Strong fourth quarter wraps up a solid year for merchants
The Builders Merchant Building Index (BMBI) saw strong growth in 2017. Total Q4 2017 merchant sales to builders and contractors were up +6.3% on Q4 2016, delivering stronger growth for the quarter than the running average, which in turn helped to push the annual growth numbers. Overall, merchant sales in 2017 finished 4.8% ahead of 2016 by value.
Looking at Q4 in detail, total growth was supported by the two biggest value categories, Timber & Joinery (+7.3%) and Heavy Building Materials (+6.4%). A number of other product categories contributed to the strong finish, notably Plumbing, Heating & Electrical, and Tools (both up by +7.7%), Ironmongery (+7.3%) and Kitchens & Bathrooms (+6.6%).
December slowed in comparison to both Q4 and the annual totals, but an extra trading day in 2016 hides the true performance. Growth per trading day grew faster than the annual average at +5.7%. Timber & Joinery at +8.6% was a major contributor, but internally focused categories – Plumbing Heating and Electrical +10.1%, and Kitchens & Bathrooms +8.9% – performed strongly year-on-year.
Steve Halford, Group Managing Director The Crystal Group and BMBI’s Expert for PVC-U Windows & Doors comments: “The fourth quarter of 2017 eased back in construction and the economy as consumer confidence wilted under the threat of uncertainty and political instability. But there was little sign of slowdown in merchants’ sales of PVC-U windows and doors. Enquiries slowed but Q417 orders were strongly up on Q416, and up on Q317.
“The disruptive effects of online technology, new formats and new ways to buy are turning retail on its head. Many retailers had a torrid 2017 and all the big grocers lost share to Aldi and Lidl, and to Ocado which grew faster than the rest of the online food market. The turmoil has triggered market restructuring.
“But it’s not a battle between online and bricks and mortar: the first part of the customer journey is mostly online. The challenge is combining them into a slick Omnichannel experience that’s how people like to buy. And from their own experience builders are aware of best practice, because who doesn’t buy online?
“We’re all going on an Omnichannel journey with showrooms, online software that’s more transactional, videos, online configurators, a new sales toolkit and measuring service and training. Buying is changing, and we need to help customers change how they sell to match how their customers want to buy.”
BMBI Experts speak exclusively for their markets, explaining trends, issues and opportunities. To download the latest report, visit www.bmbi.co.uk.