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As the threat of a potential recession looms, continued demand for field services from the retail sector is putting pressure on field service leaders to deliver in what will be a volatile 2023. This means the savvy field service leader needs insight into multiple verticals to assess current state and develop a holistic, strategic perspective on the industry’s health and direction.
Using data from the tens of thousands of work orders facilitated by Field Nation in 2022, as well as insights from previous moments of economic uncertainty, our 2023 definitive guide to field service will give you that type of insight and actionable takeaways.
- The post-COVID recovery period has seen strong growth in infrastructure work (networking and cabling) driven by digitization efforts in retail.
- In a potential recession scenario, complex projects and infrastructure will take a more dramatic hit and take longer to rebound. But infrastructure will recover the strongest on the other side of a recession scenario.
- Field service companies can strengthen their readiness by getting granular about their markets, competing on customer experience (CX), and ensuring their organizations are agile.
THE DEFINITIVE GUIDE TO FIELD SERVICE IN 2023: Insight and tips for staying ahead of a changing marketplace
Transforming broad (and sometimes vague) technology solutions into concrete IT services lies at the center of your company’s value proposition. Each veteran of the field service industry has at their disposal a boundless well of experience in forging clarity out of chaos.
Even so, current market conditions may make you feel like you’re navigating in the dark. The threat of a potential recession looms, and fears of an economic downturn combined with stubborn inflation rates have led many companies to delay tech investments and new equipment installs. But the ongoing digitization of the customer experience puts pressure on retailers to keep up with evolving technology needs, and this translates into continued demand for field services. The conflict between these headwinds and tailwinds creates volatility in the industry.
The truth is the field service market is intensely heterogeneous, which means the value of so-called “industry-wide” trends is limited. IT trends related to the growing popularity of quick-service
restaurants, for example, have little bearing on those related to hospitality or general retail. Accordingly, the savvy field service leader needs insight into multiple verticals to develop a holistic,
strategic perspective on the industry’s health and direction.
Our 2023 definitive guide to field service will give you that type of insight.
Using data from the tens of thousands of work orders facilitated by Field Nation in 2022, as well as insights from previous moments of economic uncertainty, our definitive guide breaks down the
current state of the industry into discrete, actionable takeaways ensuring you stay ahead of the changing marketplace.
In short:
- Whereas 2022 was defined by growth and transformation, 2023 will be defined by volatility. Service companies with responsive analytical tools and agile processes will fare the best.
- The post-COVID recovery period has seen strong growth in infrastructure work (networking and cabling) driven by digitization efforts in retail.
- In a potential recession scenario, complex projects and infrastructure will take a more dramatic hit and take longer to rebound (three to four quarters) on an L-shaped recovery curve. But infrastructure will recover the strongest on the other side of a recession scenario.
- In the event of a recession, we project that mission-critical break/fix work will experience little or zero impact. Discretionary maintenance work will drop roughly 10%, but it will recover the fastest (one quarter).
- Field service companies can strengthen their readiness by getting granular about their markets, competing on customer experience (CX), and ensuring their organizations are agile.
Digitization in retail continues to show its strength
The past year and a half of post-COVID recovery has made one field service übertrend absolutely clear: The digitization of the customer experience, once a nice-to-have feather in the cap of ambitious retailers, has become a do-or-die necessity.
Retail is laser-focused on digitization for two primary reasons:
The ongoing labor crisis increases automation needs
First, the ongoing labor crisis has driven retailers to automate several aspects of the customer journey. Self-checkout technology eliminates disruptions triggered by staffing upheavals. Digital signage helps customers navigate the store without the aid of store attendants. IoT technology measures customer engagement in real-time, while upgraded security systems keep a better eye on inventory and store access without staff intervention.
Personalized shopping experiences require technology investment
The second factor behind the accelerating digitization trend is customer behavior, specifically the heightened drive for a personalized shopping experience. Young consumers, retail’s most coveted audience, want recommendations, cross-device functionality, and above all, a seamless experience. This degree of personalized, curated customer experience is impossible without the data that IoT technology provides through heat mapping, surveillance, and other data collection.
Connecting this novel retail technology and maximizing its efficacy translates into major cabling and networking infrastructure investments. This is apparent in YoY infrastructure growth patterns: The levels of YoY growth in networking and cabling post-COVID far exceed pre-COVID growth levels. Notably, work outside of this CX digitization trend (traditional POS, Desktop/Laptop) is not seeing the same acceleration of growth.
