s sales to increase 2.5% – 4.0%, after decreasing 15.0% – 18.0% in 2020. If revisions to that forecast are necessary, they are likely to be up rather than down. (PRINTING United Alliance members can download the November report here: Member Report. Non-members can download an Executive Summary here: Executive Summary.)
If the world were going to be fundamentally the same coming out of recession as it was going in, that’s all we’d need to know. Hang on until spring 2021 and rise with recovery. But, of course, much will be different in the post-COVID world. We must understand the short-term and long-term consequences of those differences. (By post-COVID world we don’t mean when the virus has been eradicated but rather when we ‘ve learned to live with it, because that’s what we’ll have to do.)
“Adapt Your Business to the New Reality,” Michael G. Jacobides and Martin Reeves, hbr.org, can help. The authors argue that the ultimate winners from an upheaval such as COVID-19 are companies that can quickly identify and adjust their business models to structural changes in behavior and are not afraid to make the investments necessary to capitalize on those changes. They provide a framework for being one of these companies. Basically, we begin by asking two questions about each trend affecting our markets:
- Was the trend in place prior to the pandemic or was it created by the pandemic?
- Is the trend structural — i.e., will it permanently alter business and consumer behavior — or will it fade with the pandemic?
We then classify each trend as a displacement, boost, catalyst, or innovation, as defined in the matrix in Figure 2.
Bottom line: We can ride the displacements and boosts for a while, but we must build the catalysts and innovations into our long-range business plans. They are the new reality. If we are prepared for them, the opportunities are historic. If we are not, the recovery ahead — no matter how robust — will leave us behind.
Analyst Insights features research and analyst insights from the NAPCO and PRINTING United Alliance research teams. Market research is valuable for making strategic business decisions, solving challenges, and pursuing opportunities, and the NAPCO Media research teams survey, analyze, and monitor critical trends related to marketing, printing, packaging, non-profit organizations, promotional products, and retailing. To learn more about how the team can leverage its research and industry subject matter experts to support your organization’s needs, contact firstname.lastname@example.org.
Andrew D. Paparozzi joined PRINTING United Alliance as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.