RIO DE JANEIRO, BRAZIL – Before the health crisis that forced the closing of physical stores, e-commerce represented an average of 9.2% of retail store revenues. However, in July last year, just 4 months into the pandemic, this figure more than doubled to 19.8%. And by June this year, e-commerce already represented 21.2%.
“The result confirms with figures that companies accelerated their digitalization process during the pandemic, mainly to minimize the negative impacts of the drop in the flow of people in physical stores,” says economist Rodolpho Tobler, coordinator of the Commerce Survey conducted by the Getúlio Vargas Foundation.
According to the criteria used in the study, online purchases include sales made on the website, in the stores’ apps, and through WhatsApp.
The rapid digitalization occurred almost uniformly in companies of all sizes: small, medium and large. With the reopening of physical stores, Tobler says there may be some correction in the coming months, but he believes that many changes are here to stay.
He argues that this new way of selling has attracted new consumers from several locations in Brazil and has had a favorable impact on retailers’ business.
PANDEMIC IMPACT ON BUSINESS
To assess the net balance in sales caused by he pandemic and the boost from online commerce, the economist compared the performance of two groups of retailers operating online.
Companies whose e-commerce share in revenue is higher than the industry average have managed to achieve a better sales performance since mid last year until today, compared to the group of companies whose online share in business is below the market average.
The economist highlights two important moments that show that the most digitized companies are ahead of the least digitized in sales performance.
The first moment was at the end of last year, when the recovery of commerce was driven by retailers whose online sales accounted for a larger share than the sector average, according to information pointed out by the survey, taking into account the level of current demand.
The other moment was earlier this year, with the second wave of the pandemic. The study shows that all retailers were affected due to more severe restrictions on the operation of physical stores. However, companies with online sales as a share of revenues above the market average suffered less and still have an important demand for their products, Tobler notes.
Another significant result pointed out by the FGV survey is that 49.7% of companies – almost half – did not make any online sales before the pandemic. In July last year, this share had dropped to 28.4% and in June this year it reached 20.2%.
This means that almost 80% of all retailers consulted in the survey were using digital channels. This number is even more significant for larger companies, with over 90% using online channels. Smaller companies remain more resistant to digitalization, with almost 30% of the number of retailers focusing on physical stores only.
TREND
With the progress of vaccination and the reopening of the economy, Tobler believes that the trend is for retail sales to stabilize as a whole because of greater competition from service spending that was set aside during the most critical phase of the pandemic.
Nevertheless, Tobler thinks that the online sales share in Brazilian retail commerce as a whole, which was around 5% before the pandemic, may close this year at 10%.
ALMOST HALF OF NOVO MUNDO’S SALES ARE THROUGH E-COMMERCE
Founded in 1956 in Goiânia, the regional Novo Mundo chain, specialized in selling furniture and electronics, was one of the companies that used the pandemic to accelerate its digitalization.
The retailer has been selling through its website since 2000, in addition to physical stores spread across 9 states in the Midwest, North and Northeast regions and in the Federal District. “Before the pandemic, online represented 22% of our revenues and today accounts for 40%,” says Novo Mundo Digital director Matheus Sepulveda.
In addition to the website, under the online umbrella today are sales made through the store’s app, WhatsApp, the retailer’s marketplace, and all purchases influenced by the digital medium. The director says that online sales grew 58% last year compared to 2019 and ensured that the company repeated the previous year’s revenue.
With the closure of physical stores due to the pandemic crisis, the retailer implemented sales through WhatsApp and the app. But the main boost came with the digitization of physical stores in the period. “We had already woken up to digital, but the pandemic accelerated this change,” Sepúlveda says.
The 139 traditional stores went through a radical reform in the way they operated to consolidate themselves in a multichannel format. Salespeople became consultants and were responsible for the sale as a whole, from choosing the product in the physical store or online to payment.
Online and physical store sales began to work in coordination, with consumers being able to buy online and pick up at the store, or choose in the store and buy on the website.
In addition, stores became mini-distribution centers, providing greater agility to the delivery of online purchases. “We currently deliver online purchases in up to two hours in state capitals,” the director says.
The transformation from 139 traditional physical stores to the multichannel format cost the company R$75 (US$13.8) million. Last month, the retailer resumed its store opening plan. There were 5 new points of sale in September. “We want to increase our share in the states where we are present,” Sepulveda says.
With a projected revenue of R$1.2 billion this year, the company intends to open 3 more stores by December and 20 next year, with e-commerce as an ally.