Builders Merchants Market Optimism for 2012

A new report on the builders merchants market from MTW Research suggests that whilst growth has been erratic in 2011 sales of building products have continued to grow, with above inflation growth set to return in mid-late 2012.
By: Builders Merchants market from MTW Research
 
Dec. 9, 2011 - PRLog -- MTW describe the builders merchants market as having experienced ‘4 distinct phases’ since 2008, with the market troughing at 60% of its normal volume by mid 2009 followed by a stabilisation of market demand during H2 2009, modest yet tangible growth returned in 2010 followed by more erratic trading conditions in 2011.  The report forecasts continued difficulties in the market for the first half of 2012 though highlights a number of opportunities and strengths which should underpin more positive performance from mid-late 2012 onwards.  

Builders merchants have endured a challenging trading period since 2008, with more than £1.8 billion being wiped off the market value since its peak in late 2007 / early 2008 in real terms, according to the report.  In addition, MTW state that customer characteristics and needs have changed significantly in the last 3 years, with a rapid shift toward a more ‘lightside’ product bias as contractors’ work increasingly comprised of second fix activity rather than new build projects.   This change in market characteristics has had a dramatic impact and reinforced the need for merchants to respond quickly to these changing demands, as well as having immediate implications for building product manufacturers and distributors.  

The report forecasts that the builders merchants market will grow in real terms from mid-late 2012 onwards, reflecting more positive demand patterns in terms of volume coupled with less price sensitivity across the industry.  However, the report clearly illustrates that the builders merchants market of 2012 will have very distinct characteristics to the ‘pre-recession’ market.  Critical success factors such as management flexibility, branch level decision making, enhanced service levels, back office efficiencies, organic growth, and higher levels of imports are considered pre-requisites by the report in order for merchants to maintain profit & sales growth in the challenging environment expected in the near term.  

In terms of longer term prospects, the builders merchants market is forecast to gain momentum from 2013 onwards, as macro-economic conditions continue to improve and consumer and business confidence strengthens alongside an improving construction market.  Sales of building products and equipment through builders merchants are set to be worth some £2.4 billion more by 2015 than current levels, with MTW forecasting steady increases in terms of both value and volume performance during the next 4 years.  

Despite the report’s assurances that the worst is over, a note of caution is raised with a review of the builders merchants industry finding that some merchants are unlikely to survive the current climate of low profitability.  The research found that 5% of UK builders merchants remain in the ‘low or at risk’ credit rating category in late 2011, suggesting that further business closures are likely in the sector in the short term.  However, MTW also point to the fact that more than 70% of merchants have a ‘good or excellent’ credit rating and that more than 90% of the industry have healthy balances sheets and are well placed to take advantage of the upturn in market conditions in 2012 and beyond.  The 220+ page report is available now from MTW Research’s website www.marketresearchreports.co.uk for £565 or by calling 08456 524324.

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MTW Research are a leading publisher of UK market research reports, databases and competitor analysis reports for a wide range of sectors including DIY, housebuilding market, environmental, construction, building, manufacturing and other industries.
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Source:Builders Merchants market from MTW Research
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