Economic shifts as homes become hubs for work, learning, fitness and entertainment
By Arianna Todeschini, Corporate Business Development
How is the epidemiological crisis and the imperative to implement smart-working influencing purchases in the B2C and B2B goods markets? Almost a month after the “stay at home” order it’s difficult to imagine that we’ll return to a “normal” life when the restrictive measures are lessened. Having been obligated to adapt our lives at “home” has profoundly changed all of our needs. To meet our social needs, now we enjoy digital cocktails with friends at “skyperitivi”, attend web concerts and go to digital get-togethers. The same programs that allow us to see our distant friends are those that we use for conference calls, staff meetings, appointments with clients, and refresher courses.
The requirement to use smart-working, whenever possible, has accelerated the digitization process, transforming thousands of living or dining rooms into workspaces.
One might think that physical immobility has led to a decline in consumption in all commodity markets and a relative decline in distribution, but this has not been the case. Despite the fact that many businesses are closed, and there are transport bans in some sectors, major retail distributors have not only borne the blow but have become a mainstay in responding to the growing needs created in this period – managing to adapt and deal with the mass of requests coming from many thousands of users.
After a muted beginning and a drop in February, B2C retail sales grew globally by 8% in 2020, exceeding those during the same period in 2019. The undisputed leader is online sales, which has seen uncontrolled growth in demand, reaching an average of 22% more than the previous year, with peaks of +34% between the end of January and the beginning of February; then slowly decreasing, approaching the median value.
If the B2C market has seen 8% growth, the B2B market has outperformed it, rising to a 9% increase compared to 2019. The growth driver is most likely company’s need to equip their employees with the tools they require to continue working remotely. These investments are not only being made by multinationals and large businesses, but also and above all the request coming from small and medium IT consultancy agencies is spurring demand.
The need to upgrade computer systems marks the beginning of an upward parabola starting from the last week of February. Underlying the increase is the demand for communication and computing equipment and the upgrading of infrastructure for connectivity and entertainment.
The most popular devices are: headphones (+75%), smartphones (+71%), wireless mouse (+49%), portable computers (+43%), webcams (+41%), monitors (+16%), printers (+10%) and routers (+9%). This growth data is only surpassed by that of the B2C demand, linked to home entertainment, such as internet connection enhancement systems (+451%), a variety of wearable devices, speakers or sound systems, and gaming sets/boxes/consoles[1].
These market shifts represent a major opportunity, not only for those in the industry, but also for the entire downstream chain. When this period comes to an end and it’s possible to return to selling all types of products, and not just those deemed essential, all of the objects that are necessary for the care, transportation, and protection of these technological tools will experience exponential growth.
There are some irrefutable facts: physical sales are declining, online sales for B2C and B2B are experiencing strong growth, retail purchases are mainly concentrated on electronics for smart working and increased connectivity.
So, if online distribution has seen an unexpected boom – comparable only to holiday seasons, such as Christmas, or to programed sales-drives like Black Friday – traditional, brick-and-mortar stores, suffered a sharp drop in sales at the beginning of the health emergency, (especially traditional retail outlets and specialty shops). Some larger retail chains have been less affected (because they also sell food), and businesses will have the task of reinventing themselves in order not to close their doors or to reduce economic losses.
Many companies will have to update and change their offer in order to compete in the market. For example, clothing manufacturing firms have already started producing and selling masks. We’ll see an increasing number of UV disinfection devices, equipment for working from home (like the items mentioned earlier), but also many ergonomic supports for the new home offices, along with new home fitness equipment on the market. They will all have to deal with the challenge of strengthened online retailers, both for B2C and B2B.
The changes brought on by this period will have not only short-term but also long-term repercussions. However, we’ll also be able to observe them in the medium and long term in our own personal habits as well as in the markets.
[1] Source: GfK distribution panel, global sales unit (2020)
Up until a few days ago, if you had asked me to describe a ‘smart-worker’, I would have thought: young, technophile, phone always in hand, laptop in the backpack, tablet under their arm, but above all always ready to go somewhere or always travelling. In short, an intensely dynamic person, a true digital nomad.
Today many of us have found ourselves working from home, transforming the living room into a hub for video-calls and meetings as well as an operational headquarters for dealing with tasks both large and small. In the end we’ve all become digital nomads, using technology on a daily basis and pushing it to the limits to make up for our physical immobility; relying on smartphones, computers, webcams, speakers, and portable printers to carry on our work and keep all of our contacts open. This has led to an increase in demand for some essential tools or those which facilitate agile work methods.
Among the various gadgets available on the market are some that can turn the house into a real hub to connect with the world. A number of them have become indispensable:
