An analysis of the impacts by sector and possible responses based on branding.
Part 2 of 3
Challenged sectors
Digital maturity and pathways to new business models.
The sectors that were not forced to halt the bulk of their activities are experiencing a different situation. Some are navigating better now, with increased demand in the short term (supermarkets and pharmacies, for example), but may suffer from the recession in the coming months; others (such as most of the Services sector) are seeing a drop in revenue, but tend to recover faster than the first group as the economy recovers.
Here, even within the same sector, the impacts can be quite different. For these segments, government aid is not expected to arrive in the same measure, and the financial stability of companies is being challenged. Among the world's largest companies, the differences in market value variation between companies in the same segment exceed 30 percentage points in the Consumer Services sector and 25 points in the Media sector, for example.
Beyond the individual situation of each business, a factor that changes a business's ability to find this balance is its level of evolution in the face of the challenges posed by a hyper-connected VUCA* world – which brings new consumption habits, drives potentially disruptive technologies, and demands the reinvention of strategies.
In Brazil, the gap between companies in the same sector is largely explained by digital transformation. The Ibovespa index on May 19th, compared to March 4th – just before Covid-19 took on greater proportions here – fell 251% (3% of the market share). During this period, the shares of Via Varejo – which controls the Casas Bahia and Ponto Frio brands and whose revenue is heavily dependent on offline sales – experienced an even greater drop: 391% (3% of the market share).
Also in the retail sector, shares of B2W (Submarino, Shoptime, Americanas.com) are moving in the opposite direction and rising 34%. In addition to its fully digital business model, the company has strengthened itself through integration with third-party marketplaces, such as its partnerships with BR Distribuidora and Grupo BIG.
Magazine Luiza, like Via Varejo, originated from physical stores, but some moves towards digital transformation suggest a more developed multichannel approach, approved by the financial market: its shares rose 121% during the period. In December, the company announced Magalu Pay, its initiative in the financial sector, in partnership with Banco do Brasil, with the goal of becoming "the operating system of retail". In January, it finalized the purchase of Estante Virtual, the country's leading marketplace for used books.
With the pandemic, movements like these translated into an initiative consistent with its purpose: the Parceiro Magalu platform, which allows small merchants and freelancers to create their virtual stores for free, with support from Sebrae in training and implementation. Finally, in response to the pandemic, the company accelerated its entry into the supermarket sector – a move also made by Mercado Livre.
Reinventing our business models.
Business diversification is no guarantee of smooth sailing. In the United States, Netflix surpassed Disney in market value precisely because it has a single, growing business, while its competitor suffers revenue impacts from product licensing and theme parks, for example.
However, the ambition to diversify tends to bring greater stability, because periods of contraction in a particular business can be offset by other revenue streams. And, even more importantly: intersections are proving increasingly valuable as they pave the way for the integrated offering of products and services and enrich the collection of data on consumers and their journeys. With this crossover, operations generate business value for each other, as Amazon's evolution in recent years makes clear.
In the private education sector, educational institutions that already had Well-structured digital platforms were able to leverage them to mitigate the effects. in business – due to quarantine or economic downturn. The availability online courses, trial periods and special classes were some of the The strategies adopted are certainly yielding better results. to those who were already investing in data intelligence and improving user experience.
Something similar is happening in the healthcare services sector. Before Covid-19, behavioral data from clinicians and patients already indicated an increase in receptiveness. and satisfaction with the practice of telemedicine – remote medical care – and its increasing adoption.
Observing these changes, some companies in the sector in Brazil had already developed their applications and initiatives while awaiting regulation of this modality in the country. When it came, albeit temporarily, they were ahead of others and will reap the benefits, for example, with the expansion of their customer base and the intelligent collection of data. This is the case of Dr. Consulta, which launched a video consultation service via WhatsApp, and Sorriden, which released the first dental plan with telehealth, in partnership with Hospital Albert Einstein.
In both healthcare and other sectors, the digital imperative is to transform the vast amount of available information into practical solutions, with positive effects for both business and society. Remote consultations are on the rise and were accelerated by the pandemic, but they are just one of the opportunities opened up by telemedicine: for specialist Daniel Branco, the greatest potential "lies in everything that happens while two people are not seeing each other in real time." We are navigating the situation as best we can for now, but there is a world of possibilities beyond that in terms of digital maturity.
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Sources and references:
MCKINSEY & COMPANY. Covid-19: Briefing Materials. Global Health and Crisis Response. Based on the 3,000 most valuable companies in the world in 2019. Available at:http://clck.ru/NdxZ5Accessed on 12/05/20.
CIELO. Cielo Bulletin: Impact of Covid-19 on Brazilian retail. ICVA – Cielo Expanded Retail Index, March 1, 2020 to May 9, 2020, compared to equivalent days in February 2020, with calendar adjustment (e.g., Carnival, Easter, holidays, Mother's Day week). Available at:http://www.cielo.com.br/boletim-cielo-varejo/Accessed on 12/05/20.
*VUCA (Volatility, uncertainty, complexity and ambiguity).
