With sights set on a post-pandemic future, AVIXA looks at how AV vertical markets fared over the last year.
Rebirth marks every spring. That cycle is even stronger this year. Days are stretching, flowers are blooming and, most importantly, 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 scars. Too many businesses have lost too much revenue to bounce back immediately as soon as consumers feel safe to return to pre-pandemic habits. The lingering impact of the pandemic is where the AVIXA 2021 Q1 Macroeconomic Trends Analysis (META) report comes in.
In the report, AVIXA studies each AV vertical market to understand how each one fared in 2020. We synthesize that 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 that each vertical presents.
We had a few surprises when we looked back at the actual performance of various vertical markets in 2020. On the negative side, the performance of transportation was ugly, with just 57 percent of the expected total gross domestic product (GDP) output through the first three quarters of 2020. For commercial AV, there are two positive mitigating factors, however: 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 from revenue fluctuations. So, yes, it was a harsh year for transportation, but its AV spending might have been steadier than you would have thought.
AVIXA’s data revealed a positive surprise for the corporate vertical market. We have data on both construction and average rent for offices in the US, 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 actually conclude that the market was perfectly steady in that regard. Still, the combined data is sufficient 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; the data, however, 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 percent of its expected GDP output, and it was at 96 percent for brick and mortar. That’s not bad at all, especially considering fourth-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 the data was unsurprising doesn’t mean it fails to offer insights. 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 conditions typical of the pandemic and packed-house conditions after the pandemic will be attractive options for venue operators.
Hospitality is another market that roughly followed expectations. (That being said, the restaurant segment fared better than the accommodations portion—and better than you might think!) The knowledge of how much hospitality contracted last year gives a signal about the challenges ahead. Hotels and restaurants that were forced to close spaces and lay off staff will be stretched thin during the recovery, having to work to hire new staff and reestablish efficiency at high volumes. Leaders at such organizations will value simple and reliable AV. If you can give them clear choices that require little hands-on involvement, you will save them precious mental resources, which they can then direct elsewhere.
The full story is much more complex than these highlights could capture. In fact, we’ve left out one of the most critical hangover effects from the pandemic: diminished financial reserves. Limited cash availability will significantly influence 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; these range from risk mitigation to managed services.
Spring, with its annual burst of life, is taking hold. 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, and those will create lingering challenges for months to come. Strategic AV companies can understand those difficulties and tailor their services to address them. If you do so, you’ll not only help your clients but also help your own bottom line.
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