Paycheck Protection Program Helps Construction Sector
More than 101,000 architecture, engineering and construction companies received Paycheck Protection Program loans worth at least $150,000 from April 3 to June 30, according to Engineering News-Record. That amounts to 15.3% of such loans across all industries but does not include many construction-related companies.
Construction Employment Down
Employment in construction fell by 630,000 jobs at the height of the pandemic, but has since recovered about 158,000 jobs, according to the Bureau of Labor Statistics. Large segments of the industry were heavily impacted by widespread shutdowns as well as long delays in processes such as permits and inspections. This disproportionately impacted the big Pro section of the industry. Many small Pros were able to take advantage of the consumers’ renewed interest in maintaining and improving their homes, which had become offices, schoolrooms, gyms and rec centers as many people stayed home.
New Materials and Prefab Construction
The construction industry is improvising and adapting to challenges from the coronavirus pandemic by using new materials, considering off-site production and exploring new materials. Prefabrication allows production in a controlled environment which helps guard against infection. Off-site production of building components, such as bathrooms and panelized wall systems, helps reduce the risk of workers being clumped closely together on a job site. Construction firms are also exploring the use of materials that can be cleaned more easily and don’t absorb bacteria and viruses. Such materials will likely be installed in heavily trafficked areas, such as lobbies, corridors and restrooms. Some products work like shrink wrap; there are antimicrobial products that can be put on door handles that kill germs on contact and last for six months.
Amazon and Walmart Fight it Out Online
Amazon captured more Walmart customers than Walmart captured Amazon customers during the pandemic, according to Facteus, which tracks credit and debit card spending. They report that when Americans concerned about catching CV19 began avoiding physical stores and shifted their spending to online, more Walmart customers turned to Amazon than to Walmart’s own website. During the first week of February, for every dollar spent with both retailers, 66 cents went to Walmart and 34 cents to Amazon. By the first week of August, 55 cents went to Walmart and 45 cents to Amazon. After some initial problems, Amazon hired 175,000 people to speed up delivery times and stepped up safety measures in warehouses. McKinsey noted that Amazon was well positioned to take advantage of a sudden shift in consumer behavior that, according to McKinsey, has compressed 10 years’ worth of online sales growth into three months. Consumers also became more tolerant of shipping delays, with more than 8 in 10 saying that delays of a few days or longer were reasonable given the pandemic, according to a survey of 500 Amazon customers conducted in June by Goat Consulting. Marketplace Pulse reported that the Amazon website attracted 2.57 billion visitors in July, more than Walmart, Home Depot, Target, Best Buy, eBay and Etsy combined.
Shippers Implement Holiday Fees
UPS plans to levy hefty fees on large shippers during the holiday season, reflecting the added complexity and cost of the surge in online orders due to the pandemic. UPS’s new chief executive, Carol Tome, took over the top spot after decades as CFO at The Home Depot. She said that the surcharges are necessary in order for UPS to maintain their high-quality service. Fees could be as much as an additional $3 per package for ground and $4 for air shipments bound for residences, with additional fees for special handling and large items. Fees will apply from mid-November through mid-January. The US Postal Service has also announced an increase in holiday shipping costs for packages starting October 8 and running through December 27. FedEx declined to comment but is evaluating added fees, and stated that holiday surcharges are part of the new normal. In the past FedEx has not imposed surcharges on residential deliveries, instead working with shippers to manage volume. FedEx has charged more during peak periods for bulky parcels.
Retailers Launch Coalition to Fight Counterfeit Goods
The Buy Safe America Coalition is ready to take on counterfeit goods online. The Retail Industry Leaders Association (RILA), whose members include Walmart and Target, has joined more than a dozen trade groups to form a coalition dedicated to fighting counterfeit goods on online platforms such as Amazon. The coalition will back legislation that would require digital marketplaces to verify information about third-party merchants on their platform.
Liability for Third Party Goods
Amazon can be held liable for damages caused by defective goods sold on the Amazon Marketplace, including goods sold by third parties. The California Fourth District Court of Appeals overturned the original verdict, which found that Amazon could not be held liable. This ruling could create a major hurdle for all retailers that sell goods online. Amazon had argued that the seller was liable, not Amazon, even though the goods were bought on the Amazon marketplace.
Online Spending Grows
Consumers spent $211.5 billion online during the second quarter of 2020, with ecommerce sales up 31.8% from the first quarter. Ecommerce sales accounted for 16.1% of total retail sales during the quarter; total retail sales dropped 3.1% during the second quarter. Compared to the second quarter of 2019, ecommerce sales rose 44.5% and total retail sales decreased 3.6%. Ecommerce sales soared for many retailers in the second quarter, as did curbside pickup.
Amazon Mall-Based Fulfillment Centers
Analysts have been looking into Amazon’s recent negotiations with the nation’s largest owner of shopping malls. Amazon reportedly wants to place fulfillment centers in spaces once occupied by anchor-tenants who are no longer in business, including Sears and J.C. Penney. One Forrester analyst noted that a great deal of research goes into locating malls to make sure they are within easy reach of thriving demographics, major thoroughfares and residential areas, so leasing anchor space in a mall guarantees that someone else has already done a great deal of homework. As of this spring, Amazon operated 110 fulfillment centers in North America and a total of 185 globally, as well as more than 40 sortation centers. Amazon centers range from 600,000 to more than one million square feet. Amazon has said that their larger centers can ship as many as one million packages each day. Analysts note that being strategically located in malls could help Amazon speed up delivery times for the all-important last-mile.
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