Jan 13 2020
In 2020, anticipated developments, both political and technological, are expected to have significant effects on every aspect of the US economy. At the industry level, revenue performance for many domestic industries is expected to continue to follow long-term trends, while others stand to benefit from expectations specific to 2020. We’ve outlined 10 of the top growing industries projected to stand out from the rest in the new year.
Medical & recreational marijuana growing
The lack of a robust supply chain is among the most limiting factors affecting the nation’s budding marijuana industry, with federal regulation being the most limiting. As the most-recent state to legalize recreational marijuana, Illinois is a prime example of the capacity improvements needed for medical and recreational growing operations. Within a week of its January 1 legalization, dispensaries sold out of recreational marijuana despite the state’s 21 growing operations.
In turn, many of the state’s growers are expanding their operations to keep up with demand. Thus, the expansion of the Illinois market is expected to be a major driver of growth in the national Medical & Recreational Marijuana Growing industry (IBISWorld report OD4141) in 2020. In turn, IBISWorld expects industry revenue to grow 25.2% in 2020 alone.
Medical & recreational marijuana stores
Similarly, as the sixth state to legalize recreational marijuana, Illinois is anticipated to drive outsized industry growth in the Medical & Recreational Marijuana Stores industry (OD4142), particularly in the recreational market.
From a retail perspective, operational efficiencies regarding inventory and cash management will be the primary factors differentiating a successful retail operation from its competition. Still, limitations on interstate trade and banking services, while different on a state-by-state basis, will continue to constrain the industry’s overall growth.
However, the congress’ passage of the Secure and Fair Enforcement Act of 2019 (SAFE Banking Act) would effectively open up the Finance & Insurance sector (report 52) to marijuana industries nationwide, and represents the most-pressing legislative catalysts for the Medical & Recreational Marijuana Stores industry in 2020. Overall, IBISWorld forecasts the industry to grow 23.4% in 2020.
Specialty online sales
Specialty online sales are expected to be a major growth area in 2020. IBISWorld anticipates significant annual growth in online sales for several specialized industries including Online Vitamin & Supplement Sales (report OD5091), Online Men’s Clothing Sales (OD5095) and Online Children’s Toy Sales (OD5103).
From a top-down perspective, robust consumer spending is expected to continue in 2020, further driving the long-term rise of e-commerce. Additionally, on a more granular level, supply chain efficiencies that drive e-commerce (e.g. payment, online storefront and last-mile logistics platforms) are becoming more accessible. Thus, with reduced barriers to entry, more specialty online operators (e.g. boutiques) are beginning to command a sizable share of the e-commerce market collectively. Overall, IBISWorld anticipates online vitamin, men’s clothing and toy sales to grow 15.0%, 10.5% and 10.9%, respectively, in 2020.
Automated guided vehicle manufacturing
The Automated Guided Vehicle (AGV) Manufacturing industry (OD4419) manufactures mobile robots used for material handling and tracking, in addition to other commercial uses. The industry is expected to grow 13.9% in 2020 alone as AGVs expand beyond traditional markets (e.g. warehousing and manufacturing).
AGVs have recently garnered interest from the Retail Trade sector (report 44-45). In particular, supermarkets across the United States have been using AGVs as robotic janitors, which are able to report on spills and trip hazards. For instance, The Kroger Company has started using AGVs to deliver groceries to costumers in test markets in Texas and Arizona. While still a nascent trend, improvements in technology and its cost-effectiveness will likely drive long-term growth in the AGV Manufacturing industry.
Field service management software
The Field Service Management (FSM) Software industry (OD5393) develops software that assists in the coordination and dispatch of field agents and technicians. The software has far-reaching applications across several sectors since its core function is to boost efficiency among labor-intensive industries.
In 2020, FSM software developers are expected to expand the accessibility of their product to small- and medium-sized businesses given the near ubiquity of mobile internet connected devices. In turn, as the FSM Software industry expands into niche markets, IBISWorld projects the industry to grow 13.5% by year-end 2020.
Social network game development
The Social Network Game Development industry (OD4564) continues to expand its market share within the broader Video Games industry (NN003). This is because it is inherently linked to rapidly shifting technological trends and standards, including faster mobile internet connections (i.e. 5G), improved smartphone capabilities (e.g. larger screens, faster processors) and software advancements in augmented reality and cloud gaming.
Moreover, given the proliferation of mobile devices, accessibility has played a major role in the expansion of the mobile and social network game development industries. High-quality video games are no longer limited to gaming consoles and PCs as they have become increasingly available on a variety of more-affordable devices.
Overall, IBISWorld forecasts the industry to grow 12.8% in 2020 as game developers continue to capitalize on improving mobile technology and expanding social networks. [For further coverage on the video game market, see our recent Analyst Insight covering video game streaming services.]
The Wind Power industry (22111d) is expected to outperform the overall economy in 2020. Over the coming year, the industry is expected to reach a stage of maturity in which industry operators shift from construction and installation efforts to operational and efficiency efforts.
This industry shift will be largely driven by the 2019 expiration of the Renewable Electricity Production Tax Credit (PTC), a 1992 federal tax credit that jumpstarted the industry’s formation. To receive the full 2016-level PTC, wind projects must come online by December 2020. With the tax credit now expired and construction projects coming to a close, 2020 is expected to be a banner year for onshore and offshore wind capacity as new wind farms come online. According to the US Energy Information Administration, operational US wind capacity is expected to reach 14.3 gigawatts (GW) in 2020, surpassing the previous record of 13.2 GW set in 2012. As a result, IBISWorld expects the Wind Power industry to grow 24.3% in 2020 alone.
Hydraulic fracturing services
The United States is expected to become the largest producer of crude oil in 2020 largely due to the influence of the Hydraulic Fracturing Services industry (OD4725). This industry provides hydraulic fracturing (“fracking”) oil and gas extraction services to the Oil Drilling & Gas Extraction industry (21111).
Despite volatility in oil and gas prices, demand for new well development in 2020 is expected to be the primary driver of industry growth. As older, traditional wells become less productive, oil and gas extraction operators are incentivized to use fracking services for greater extraction of oil and gas. In turn, IBISWorld expects the industry to grow 27.8% in 2020.
On a broader scale, IBISWorld expects the industries that stand to benefit most from 2020’s socio-economic conditions will largely be related to the marijuana industry cluster and certain pockets of the Information sector. Robust consumer spending is expected to remain the driving force behind economic growth, at least in the first quarter of 2020. Nevertheless, broad-level variables such as the US presidential election, developing trade negotiations with China and the Federal Reserve’s stance on interest rates represent major catalysts for change in the new year.
Edited by Sean Egan, Copy Editor
Infographic Design by Veronica Albarella, Copy Editor