PRESS RELEASE

November 2009

UK Builders Merchants Market Polarises in 2009

A new market report from MTW Research on the UK Builders Merchants market has found that ongoing price sensitivity and product price inflation is dividing builders’ merchants’ opinion in late 2009 with some chasing margins whilst others target lower value, volume contracts. 

The report’s findings, based on 90% of the industry, found that average product price inflation rose by 4% in 2009 as manufacturers sought to protect margins, resulting in a polarisation between those builders merchants who are more willing to operate on a value-led strategy with lower margins; and those operations that have actively avoided less profitable contracts. MTW suggest that increasingly the smaller local and regional merchants are positioning themselves at the lower value end of the market in late 2009, whereas the larger nationals have withstood rising pricing pressure to the extent where they are less inclined to supply to contracts which offer lower margins.

The report highlights a brighter future for the builders’ merchants market, with business and consumer confidence slowly returning in a number of key end use sectors, with demand returning led by public sector projects, domestic RMI activity and increasingly, the housebuilding sector. Nevertheless, MTW highlight the need for cautious optimism, with a number of remaining downsides in the market cited which are likely to dampen any prospect of rapid value growth, particularly given the likelihood of a cut in public capital expenditure in the near term.  According to the report, around 8% of builders merchants remain in the ‘at risk’ category, underlining the fragility of the market in 2009 and into 2010.

During 2009, demand shifted toward lightside building products as the market became more reliant on the domestic and smaller scale commercial RMI sector.  With housebuilders now increasingly opening up ‘mothballed’ sites, MTW point to the likelihood of a relatively rapid return to growth for heavyside products given that many housebuilders ran down their inventories during the latter half of 2008 and will therefore have immediate requirements for replenishing materials.  

According to the report, pricing pressures should ease in the near term as average product inflation falls from current levels of 4% to around 2-3% by early 2010, although profitability is likely to decline by around 25% over the full year. However, much of this contraction is derived from lower performance in the first 3 quarters of the year, with a much improved trading environment likely in Q4 2009 as volume demand returns from some key end use sectors such as housebuilding and RMI.  Whilst there remains some concern that outside the Olympics construction activity, capital expenditure in public sector construction may decline, prospects are for market growth at, or just below inflationary levels for 2010 with a gradual upturn thereafter. 

The report provides a comprehensive review of the UK builders’ merchants market in 2009 and forecasts sales to 2013 and provides sales estimates enabling market share estimation.  The report package also includes mailing, telephone and contact details, providing comprehensive industry analysis and a useful sales & marketing tool.  The report is available to purchase from GBP375 from here where a free sample is available to download or by calling 08456 524324

PRESS RELEASE

2008

Crunch Time for Builders Merchants

As the effects of the credit crunch continue to reverberate throughout the construction industry, research for a new report on the UK Builders Merchants market has found that the sector remains on a good footing to withstand the more difficult trading conditions forecast for 2008 and 2009.

Whilst growth has now clearly slowed for the builders merchants compared with recent performance, the industry is set to increase sales turnover in 2008 and 2009, according to a new report from MTW Research. In addition, a return to stronger growth in the medium to longer term is forecast, underlining the market’s resilience in overall terms.

At present, however, MTW suggest that there is likely to be a ‘tightening of belts’ by many of the merchants in 2008/9, due to the impact of the credit crunch and subsequent ‘softening’ of construction activity in a number of key end use sectors. Profitability has remained under pressure in recent years and a downward trend is likely to be sustained in the coming months as merchants focus on maintaining or growing turnover share, rather than protecting profit margins. Acquisition activity may also become more prevalent in the short term according to the report, as smaller merchants become more susceptible to takeover bids from the larger players seeking to consolidate their market position.

MTW’s “Builders Merchants Rank & Profile Report 2008” points to the strong likelihood of a return to profit growth by 2010, with pent up demand likely to support profit margins in the medium term, following the postponement of construction projects in 2008/9. Overall, therefore prospects remain positive for the merchants in the longer term, with more difficult 2008/9 market conditions to be regarded as a ‘hurdle’, rather than any significant pessimism for the industry.

Another key issue identified in the report is that average liability levels have remained relatively steady in recent years, with most merchants’ debt representing a reasonably comfortable 30% of turnover. Whilst MTW have forecast growth to 2012 for total and average debt levels, it is clear that the industry stands in good stead to withstand a reasonable degree of pressure from the decline in business confidence in 2008.

Alongside both the industry overview and ‘average’ merchant illustrations, MTW also provide a useful financial profile for the UK Builders Merchants, each with a key performance indicator chart enabling the reader to quickly gauge a competitor’s or customer’s recent performance in the market. In addition, the report also includes full mailing address details and senior decision maker contact details for the builders merchants.

The report is priced from GBP 375 and can be purchased from MTW Research by calling 08456 524324 or by ordering online here, where a free sample is available to download, alongside further details on this and other markets in the building and construction industry.

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PRESS RELEASE

2008

New Email Listing for Builders Merchants Market

The UK Builders Merchants Market represents a vital distribution channel for the UK building and construction products industry in 2008, with widely reported sales of more than £11 billion per year.

However, recent signs are that the sector has tightened since 2006 and the need for more focused and effective methods of marketing have grown in importance. In recognition of this, specialist construction research publishers MTW Research have launched a brand new, uniquely focused database covering the UK Builders Merchants Market in 2008.

The listing is designed specifically for building product manufacturers and distributors to grow their sales through the Builders Merchants market in 2008 and beyond. MTW’s database offers a traditional mailing list with more than 2,000 senior or purchasing contact names, alongside full TPS / MPS screened address and telephone data. In addition, MTW also include more than 330 email addresses for head offices and single sites, providing companies with a highly cost effective method of marketing to these distributors.

The multi-use, no restrictions database is priced at just 23 pence per record, reflecting excellent value for money. By focusing on head offices and single sites, MTW’s database also provides a more focused cost effective marketing tool, by removing the need to target branches which have little or no purchasing power.

Available to purchase now from MTW’s website for GBP450, the Builders Merchants Market Database 2008 is available in a range of formats and is compatible for all software or CRM applications. A free sample is also available to download from the website, or by calling 08456 524324. 

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