COVID-19 and its effect on the construction supply chain

COVID-19 and its effect on the construction supply chain

In these unprecedented and uncertain times, what impact is COVID-19 having on the construction and merchanting sectors? Peak’s Jack Nolan discusses…

As the nation continues to react and adapt to the ongoing coronavirus pandemic, it’s fair to say a lot of the focus has been on high street retail, and how smaller businesses are under immense pressure to survive. But, what about construction? The sector that contributes…

  • £117 billion to the UK economy
  • 6% of country’s total economic output
  • Generates 2.4 million jobs
  • Accounts for 7% of the UK’s total workforce

While there is still clarification required around what the government deems to be “essential work”, for now it appears that construction has been given the green light to go ahead – although many contractors are taking matters into their own hands and are closing down sites. Furthermore, tradespeople (many of whom are self employed) working on building sites and smaller scale projects, may want/need to be able to continue. As it stands, they’re going to be able to, as long as it is safe for them to do so.

Consequently, and due to long term uncertainty, merchants are currently seeing a huge spike in demand – not only for home renovation and improvement products, but the larger construction materials needed for bigger projects. While it’s not quite the panic buying seen in supermarkets, companies want to have peace of mind that they have the right materials to complete their job and don’t lose any vital work.

Across the country, merchants both large and small have been doing their best to fulfil this demand, but often they have not been able to do so. Inventory has not been in the right place and increasingly manufacturers are shutting down production.

Many merchants have kept their branches open as long as possible but, inevitably, we are now seeing more and more closures being announced with further governmental guidelines being enforced. It does appear that the industry is slowly, and probably rightly, grinding to a halt.

It’s time to embrace e-commerce

What is clear is that there has been a staggering uplift in online orders over the past fortnight. Merchants with a strong e-commerce presence, who can offer click and collect or deliveries, are best placed to help. Increasingly, as we see more and more merchants close their doors due to COVID-19, this will lead to a huge drive for merchants small and large to focus heavily on e-commerce and follow in the footsteps of other sectors. 

It’s no secret that the construction and merchanting sector is behind the curve when it comes to this area, but it is definitely heading in the right direction. Time will only tell how long this inflated demand will last, but for now, it means that merchants have to quickly learn how to take online seriously. Having a well-designed website and driving traffic to it is a good start, but it needs much more than that to be a long-term success.

Construction supply chain and the impact of coronavirus

Artificial intelligence (AI) can play a significant role in providing a personalised experience for every single customer both in branch and online, making sure that you are engaging with them in the right manner, wherever they are in their purchasing journey.

This could be for a customer that is visiting you for the first time through to a long standing customer that has been loyal to your business for a long period of time. Taking away the pain for them having to trawl through your branch or website, and making it easy for them to find the right product, is key. Additionally, ensuring that you maintain the right levels of inventory in the right locations so that it can reach your customers is equally as important.

Undoubtedly, online will never be able to completely replace the ability to go into a branch and have a one-to-one chat with a knowledgeable and friendly member of staff, but it’s essential to replicate this as best as possible in a digital setting. For now, it may be the only way that many merchants can transact, so it’s critical to get it right. 

Shifting to a new way of working

As I’m writing this (Wednesday 25 March), we’ve heard multiple stories of tradespeople not being able to buy products from their usual merchants. As a result, they are increasingly shopping around, with many happy to do so online. It doesn’t take much for them to find a new supplier who can make their lives convenient and help them get the products they need. Once their data has been captured, it then becomes easy for them to be marketed to with further and more relevant product offerings.

As merchants shift to a new way of working, with the hope that normality will resume as soon as soon as possible, what is clear is that e-commerce will play an integral role. For many, it may mean the difference in terms of short-term survival – and for some, it will become the long-term new norm.

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