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AMA Research has
published a new report covering the builders and plumber’s
merchants’ market. Available for purchase at £625 from
www.amaresearch.co.uk, the report provides a comprehensive analysis
of the structure of the market and provides details of the key
players within the market. The main building product sectors are
analysed including the product market sizes, mixes, trends and the
merchants’ share of product distribution. The report also provides
forecasts of the markets prospects to 2013.
The builders and
plumbers merchants’ market is a highly fragmented market with a
small number of large organisations competing with many regional
and local merchants. The market is dominated by a leading group of
five merchant organisations. The rate of expansion of this group
has slowed in recent years and the market shares held by the
different companies have changed. Acquisition activity and branch
expansion have continued, particularly with the medium sized
companies. The trend has continued for extension of product ranges
through vertical integration activities, often focused on areas
such as timber engineering, electrical wholesaling and specialist
product distribution.
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The market experienced good
growth from the late 1990’s to 2004, benefiting from a buoyant period in
the construction sector in both new build and RMI. However, due to a
slowing of the construction sector and the RMI market, 2005/06 produced
tough trading conditions for the merchants and the rate of growth of the
market declined. Improved trading conditions in 2007 saw the market
recover, but by the end of the year the impact of the ‘credit crunch’
began to affect the UK economy and the merchants’ market. The start of
the recession in 2008 severely impacted the merchants’ market with
prospects deteriorating for 2009/10. However, the market is anticipated
to begin recovery in 2011 and reach an estimated market size of £11.7
billion by 2013. Forecasting at this time is extremely difficult and
should the recession be longer and deeper than expected, this forecast
could prove to be optimistic.
The
health of the merchants’ market is directly related to the performance of
the UK construction sector, influenced by both new build and repair,
maintenance and improvement activities. Different sectors of the
merchants market have fared differently reflecting the construction and
RMI activities. In 2007 the housing market, public construction,
commercial and private RMI all performed well, benefiting the merchants
market. By the end of 2008, due to the extremely volatile economic
conditions, faltering business confidence and pressures on credit and
finance, almost all sectors were affected, but to differing degrees.
The
product ranges carried by builders and plumbers’ merchants is large and
varied, with their main strengths being in traditional building products
such as plumbing & drainage, timber and heating & ventilation products.
One high growth market area for the merchants has been in sustainable
materials and in the energy management sector. Also timber products have
increased their share of the overall merchants’ market. The market
continues to be price sensitive driven by increased energy & fuel costs
and escalating prices of raw materials such as timber and metals.
The
role played by the buying groups has become increasingly important in the
merchants’ market and may prove invaluable in the tough trading
conditions forecast.
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