The Security Industry’s Economic Forecast Looks Good, but Is It Really Recession Proof?
While we clearly are not out of the woods yet and will continue to face challenges, security is among the most essential of industries in our country.
PSA has traditionally been a strong barometer of the health of the security integration industry. Since it is not strictly a manufacturer, distributor or integrator, it has relationships with all resulting in an excellent bird’s eye view of overall market conditions. Due to our unique position, we see different sides during good and bad times than others may.
For example, we have large, mid-sized and small security integrators in all 50 states, providing beyond regional issues or challenges for a wider perspective on what trends are developing across the nation. Our integrators represent all major verticals as well. While some trends remain isolated to specific verticals, our team can gauge what will be more widespread.
This has especially been the case during the COVID-19 pandemic. Sales through our network slowed in April 2020 as the initial shutdowns affected our integrators. By the end of late May, however, we began to see a rebound and ended up with a very strong June. I was impressed by our integrators’ ability to pay their bills on time through all the challenges of job losses, decrease in new business opportunities, etc.
This is indicative of the security industry based on discussions we have been having in our network and beyond. While we clearly are not out of the woods yet and will continue to face challenges, security is among the most essential of industries in our country. Other critical businesses are dependent upon us to help keep their doors open.
Similarly, most integrators cover more than one vertical. Those who service industries such as hospitality, casinos, malls, etc., were able to keep revenue flowing from other parts of their businesses such as financials, medical and government. It is an ages old rule of thumb that it is best not to “put all eggs in one basket,” and diversification holds true in this case.
So is the security industry recession proof? There is often discussion around this topic. No. There isn’t any business that is. However, security will fare much better than many other industries as COVID-19 continues to affect our world. Security was not as hurt in the initial wave of the pandemic shutdowns as our supply chains were not as affected as many predicted they would be.
I expected this disruption to be greater than it was, but many manufacturers were able to pivot to other suppliers and integrators were ultimately able to get the products they needed. Our team kept a close eye on the supply chain early on and talked with our manufacturers to see how it would affect our integrators. We were pleased to see most fared quite well in the early days of the pandemic when we saw shortages in a variety of consumer and commercial products.
Likewise, we have seen a variance in products that are in demand. With thermal products, cybersecurity technologies, etc., many of our integrators are simply pivoting their areas of focus to adapt to the market demand. The medical industry, hospitality, travel, etc. are demanding more of their security integrators than they ever have before. There is a real opportunity to expand existing business into new areas that will last far beyond COVID-19.
In other challenges our nation has faced, security has often come out more successfully than before. Smart integrators and manufacturers who can pivot their businesses will find that to be the case now as well. The next year holds a lot of unknowns for our world, but the security industry will navigate the tough times much better than others.
Bill Bozeman is CEO of the PSA Network.
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