State of the Service Industry: 3 Trends to Keep an Eye On

Industry Information | June 16, 2021

For over a year now, we have been watching some unbelievable demand and trends in the in-home service industry. All the original equipment manufacturer (OEM), extended warranty, whole home warranty, or service companies we have spoken with have similar stories.

As a partner to the industry, we take our role seriously and value the opportunity to share information among members as it arises. With this in mind, we have detailed three trends below that we are keeping an eye on and wanted to ensure our partners are also aware of them.

Most importantly, we want to acknowledge the continued and unprecedented demand for in-home service requests resulting in backlogs of service, including product delivery, replacements, and new installations. This has been the single biggest comment we hear from networks.

Keep reading to learn about three trends impacting the service industry.

Backlogs and Inventory Challenges Continue

Across the U.S., many work-from-home arrangements are still firmly in place, and home renovations, appliance upgrades, and maintenance remain at escalated levels. Whether new appliances were purchased as an upgrade or replacement to an existing unit, under warranty or not, this sector is experiencing incredible demands on supply chains.

As a result of the shutdowns that occurred around the world in 2020 and into 2021, in many industries, manufacturers, distributors, retailers, and parts suppliers are now struggling with inventory flow challenges. There is a global shortage of shipping containers that are required to get products and parts from around the world to North America. In addition to the increased demand, even if the parts exist elsewhere, getting the parts into the hands of servicers is posing a great challenge.

Initially, we expected sales and demand would return to normal levels by now, but the trends have continued well into 2021 and are now predicted to stretch into 2022. The current backlog of product inventory is causing a high demand for out-of-warranty service and when the supply chain eventually catches up with consumer demand, the service industry can expect to see an increase in their in-warranty work.

Recruitment and Hiring Difficulties Abound

To address the increased demand for repair service, delivery, installation, and other in-home services, many of our partners are eagerly striving to hire more personnel. For many, this would provide a stable role in an attractive and well-paying industry. With so many workers having lost employment during the pandemic, the hope was that recruitment and job opportunities would abound. Unfortunately, attracting and hiring experienced personnel has been quite challenging for many organizations.

Without steering into political commentary, hiring continues to be a challenge as some individuals prefer not to work at this time. Whether buoyed by stimulus payments, restricted by personal or family health reasons, or hesitant considering the continued risk associated with the pandemic. Even when potential job applicants are identified, they are often faced with multiple offers and competition for their skills, especially in skilled industries such as repair and maintenance. Many applicants also “ghost” the interview, meaning they do not show up and appear to be uninterested in seeking gainful employment, which is unfortunate for the industry, consumers, and the economy. Unfortunately, the staff many servicers were hoping to recall, or hire, has been another challenge after an already frustrating year.

While we all look for the magic wand to address this situation, servicers are encouraged to work with local schools, employment groups, and community organizations that may be able to identify potential hires. Looking into the applicability of programs like the Work Opportunity Tax Credit (WOTC), which is a federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment, may also be an option. Contact local job banks and resources to see if there are hiring programs or incentives in your geographic area that you can leverage. Creativity is necessary to keep your personnel roster full.

“Right to Repair” Legislation Gaining Momentum

The Right to Repair movement has been ongoing in Europe for several years and has made its way to North America. For clarity, right to repair is the term that refers to government legislation that is intended to allow consumers the ability to repair and modify their own consumer electronic devices, appliances, vehicles, or other products. In the past, the manufacturer of such items required the consumer to only use their offered services. With equipment and items becoming increasingly more complex, many manufacturers have instituted systems whereby the only means to repair a device or obtain repair parts would be through one of their authorized vendors or original equipment manufacturers (OEM).

The right to repair argument states that the practice of requiring consumers to go to the manufacturer for repairs, parts, or information on the product has been criticized as anti-competitive, restricts any third-party from servicing, manufacturing compatible parts (that may offer more benefit to consumers, such as more environmentally friendly manufacturing processes), and can stifle innovation. Further arguments state the current practice encourages a disposal economy where products are simply disposed of and replaced with new products.

To date, right to repair legislation has been introduced in 14 U.S. states and is being discussed in some Canadian provinces as well.

The Federal Trade Commission, which governs consumer practices and fair practice and deception policies, compiled the knowledge gained from its July 16, 2019 workshop titled “Nixing the Fix: A Workshop on Repair Restrictions”, public comments, responses to a Request for Empirical Research and Data, and other independent research into a report that was issued May 2021 – Nixing the Fix: An FTC Report to Congress on Repair Restrictions.

The FTC Report looks specifically at how consumers may be impacted, and their choices limited, through the following:

• Product designs that complicate or prevent repair
• Unavailability of parts and repair information
• Designs that make independent repairs less safe
• Policies or statements that steer consumers to manufacturer repair networks
• Application of patent rights and enforcement of trademarks
• Disparagement of non-OEM parts and independent repair
• Software locks and firmware updates; or
• End-User License Agreements

What’s next? PlusOne Solutions will continue to work with and talk to our Customers, the service networks, and industry leaders on these topics. We will also continue to monitor media and other reports on these topics and share with our customers the relevant and impactful components of these issues. Until then, we are here to support you in delivering world-class service to consumers and we wish you continued success in life and business.

Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.

About PlusOne Solutions

PlusOne Solutions has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.