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Trend Four: Economy and Markets

Editor’s Note: This article is the fourth and last in a series of four trend summaries from Vision 2020, an initiative pioneered by Bayer and NPMA to help guide and shape the future of the pest management industry. The multi-year initiative will identify future trends and equip the industry to enhance its value to society in the midst of emerging societal, economic, technological and regulatory issues. The following focuses on emerging trends and implications in the area of economy and markets.

VISION 2020 - Future trends and implications for the pest management industry

Chapter 4: Economy and Markets

In the professional pest management industry, our goal is for commercial and residential customers to place a high value on the services we provide and the impact of those services on public health and quality of life. In other words, we want our services to have a high value-to-cost relationship.

The reality, however, is that the perceived value of what we offer-and what almost all industries offer-depends a lot on the overall economic forces at play. When consumer confidence slides and people begin to worry about jobs and disposable income, for instance, their willingness to invest in environmental protection, or “green” products, often wanes. Conversely, when economic forces drive prices too high-as is often the case with gas, meat or vegetables-even in good times, consumers will change their behavior accordingly, looking for more economic alternatives.

Perhaps more than any other dimension of the future, macro economic forces are going to affect most every aspect of the professional pest management industry, including both supply and demand. The Vision 2020 participants identified five key future trends and their implications relative to the economy and markets, as follows:

Household income. While things may change pending the performance of the overall economy, many economists currently predict that the income gap between the wealthiest and the least wealthy will continue to grow and that the average income may continue to decrease, resulting in a smaller upper and middle class.

Implications: Smaller numbers of upper- and middle-income customers will mean two things. One, pest management professionals (PMPs) may be in greater competition for available business. Two, PMPs may need to explore marketing efforts that increase the perceived need for and value of professional pest management services among lower-income consumers.

Rising input costs. In an increasingly unstable world, the price of raw materials has become increasingly less predictable and that is likely to remain so in the years ahead. This could affect the cost of fuel, fertilizer, utilities and other inputs.

Implications: Rising input costs of any kind will force PMPs to find ways to become even more efficient, or consider consolidating with other PMPs to obtain greater scale and efficiency.

Changing workforce. A seismic shift in the labor force will occur in the years ahead, one in which millions of older, white workers are replaced with millions of more ethnically diverse millennials. That’s the good news. The bad news is that there will not be enough of them to get all the work done.

Implications: This trend will force PMPs to change the way they recruit, train and retain workers. They’ll have to compete for the best workers and will have to explore new avenues for finding talent, perhaps in untraditional places. The industry also must find ways to become more attractive for women, who are entering the workforce in greater numbers than men.

Housing market. The economy has taken its toll on housing. And while new home construction has picked up again, the number of people renting continues to grow at a disproportionately high rate. Further complicating matters is urban sprawl, which over time will result in major metro areas coming together to form “mega cities.”

Implications: As the housing landscape changes, PMPs will need to consider how best to tackle emerging markets represented by new homeowners and property managers. This may include partnerships with smart building suppliers or others capable of offering a holistic approach to pest management. Finally, PMPs will have to rethink their service territories and transportation strategies if they want to follow the sprawl — and the money.

Green economy. While actual spending on “green” products and services tends to wax and wane with the economy, most everyone agrees that interest in environmental protection by government and consumers alike will continue to increase and that sustainability will become a mainstream national value. Evidence of this is the number of start-ups and investment funds aimed at developing “green” innovations capable of addressing environmental issues, creating jobs and stimulating the economy.

Implications: Demand for “green” innovations will continue to grow. The key to capturing value, however, will be delivering tangible benefits that people are willing to pay for. Case in point is the introduction of “softer solutions” that have less environmental impact but meet customer expectations for pest control.