September 19, 2020

Repair companies measure themselves against the breakdown of the “throwaway” economy



The post-Covid consumer is increasingly aware of the need to reuse and extend the life of the products they consume. A study conducted by Wallapop, in collaboration with Ipsos, notes that two thirds of Spaniards are willing to choose to repair their products or buy second hand, compared to the acquisition of new items, and ensures that they prioritize savings. In this context, it is questionable whether repair companies can now become a model for business success.

Amparo Merino, Professor of Business Management at Comillas ICADE, points out that the repair boom must be analyzed from two perspectives. One, taking into account the economic situation, at times of lower income due to the crisis. And another, beyond times of crisis or bonanza, as a matter of substance. «The repair industry has a growing leading role taking into account European policies that include it, beyond recycling, as an essential issue. An economic model based on social justice and that takes into account planetary limits. A way of doing economy and business that transcends the pure achievement of financial value and is committed to social value. In this context, repair is important. However, it acknowledges that has to cope with a throwaway economy and planned obsolescence. “It goes against the impulses of the market, because it means less volume of production and business,” he says.

Measures and incentives

For Merino, a greater involvement and support of the administrations towards this sector “Encouraging the creation of companies or eliminating VAT on reused products, because it is a sector that generates employment as it is labor intensive”, and is clear that a profound transformation “cannot come only from small companies or from the gestures of consumers. It goes beyond individual choices; it is necessary to make the system make it natural that if a product breaks, the first thing to think about is to repair it, and not to throw it away or buy a new one. If we only think that after the crisis and the Covid everything will return to normal, the repair companies may stop making sense. But if we take into account the factor of awareness and political support, the crisis may be a small door to the consolidation of the repair industry.

Eduardo Irastorza, professor of marketing at EAE Business School, agrees that the commitment to repair is associated more with a change of mindset towards sustainability than to the need caused by the crisis or by economic profitability. “The 2013 crisis is not a reference, at that time the repair companies experienced a significant boom, but with Covid it is too early to recognize a process of cause and effect. In order to do this, the economy would have to worsen much more “and points out that” ideologically they have a future, but they face both a market of programmed obsolescence and new rental formulas that make numerous products available without the need to purchase them. ” And he points out that the future of repair will be based on hyperspecialization.

One of the sectors with a special market niche is that of housing reform and rehabilitation. The latest Reform Sector Report by Habitissimo finds that in July there was a 48% increase in requests for home improvement and where 26% of the total requests have been for some type of repair and maintenance operation. “After the health situation experienced, there is a great opportunity for companies and the reform and rehabilitation sector, to become one of the engines of economic reactivation, as a generator of employment,” he says Sarah Harmon, CEO of the company.

Cars are another of the fronts that suffer the most from budget cuts. “In crisis there are always more repairs, but with Covid there have also been peculiar circumstances,” he explains Jose Piñera, founder and president of the MKD Automotive group to which belongs. «In Spain there are between 35,000 and 40,000 workshops, a lot of super professional supply and less demand. And in such a scenario, the Covid has caused the closure of many due to lack of profitability. But that does not mean that it will not be repaired, if the consumer cannot buy a new car there will always be more after-sales ».

This expert points out that the sector “has not behaved the same as during the brick crisis. At the end of the state of alarm, there was an avalanche of repairs caused by the inactivity of the vehicles, and if the after-sales data has dropped, it has been due to the months of hibernation as a result of the quarantine. Now, they increase because the volume of sale of used cars has increased, people are afraid of public transport and cannot buy a new one. And, logically, a greater volume of used vehicles leads to an increase in repairs, “says Piñera.

700 million annually

But if there is a star sector in the world of repairs, it is technology and, especially, mobile phones: in Spain almost five million are repaired per year, a business that moves more than 700 million euros per year. Daniel Gonçalves decided only a year and a half ago to create Punto Móvil, a mobile and tablet repair workshop in Valladolid. «Telework as a result of Covid has increased the repairs of mobile phones, laptops and tablets. And with distance education, many parents have recovered laptops or tablets that they had in disuse and have refurbished them before buying a new one. But it is a business model that has been growing for eight years. Today mobile phones do not present as much innovation from one year to the next, and many consumers choose to save and prefer to repair ”.

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