The world had been getting used to the ‘disruptive model’ in businesses and economies around the world. Till now, these disruptions were confined to specific businesses, or at best, to a group of businesses. So, an Uber had a bearing on the commuter-transportation model, an Amazon had it on the way people shopped. The ongoing Covid19 pandemic would radically re-define the way the world moves. At buildingandinteriors.com, we look at the 10 most important implications this pandemic could have on the way the Indian building materials industry works.
1. Companies (manufacturers/brand owners/suppliers) will start re-looking at ways to reach out to their customers in more efficient ways.
Traditionally, companies have largely relied on an elaborate distribution/retail network, fully realising that this, in many instances, leaves much to be desired. There are problems like damages in warehousing (at the distribution end), unfair rejections, inappropriate display space, payment delays, new product resistance at the point of sale (at the dealer end), etc. With each company now re-looking at/questioning it’s existing business strategy/model, there will also be some thought on how to reduce the dependence on the distributors/retailers and mull over alternate ways to reach to the end-customers more efficiently. The alternatives could be relying directly and more so on specifiers, influencers, etc. To safeguard their business interests, the distributors/retailers will have to do more value-addition to hold onto the good companies.
2. Consolidation in the marketplace.
The Indian building materials market has been witnessing a series of consolidation moves over the last decade. These include C&S-Siemens and Panasonic-Anchor (electrical trade), Dorma-Kaba (hardware), Asian Paints-Sleek (modular kitchens), etc. With both big and small companies coming under increased business pressures, the Indian building materials market is going to transform much more rapidly through mergers, acquisitions and closures. Companies which explicitly spell-out cost-benefit to the customer will sail through. The mid-segment of the market will see the most activity, while a curtain may be drawn on many low and high-end companies.
3. Marketing communications will take the driver’s seat.
Till now, across many companies, sales has been seen as the supreme function. So much so that the marketing communications has been ‘portrayed’ as a distant cousin of sales. With layoffs projected to be in unpleasant numbers, and with sales usually being the most ‘people heavy’ department, the major effect of layoffs will be felt in the sales departments across companies. The companies will leverage the marketing communication function to reach out to more number of customers.
4. More reliance on online information.
Globally, there has been an increased trend on consuming business/trade information via online mediums. With the easy availability of data and speed, online consumption of information has been on the rise. Printed matter like books, newspapers and magazines have intrinsically had their own limitations and were already proving themselves to be having diminishing returns for the advertisers. And with a big chain of people involved in getting the message across in the ‘printed version’, the current situation is only going to catalyse the emergence of online information pools.
5. Exhibition business will go through a transformation
The success for any exhibition is determined by the number of exhibitors and visitors. In the present situation, a successful exhibition sounds paradoxical. Given this background, and the highly-experienced professionals who run exhibition companies, the exhibition businesses will have to come out with innovative solutions – virtual exhibitions could be a case in point. Competing shows could also team-up for the betterment of the industry. There is no denying the fact that exhibitions are vital to any industry, it’s the way that exhibitions are conducted that will define the trajectories of exhibition companies.
6. Roles of Architects/Consultants/Designers will evolve.
The specifier-community will increase it’s consumption of business information through online modes, digital catalogues, virtual displays, etc. Since we seem to be moving towards a ‘less people contact’ ecosystem, the specifiers will also, in a major shift, move towards a minimal contact milieu. This could mean that say, he/she sees and visualises solutions based on the online resource pool and than zeroes-in on ‘a solution’, and than may ask the supplier to show that very sample for the touch and feel. This will also lessen the burden on the company respresentatives to carry heavy/bulky samples all around the city.
In such a situation, when the Architect is able to give vale-adds such as a ‘digital experience’ to his/her customer, he/she will be able to charge a better fee – something which takes away quite a lot of malaise from the system. It could be a big opportunity for the deserving specifier-community.
7. Role of Retailers will expand
Retailers in India typically don’t stock supplies. Most of the products are delivered against orders. The retailers place orders on distributors when the customer at the retail counter finalises an order. With companies slated to come under increased performance pressures, the division of distributor/stockist/retailer would be blurred, and a pure distributor or a dealer function may not hold true. With the pruning of retailer network by companies, it’s also the retailer who is going to come under increasing pressure to carry inventories. He will also be operating in a more organised credit market, as discussed in point 10 below. Overall, the whole way in which a retailer operates will undergo an expansion.
8. Companies will have to find a balance between domestic and international businesses
Like any industry, the Indian building materials industry is broadly (but firmly!) divided into the domestic players and exporters. The ongoing pandemic has proven that it might not be the right model to focus on an either/or situation. Purely India-centric companies will have to look overseas and pure exporters will have to look for markets within India. The upcoming business times would offer juice to companies which are ‘opportunity driven’ and not necessarily driven by geographies.
9. Increased demand for robust products requiring minimal after-sales support
With economies projected to grow (if at all) at a measly-pace, and operating on reduced manpower, products requiring minimal after-sales service will have the potential to shine through. This presents a win-win situation for the whole building materials ecosystem – the company: as it can sell better and robust solutions, the specifiers: they can show their product understanding by specifying better solutions and the customer: he gets to have long-lasting solutions, something that will make the solution last longer.
10. Availability of credit and business loans in an organized way
One of the critical aspects of the building material industry is the credit that the dealers offer to the end user. This is the risk that business owner takes in return for the margins. But in the new scenario, where there will be significant reliance on alternative channels of distribution, the credit and business loan aspect would have to be addressed. This is an opportunity that lot of banks and financial institutions would tap, changing the dynamics of the business and resulting in an overall growth.