Brazilian construction industry reacts to Covid-19 with digital

Brazilian construction industry reacts to Covid-19 with digital 1

Brazilian construction retailers and sector businesses are adapting rapidly to new ways of trading during the Covid-19 outbreak, with tools such as WhatsApp gaining more relevance in the last few months, according to new research.

A survey from Juntos Somos Mais, an ecosystem led by sector giants Gerdau, Votorantim and Tigre comprising of over 75,000 retailers and 20 major Brazilian construction firms, has found that 86% of the 1.400 businesses polled in the second week of June 2020 believe they will manage to overcome the current crisis.

When asked about the impact of the pandemic on revenues in 2020, 60.6% stated the crisis will not change their forecasts for 2020 – an increase of almost 40 percentage points compared to the previous survey in May. According to the study, much of that confidence is due to the ability of these retailers of doing business remotely and their rapid digital evolution.

“The construction sector spent the last five years coping with a GDP drop and retailers learned to live in the crisis, which makes them more prepared to face this moment”, said Antonio Serrano, CEO at Juntos Somos Mais.

According to the executive, there is “a lot to do” when it comes to the digitization of retailers operating in the construction space, but there is “a lot of resilience and creativity in the sector” when it comes to finding new forms of trading.

At the time the survey was carried out, most of the companies polled (79.2%) were open, but with several restrictions in place regarding access to stores and opening times. Despite the current limitations, the study noted construction firms learned to operate through digital means and those developments are enabling companies to better respond to changing consumer demands.

In May, when just over half of construction retailers were open, 43.6% had some sort of e-commerce and delivery capability in place, according to the survey. By comparison, the percentage of digitally enabled businesses in the sector jumped to 60.6% in June. The “click and collect” capability was offered by only 11.9% of stores in May and in June, 30.9% of stores offered that option.

Messaging as a sales channel

WhatsApp gained additional momentum as a sales channel for the businesses active in the construction space, the Juntos Somos Mais research noted. Before the pandemic, 90% of sales took place in-store, followed by 4.8% of sales over the phone and 3.8% through WhatsApp. After the pandemic, face-to-face sales dropped to 60.4% while the messaging app became the second most relevant channel at 20.3% with sales over the phone increasing to 17%.

The appeal of WhatsApp as a business platform in Brazil is significant: some 77% of WhatsApp users in Brazil communicate with brands and companies through the app to ask questions and get additional information about commercial offerings, according to a study on messaging in Brazil, carried out by Opinion Box and Mobile Time prior to the pandemic. About 65% of those polled want to get technical support through the app, while 61% want to receive special offers and discounts.

The Mobile Time research also found there is a massive appetite for financial services delivered through WhatsApp in Brazil, with 61% of Brazilians wanting to use it to make payments and transfer money.

According to separate research by Kantar on behalf of Mastercard in May 2020 with over 500 Brazilians on changes relating to payment habits as a result of the Covid-19 outbreak, 56% of Brazilians polled said they had changed their payment behavior due to the pandemic with about 75% reporting an increase in the use of digital payments due to social distancing recommendations.

The opportunity in Brazil prompted Facebook to choose Brazil, its second-largest market after India, to launch WhatsApp Payments in June. The company positioned itself as a platform to support the economic recovery of businesses, particularly small and medium enterprises, in the post-coronavirus recession. However, the country’s central bank and antitrust watchdog ordered the suspension of financial transactions via the messaging app as part of an investigation into the threats that it presents to the national payments system.

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