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Strategy

8 Recession-Proof Markets to Target

Historically “safe” industries have been ravaged by the coronavirus pandemic.

As of February, the United States has entered a recession, according to The National Bureau of Economic Research.

Unlike the Great Depression of the 1930s and the Great Recession of 2008, this current economic downturn has been caused by a pandemic. In order to curb the spread of COVID-19, government-mandated lockdowns went into effect and most businesses were forced to cease operations, causing more than 42 million Americans to file for unemployment. Consumer spending habits have changed over the past five months, and historically recession-proof industries have been upended.

In order to survive, distributors must adapt to the ever-evolving economy by targeting these thriving markets.

1. Telehealth

While healthcare has traditionally been recession-proof, telehealth has exploded during the pandemic. Fearful of being exposed to the coronavirus, people have avoided hospitals, medical facilities and urgent care centers at all costs. Thus, telehealth companies that allow patients to see doctors or therapists via their computers or phones have become more popular, with about 9 million people under traditional Medicare using the service from mid-March through mid-June, Health Affairs reported. Additionally, nearly $4 billion was billed nationally for telehealth visits during March and April, compared to less than $60 million for the same two months of 2019, according to FAIR Health, a nonprofit group that analyzes private health insurance claims. The future looks promising for the technology as President Donald Trump recently signed an executive order to expand access to telehealth services for people living in rural communities.

2. Online Groceries

With indoor dining restrictions still imposed in many states, people are likely to continue cooking their own meals and eating at home. That doesn’t necessarily mean they’ll be flocking to stores, especially in the age of online shopping. U.S. online grocery sales hit a record $7.2 billion in June, up 9% over May, as 45.6 million households turned to online grocery pickup and delivery services, Brick Meets Click reported. Since states first went under lockdown in March, online grocery sales have continued to climb, from $4 billion to $5.3 billion in April to $6.6 billion in May. To meet consumers’ changing needs, more retailers have added capacity for online order fulfillment.

3. Utilities

People need gas, electric, water, trash collection, etc. The utility companies that provide those essential services often operate under federal and state regulations. There’s usually a lot of red tape to get through, but once you do, it’s worth earning their business. These companies are almost guaranteed to weather any economic downfall, and right now they’re the ideal customer to sell personal protective equipment (PPE).

4. Home Repair

With stay-at-home orders throughout the spring, people had all the time in the world for DIY projects. It’s been a boon for renovation companies and stores that sell home remodeling supplies: First-quarter 2020 sales were up 7.1% at Home Depot and 11.2% at Lowe’s, compared to the first quarter of 2019. Tractor Supply Company reported unprecedented sales growth of 35%. Expecting consumers to continue the DIY trend into the fall, the chain plans to open 75 to 80 new stores, a revision of its previous guidance of 10 to 15 new stores. Budget-minded households will pay to fix things rather than spend more to buy new ones, so distributors should target service providers who specialize in plumbing, heating, ventilation, air conditioning, roofing, etc.

5. Technology Service Providers

Before March, when somebody said “Zoom,” many Americans thought of that old PBS show. Now, it’s a household name synonymous with conference calls. Whether for work, school, entertainment or connecting with friends and family, we’re relying on technology more than ever. As a result, cybersecurity has become increasingly important with companies taking their businesses digital. There are many opportunities for distributors to promote data protection through promotional products, such as webcam covers, texting gloves and mouse pads that also function as monitor wipes.

6. End-of-life Startups

Since the COVID-19 outbreak, funeral homes have been working tirelessly, but they’ve had to adjust to social distancing guidelines. Many have pivoted to online services, trying to create that intimate experience virtually to accommodate attendance restrictions. On the other hand, business is booming for end-of-life startups, companies that help clients plan funerals, handle remains and process grief. Companies like Cake and Lantern have seen an uptick in users, especially among millennials, during the pandemic, The New York Times reported.

7. Pets

Man Hugging Dog

Emerging relatively unscathed during the Great Recession, the pet industry may not hold as firm this time around. Market research firm Packaged Facts forecasts that total U.S. retail sales of pet products and services will decline by 17% in 2020, a drop from $95 billion in 2019 sales to $78.5 billion. Services such as kennels, pet boarders, groomers and vets are expected to account for most of that decline due to government-mandated shutdowns. However, the firm projects a substantial rebound in 2021, given the underlying strength of the pet industry (people are willing to shell out big bucks for their furry friends), as well as the rise in pet telemedicine. Daily downloads for virtual vet apps rose 40% in March, Fortune reported.

8. Collection Agencies

During a recession, more people won’t be able to keep up with monthly payments, and they’ll go into default on their accounts. That’s when lenders hire collection agencies to recover what they can. Or, when they finally write the borrower off as a loss, lenders sell the account to debt collectors altogether. Whether they’re back in the office or still working from home, collection agencies can certainly benefit from pens, business cards, signage, calculators or other branded items.