What do you
do if you are in the business of market sizing and predicting consumer behavior
and the markets get shut and consumers forced inside?
The COVID-19
pandemic is the biggest disruptor to hit the global economy, and our everyday
lives.
When this is
all over, what will people want? Other than shaking hands, what else will
change?
As one of
our analysts put it: “Next month, if we are set free, you may schedule
that business trip that you should have taken last month. But you will run
out to get that long overdue haircut. The trouble is, you won’t get two
haircuts. That money is gone.”
Most recent crises
were financially driven: The dot com bust, the financial crisis of 2008. So while
deliberately shutting down many sectors of the world economy is a moment
without history, our experience from other sudden changes give us guidance
about how sudden shocks to these industries are resolved.
We believe
consumer response to this crisis will be faster and more robust because of the
strength of the underlying economy when this began, which differentiates it
from the most recent economic declines. There will be pent up demand. The
market for various products will change, but how much and for how long?
How do we frame this moment?
We look to past events to learn how
product demand is affected by market variables and then use projections of
those market variables to anticipate how demand will evolve in the future. But
it’s not just the mechanics, the process, the numbers, it’s how and why those
relationships held in the past and why they might change in the future.
This is not
BIG DATA. It’s deliberately small data with big analysis. We take topics where
there is limited information like copper piping or flat glass and we create
market data and insights.
We are like
the archeologists who find a handful of dinosaur bones, but can create the
entire dinosaur skeleton from them. We take a small amount of
information, and through associated data, research, and expertise, build it out
into the entire picture of an industry.
But it
starts with data. Take the healthcare market for sanitizers and
disinfectants. There is no published data on this market
at the industrial and institutional level. So we look at the number of
healthcare facilities in a certain region, the square footage of these places,
and the facility type to estimate how much they are using. Then we might look
at hospital expenditures, healthcare acquired infections, and how that is
driving demand.
And then of
course, there’s the human factor. After
various historical events we have feared flying, feared trains, feared crowds.
Now we fear people, closeness, nose scratching and running out of toilet paper.
Market researchers are modern day fortune tellers.
But we don’t
read palms. Beyond the data it’s all about
relationships and the factors that make them change. Predicting the
future is all about understanding the past, even in a time without precedent.
