Higher classes increased online shopping during pandemic

why-online-shopping - Altenburg

Brazilian families have bought more online during the pandemic and most intend to keep the pace of consumption on the internet even if the evolution of vaccination allows people to return to physical stores in greater numbers. This is what an exclusive study by the think tank Fundação Getúlio Vargas (FGV) shows, based on data from the Consumer Survey, released every month by the institution.

The study found that the pandemic has accelerated changes in the consumption habits of Brazilians and that online shopping has grown more among higher-income consumers, a fact that is likely to last and widen the gap between rich and poor in internet shopping, said Claudia Perdigão, an economist at FGV who co-authored the study.

The growing interest of Brazilians in online shopping is closely followed by large retail chains such as Magazine Luisa (Magalu), Grupo Pão de Açúcar (GPA), Via, Grupo Soma, Renner, Mercado Libre and Lojas Americanas, which are betting on the combined effect of both types of sales, in person and online (the so-called omnichannel), to boost revenues ahead of the Black Friday promotion week.

Frederico Trajano, CEO of Magalu, noted that, in the short term, the search is for the wealthier consumer: “We are prepared to carry out a more premium Black Friday both in online and offline – but in this latter case with more credit offer and payment terms,” said Mr. Trajano last week in the conference call on third-quarter results.

FGV’s research about online shopping is an item of the Consumer Survey. The work outlines the consumer profile in the Covid-19 crisis and takes into account interviews conducted in August in 1,946 households in seven state capitals. In all, 59.4% informed that they have bought more through electronic means – internet, apps and others – since the pandemic spread in March 2020.

Of this slice of those who bought more, 44.4% informed that they will remain with the same pace of purchases in the next 12 months; and 19.4% said they will decrease electronic purchases or increase purchases in brick-and-mortar stores.

The consumer profile calculated by FGV also revealed a dramatic difference in internet consumption between the rich and the poor. Among consumers who make over R$9,600 a month, 71.8% reported higher consumption in purchases over the internet during the pandemic. For consumers with monthly income below R$2,100, this percentage was 41.1% for the same answer. This gap between the rich and the poor when buying over the internet may continue, according to Ms. Perdigão, co-author of the study. This is because the poorest have less access to credit, as well as lower quality internet connections, in a context of high inflation, which erodes income. This is a scenario that does not stimulate more purchases, she said.

When detailing the survey data, Ms. Perdigão, who conducted the study in partnership with another FGV economist, Rodolpho Tobler, said that in general the results show a change in the way Brazilians buy. This change has been taking place gradually, with consumers having more access to the internet, but was significantly boosted by the pandemic, she said.

“Before the pandemic, Brazilians were shopping online, but it was more restricted than today,” said the economist. “What we had during the pandemic in Brazil was a process of acceleration of online purchases – a process that would have happened anyway, but that was accelerated by Covid-19,” she noted. The rapid spread of Covid-19 in the country led to restrictions in circulation and emptied physical stores.

Another exclusive survey to which Valor had access, the 7th edition of the Consumer Pulse survey, by Dunnhumby (an England-based company that analyzes consumer data), also shows a growing interest of Brazilians in internet shopping. In this research, the consultancy found that, with the gradual improvement of the pandemic in the country, visits to physical stores should grow again and account for 60% of total sales, compared with 40% of online sales. Two thirds of Brazilians, the consultancy projected, make both online and offline purchases. This indicates acceleration of e-commerce throughout 2020 and 2021, which has entered the routine of the country’s population, the consultancy said in its analysis.

FGV’s Ms. Perdigão is cautious when analyzing the possibility of reduction in online sales as a result of fewer cases and deaths by Covid-19, which tends to stimulate a greater presence of consumers in brick-and-mortar stores. According to her view, an “adjustment” must be expected from the stores, using stimuli to consumers to make online and offline sales: “Online shopping allows consumers to search for prices in a more agile way,” she said. “But in a physical store you can touch and try out the product,” Ms. Perdigão added. For her, both channels offer advantages. “What companies need is to establish a better strategy to combine [the advantages].”

Another aspect revealed by the survey is the fact that, among richer and poorer people, regardless of income, the food and beverage sectors were the favorites in online purchases. Ms. Perdigão said that, from the total of interviewees who informed buying in the pandemic more by electronic means, the most cited product and/or service was food and beverage commerce (52.6%). This segment was also the most recalled (among those who bought more online in the pandemic) by families with income of up to R$2,100 a month (47.5%) and in households with income over R$9,600 (64.1%).

On the other hand, the disparity in preference between rich and poor in virtual purchases of some types of products and/or services is remarkable. This is the case of telemedicine. This type of service, mentioned by 19% of respondents who reported buying more on the internet, was cited by only 7.3% of families with an income of less than R$2,100, who reported online purchases at a higher rate. On the other hand, among families with income above R$9,600, the share for this service was 29.5%.

The same happened with food services, such as restaurants and snack bars, mentioned by 43.1% of those surveyed who reported buying more online in the Covid crisis. This type of service was cited by 18.6% of the families with a monthly income of up to R$2,100 who bought more online; and by 66.1% of those with a monthly income of over R$9,600.

In general, said Ms. Perdigão, the interest in raising the pace of online shopping has increased among both rich and poor. But the rich have more financial and technological conditions to perform transactions, she acknowledged: “We noticed a greater insertion of online shopping. However, it’s clear that it takes access to the internet, to technology.”

Source: Valor international