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The renovation market as a crisis-affected reality: the rise of eCommerce in the construction sector8 min read

While the construction market was once perhaps one of the sectors the furthest removed from the digital world, things are now changing rapidly. The current pandemic and the various measures (bonuses and government incentives) have tackled the system; if we add to this the raw material crisis and the current supply difficulties, the result is a very interesting situation to study developments in. MBK Fincom, which deals directly with the ProduceShop platform, decided to carry out research on the subject

At a time when people were saving on certain services, the consumer market took over. This change of habits affected not only the purchase of goods; in the perspective of spending more time at home, and in a new wave of collective consciousness, people started to invest in construction, renovations and refurbishments.

This is also thanks to the intervention of the Government; to revive a sector seriously affected by the Covid blockage (construction), bonuses, incentives and decrees encouraging renovation have been proposed and extended. Construction sites have started to appear with an accelerated growth trend, perhaps too accelerated; the sudden lack of raw materials and the soaring cost of inventories led to the early closure of the many sites opened during the brief recovery.

In the midst of this crisis (the causes of which we will explain), new solutions have emerged combined with the digital world of eCommerce

A market short of raw materials

If the post-crisis period has meant a rebirth for many sectors, this has not been without consequences; current market trends show that the situation is more problematic than it might seem.

The shortage is not only of useful materials for industrial production (iron, copper, timber, insulation materials); it also involves products such as corn, wheat, coffee, soya and other goods for consumption in the most diverse sectors.

The reason is to be found in a chain of causes; from a “gold rush” in the Covid atmosphere of markets such as China and the USA, which have monopolised all availability, to mere speculation. Localised droughts and floods have halted or destroyed harvests and mining activities. Not to mention the pandemic situation itself: in addition to completely disrupting the dynamics of supply and demand, the virus has led to a change in import and export regulations, almost everywhere.

As the most of the world’s goods are now transported by sea, this has led to a significant transfer of human capital (sailors and operators); The restrictions imposed by the various national authorities to contain the spread of the Coronavirus has drastically reduced the number of resources that can be deployed. This has consequently frozen part of the market, increasing freight and transport prices considerably (already undermined by the container crisis, which we also discussed in a previous article).

The lack of raw materials leads construction to problematic situations
The lack of raw materials leads construction to problematic situations

Another cause: inventory management

To make matters worse, many companies were disorientated at the start of the pandemic, and stocks were poorly managed (….); while pre-crisis trends led to proper supply management, resulting in a positive build-up, today most companies find themselves with stocks nearing depletion.

As last factor to consider there is the great uncertainty that the Pandemic has caused in the investment and development strategies of thousands of companies, both large and small. A general climate of uncertainty, combined with the above-mentioned restrictions, has led to a suspension of planned investments. All projects designed in the budgets of clients and contractors and therefore spread over time, which after a sudden stop were given the green light again with the recovery, causing a simultaneous rush to the construction site.

Rising prices and difficult markets, including the construction market, have had a significant shock.

Construction, renovation and home improvement: a mixed situation

As a response to the months of closure, many people have decided to make a turnaround, devoting more resources to building and renovating their homes than in previous years.

While this situation can only have been beneficial to a market that had long seen periods of stagnation, on the other side it has generated several paradoxes.

First of all, the polarization of the market towards a specific sector, especially in an unnatural or sudden way, is never a good sign; monopolization leads to speculation and difficult management of capital and materials. Things that, as we have seen, generate uncertainty and negative results.

In addition, the State has responded (partly for incentive, partly for profit) with a whole series of bonuses and incentives; these actions have, in a way, ‘drugged’ the market, pushing suppliers and professionals to manage work and procurement in an alternative way. Although innovation is always a good thing, some dynamics require more time.

Lastly, the scarcity of raw materials inevitably led to a shortage of materials in progress; the ever-increasing demand coincided with the stock debacle, leading to the early closure of thousands of production sites in progress, and to all the consequences of this: workers in unemployment benefits (remember that during the Covid period there was a freeze on dismissals), state coffers in difficulty in management, companies in deep trouble and, above all, hundreds of thousands of consumers who found themselves having paid, in whole or in part, for a service that was not completed.

In the face of the (partial) failure of the ‘traditional’ management of the restructuring market, perhaps out of necessity, a new player has stepped in, one that in the past was more active in B2C detail than in supply: eCommerce. Let’s see how.

The entry of eCommerce into the renovation sector: redoing your home online

Renovating a house can be seen, from a psychological point of view, as a clear response to a need for change; months of constraints seeing new life in a complete redesign of theown comfort zone. It goes without saying, however, that this change follows new habits.

Given that during the period of restrictions, most of the population turned to different types of virtual shop to buy, this consumption trend has become firmly established among users. Moving away from a whole range of conveniences that eCommerce offers (virtually unlimited choice, payment security, fast shipping) is an impossible step to take now; consumer behaviour is, for better or worse, irrevocably linked to digital commerce.

The case of ProduceShop:

Moreover, when one is faced with a reality that moves according to its own directives, temptations increase. For example, ProduceShop, a leading operator in the Home and Leisure sector, can count on a total autonomy in its supply channels. Enjoying a personalised structure that does not have to use intermediaries, it has managed to stem the problem of a shortage of raw materials through a privileged supply chain. As a result, shortages of materials and goods are buffered, ensuring a constant and regular supply; this has a major impact on the customer experience, anchoring customers and building their loyalty, thus ensuring increased workflows.

If we continue to view everything with an eye more towards synergy than substitution, we only need to remember that construction tout court has indirectly attracted the entire home furnishing industry. While in the past customers (direct or contract consumers) mainly relied on contractors or interior decorators to choose furnishings for their renovation projects, today the ease of access to and comparison of web offers guarantees competition and viable alternatives. Not only are there concomitant markets, but customers who, after spending large sums of money on walls and fixtures, feel the need to save money, can easily choose bathrooms, bedroom furnishings or contract furniture from a reliable, secure and well-stocked site.

Digital Construction: innovation towards eCommerce
Digital Construction: innovation towards eCommerce

Towards innovation: digital construction

But it is not just a question of replacing a whole range of operators; the real innovation lies in integrating processes and operators to offer hybrid services that meet all customer requirements. This is actually a way of acting to protect one’s own network: by guaranteeing a service that is as complete and inclusive as possible, the risks of bounce-back and abandonment tend to be increasingly minimal.

This is why MBK Fincom’s development division, which is always working on the in-house-apps summit, allows ProduceShop‘s customers to “imagine” their already furnished environment and bring it back to the browser. And that’s not all: thanks to an efficient interior design service, assisted by the best professionals in the sector, it is possible to have a complete overview of all the furnishing solutions, with related articles and colour-match, for the interior and exterior of the home.

This is an integrated service that, from the point of view of UX, brings considerable authority to the company; standing out in substance, and not only in the shop window, is an increasingly complicated process nowadays.

In conclusion

Digital advancement, which previously seemed to have to compensate for management difficulties (marketing, logistics, administration), is now eventually embracing every part of the commercial chain. This implies a clear change in the way of doing retail: adapting and standing out, trying to cover every single free space in the market offer.

It goes without saying that, in order to keep up with the times, it is essential to equip oneself with the right weapons: technical innovation, financial prudence, and a creative and enterprising spirit.

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