International. The memoori Research study analyzes the impact that the video surveillance industry may suffer in the face of COVID-19. Here is the analysis:
The world is getting used to a new "C-word," COVID-19. Less than a quarter of the way to 2020 and the global pandemic already has us evoking "fond" memories of a simpler time in 2019; when we only had to face catastrophic wildfires and climate change.
We are still in the initial phase of this pandemic and hope that our collective efforts globally in the next 6 months will stop its rapacious advance. But at what cost to the global economy, and for the purposes of this article, what cost does it have for the physical security industry?
The total value of global production of Physical Security products at factory prices in 2019 was US$34.31 billion, which we estimate was an increase of 8.5% in 2018. Our analysis over the past 5 years estimates that the market grew by more than 7% per year. And over time, the industry has proven robust, driven by the consistent forces of rising terrorism and global crime.
However, this inevitable new cycle of recession will certainly reduce demand in 2020. Our current best estimate is that the first quarter of 2020 will show a 5% decline, caused by lower demand in Asia, and specifically in China, which is the largest single market for video surveillance in the world. Further declines are likely to follow in the next 3 quarters. The forecast for 2021 will depend on how measures to control COVID-19 are strengthened. If the pandemic shows that it is under control in September 2020, global sales of physical security equipment could grow again in the second quarter of 2021. After all, COVID-19 is a temporary and not a structural problem.
Above all, the COVID-19 outbreak will force suppliers to radically rethink how their businesses operate, particularly resistance to externalities. In parallel, there will be lessons to be learned about having a more coordinated and resilient supply chain. The video surveillance business relies too heavily on Chinese component manufacturers and OEMs. With many of them offline since January, what impact will that have on supply?
A recent analysis by IHS Markit suggests that "global manufacturing contracted at the fastest rate in more than a decade during February... led by a record drop in activity in China's factories."
As with every crisis, there will be opportunities for those Security companies that are prepared to adapt to the new COVID-19 reality. For example, access control readers that can remove physical contact, such as through mobile phones, could see a rapid increase in demand. And AI Video Analytics will most likely be required to play an important role in maintaining order on our streets, while law enforcement departments are expanding to cover new responsibilities.
Specific vertical markets such as retail, hotels and leisure are likely to be hit hard in a recession. It will be the public sector that will have to boost the global economy with infrastructure projects in transport, hospitals and education, and the pharmaceutical industry will likely need to invest more in new facilities to meet the inevitable demand for medicines and vaccines to fight the virus.
Source: memoori.