Going into 2023, we’re seeing this strength of infrastructure work continue. However, there is some hesitancy in the market related to supply chain issues, a potential recession, and a lack of clarity over the staying power of omnichannel. When these factors stabilize (and they will eventually), retailers will exhibit more confidence in a wider array of tech investments.
This is a key insight for service leaders planning for 2023. And as we’ll see in the next section, this infrastructure work is expected to rebound with strength in the recovery period following a potential recession scenario.
What history can tell us about recession scenarios
According to a recent IDC “State of the Market” report, businesses still aim to maintain IT budgets and growth in 2023, contingent on the mild recession scenario many see as likely. Of course, a more severe downturn could affect IT spending.
But how?
Though it happened under a unique set of circumstances, the economic turmoil caused by COVID-19 provided valuable data on which types of field service work are most dramatically affected in an economic downturn and how quickly those service types recover. In March 2020, when the COVID-19 pandemic began in earnest, all types of field service work took a hit. But the intensity and staying power of that hit varied. Infrastructure work involving new store openings and remodels dropped 30- 40%. Deployments dropped by 20-30%. Mission-critical equipment work (i.e., break/fix) did not drop at all.
While it took a dramatic hit, infrastructure work recovered more strongly and actually accelerated. Over the past year and a half, infrastructure work has grown 100%.
Retailers are pushing to upgrade their cabling and networking infrastructure— even amid economic volatility—because they feel the pressure to keep up with changing consumer experience expectations with wireless connectivity and IoT technology. Understandably, fears of an impending recession weigh heavily on the minds of business leaders across industries. Field service leaders are no exception.
Looking forward: Projections for a potential recession scenario in 2023
Here’s the bottom line: In a potential recession scenario, we project the same L-shaped recovery described in the previous section. The timeline will likely be compressed into 9-12 months, but it
will follow the same general recovery pattern.
Deployments will drop 10-20% overall. We expect simple cabling to remain stable relative to its current baseline due to consistent, heavy demand. We expect something similar in traditional point of sale, connected devices, and rack & stack work. Driven by macro trends, work related to electric vehicles and video surveillance will resist the overall recession and continue to grow.
Complex projects (store openings and remodels) will take the biggest hit, dropping 30-40%. However, work related to certain in-demand equipment (highlighted in green) will be mostly exempt from this negative impact. About 70% of quick-serve restaurant revenue comes from drive-throughs, which means outdoor menu board spending isn’t going anywhere. The same goes for self-checkouts and security equipment.
Infrastructure will take a similar hit (30-40%). Its recovery will follow the L-shaped timeline described above (three to four quarters). But crucially, we expect infrastructure to recover the strongest from a potential recession scenario. Many retailers are still playing catch up with competitors who are ahead in their digitization journey. While a recession may delay that spending, it will be a must-have once the economy begins recovering.
Maintenance work will take a mild hit (10%), but it will also be the quickest to rebound. Retailers will be less inclined to spend discretionary funds on preventative maintenance. But mission-critical break/fix work is essential to keeping businesses up and running: It will not be impacted because businesses can’t afford to drop it. Discretionary maintenance will eventually follow suit, and maintenance spending will recover in roughly one quarter.
This level of granular insight is priceless for field service organizations with the flexibility and capacity to adapt to changing demand. If your company can stay ahead of recession induced shifts in customer spending, you can weather difficult conditions, position yourself competitively, and win in the recovery.
Three things you can do now
Get granular: In a recession scenario, the market will pay a premium for service providers that demonstrate a well-versed understanding of the volatility upending their customers’ businesses. Rather than falling back on industry-wide trends, familiarize your organization with service types and equipment directly connected to vertical revenue.
Stay fast and agile: The market changes quickly. Change quickly with it. Stay connected to your customers and their needs. Attune your organization to those changing needs. Engineer fixed costs out of your P&L and embrace a variable cost structure. Take a hard look at your labor sourcing options, and consider how a blended workforce can help your company remain agile in the face of dramatic market shifts.
Compete on customer experience: Digitization is here to stay. Retailers know that competing on the customer experience is a do-or-die imperative, so it should be integral to your business planning as well. Prepare for the continued influx of cabling and networking work. Be aware that client spending may get rationalized and prioritized by geography. If your company can stay flexible when servicing different geographies, that will be a major asset.
A note about our model: Field Nation is a software company and labor marketplace that enables companies to connect with thousands of independent contractors with skills in a variety of work types. Companies are responsible for defining and posting the work, negotiating and engaging the technician, and reviewing and approving each work order. Independent contractors are responsible for entering and updating their platform profiles to advertise their skills, experience, and preferences, as well as choosing when and how they want to work and manage their business.
