The demand side of the equation is not the only issue. As already noted, there is likely to be a shift toward hedging supply chains to ensure adequate stock. This includes the aforementioned diversification of suppliers, as well as a likely increase in par stocking with corresponding added space needs. While increased inventory space will not come close to compensating for reductions in total space due to closures and consolidations, it will add to the cost profile and capital needs for those remaining in operations. Also as mentioned before, per employee costs and other operating expenses will increase due to new operating rules and sanitation requirements as well as the pressure on wages from the crisis pay increases that will be harder to take back than to give in the first place. While overall staffing levels are likely to fall in the new operating environment, that will not fully compensate for the factors increasing costs. The probable result is a combination of price increases and squeezed profit margins. Retail has long been a major component of Indian economies, whether tourist driven through arts and crafts or on a larger scale for tribal member needs and to serve the surrounding area. Some tribes have become large scale retail developers and operators, either in association with casino resorts or because of their proximity to urban areas. Most tribal retail is still smaller scale and locally focused. In rural and tourist areas, this can offer some protection from the disruptions associated with shifts to online retailing. Indeed, online retailing can provide significant boosts to niche retailers able to establish an online presence for their unique products. It cannot, however, protect from general declines in consumer spending, local job losses and reduced tourism. Based upon the assumptions about the course of the pandemic described previously and our analysis of economic factors, prior business cycle patterns in periods of crisis, and the likely impacts of changes in operations and customer behavior, we forecast a decline in tribal retail trade revenue of 21.0 percent for 2020. For 2021, we forecast an increase in tribal retail trade revenue of 8.8 percent from 2020 levels as recovery begins on a limited basis, still leaving the industry 14.0 percent below estimated 2019 levels. In 2022, gradual but slow recovery is forecast to continue, with revenue up 6.0 percent from 2021. This will still leave the sector 8.9 percent below its 2019 level. Full recovery is likely to take an additional one to three years beyond 2022. This information is presented in the graph on the following page. Transportation & Warehousing The story of the transportation and warehousing sector is a tale of two segments moving in opposite directions. Passenger air travel and other passenger transport has been decimated by the pandemic, mostly from lost demand rather than restrictions, although restrictions have also played a part. Freight transportation and warehousing demand has surged due to the pandemic and mitigation efforts, although not without some struggles due to the supply chain disruptions previously described. Both tales are ongoing and are likely to have very different endings.
∴ PROGNOSIS
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