The Builders Merchant Building Index

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VALUE EX VAT Index Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Total Builders Merchants 100 108.7 95.4 99.8 113.6 112.9 100.9 106.0
Timber & Joinery Products 100 108.3 96.6 100.0 109.0 111.1 100.7 107.1
Heavy Building Materials 100 108.9 94.5 99.3 114.1 113.6 101.4 105.7
Decorating 100 110.4 98.1 99.6 107.0 110.0 98.2 101.7
Tools 100 102.5 95.1 97.8 103.5 102.8 97.3 106.7
Workwear & Safetywear 100 108.0 104.9 108.2 100.1 99.4 105.5 108.8
Ironmongery 100 109.1 101.6 107.5 112.2 115.5 107.4 115.3
Landscaping 100 115.9 81.3 89.9 142.2 127.0 89.8 96.1
Plumbing, Heating & Electrical 100 104.1 109.0 112.0 105.2 105.3 113.9 119.9
Renewables & Water Saving 100 82.5 90.5 74.1 69.1 66.5 59.0 78.2
Kitchens & Bathrooms 100 106.6 98.5 103.7 104.1 106.1 104.7 110.6
Miscellaneous 100 103.4 99.0 108.1 111.3 115.1 109.4 115.5
Services 100 107.9 99.0 101.0 114.7 113.9 98.9 99.3

Source: GfK's Builders Merchants Total Category Report - July 2014 to March 2016

Quarterly Overview - Q1 2016

A good start to 2017 for Generalist Merchants and a positive outlook despite the uncertainty.

The current outlook for the Repair, Maintenance and Improvement sector is positive, with a backlog of project orders. The new build market is healthy and in Q1 2017 we saw the highest level of new home registrations in 10 years1. However, with an upcoming General Election and Brexit negotiations still to begin, the longer-term is uncertain. Stability in the property market is needed and delivery on promises such as social housing from the Conservatives or improved quality of rented homes from Labour will benefit the channel alongside pre-existing incentives and accessibility to finance.

Anticipated price increases could lead to even more price-savvy trade customers looking for the best deals, shopping for bricks or insulation in the same way they do their next 50” TV. That bodes well for merchants who have developed an online strategy and ensure they are competitively priced.

Increasing home improvement costs and inflation growing faster than wages may impact consumers’ intentions to spend. However, as property transactions slow, consumers may invest in their current homes making them fit for purchase when trends pick up, contributing to why we see consumers’ intentions to spend on property/renovation in the next 12-24 months at their highest levels in 10 years2.

Continued downward trends in the housing market would have significant implications for merchants. March saw the weakest house price growth rate since Oct-13 and transactions in Q1 2017 were 20% down year-on-year3, meaning less significant investment in newly purchased properties. Something to watch.

Focussing on generalist merchants, 2017 has started well, but a late Easter meant two more trading days in March 2017 vs 2016, generating slightly artificial total sales growth of 11.4%. That’s still 1.7% growth per trading day4. With two fewer days in April we expect much slower growth in the next report.

March’s strong performance coupled with a warmer, drier period were key to a 5.9% sales growth on Q1 2016 (+2.6% per trading-day)2. Tools (+8.8%) and Ironmongery (+7.2%) were the fastest growing categories this quarter. While the ability to start external works in a warmer, drier winter meant Timber & Joinery (+6.7% – driven by Timber and Sheet Materials); Landscaping (+6.7% – Block Paving/Kerbs); and Heavy Building Materials (+6.2% – Bricks/Blocks and Insulation) all saw growth greater than the total channel4.

1 ONS
2 GfK Consumer Confidence Barometer April 2017
3 HMRC
4 GfK Total Category Report Mar-17

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