An old cliché, I know, but true for today’s building supplies industry - times they are a changing.
An important role for any industry association is to keep an eye on the horizon and identify changes before they descend unannounced on members.
In that vein, it is apparent that the future of traditional single site timber merchants may be under threat.
Sure, those with niche markets or specialist product ranges will have a degree of protection, but others are vulnerable.
Why - simply because the bigger building material supplies chains are getting bigger in line with the larger building groups.
They are also able to offer builders and other trades ‘total solution’ buying arrangements, having the capacity to supply everything needed at the one point-of-sale.
This reality is somewhat analogous to the reasons why people now shop at Woolworths or Coles and why the single site butcher and grocer have all but disappeared off the planet.
It has become apparent that the larger multi site building materials suppliers are implementing further actions to grow their share of the trade market.
These include expanded special order business for products like water tanks, solar hot water systems, doors, flooring systems and joinery.
They are also selling products by having arrangements in place with manufacturers that enable products to be ordered and delivered directly to work sites.
There is little doubt in my mind that such initiatives will have significant implications for timber merchants and other specialist trade only businesses.
This increased focus on trade customers, plus the ‘total solution’ approach by the large building material suppliers is, in my view, going to further erode the market share that has traditionally been the domain of the traditional timber merchants.
The larger chain outlets are also increasing their effort to chase DIY and owner builder custom.
This, in part, is occurring because the big-boys-on-the-block recognise that in the current fairly flat market there has been an appreciable shift in building from new homes to additions and alterations.
My assessment is that the future prospects for the single site traditional timber merchant will become more precarious and that an industry ‘shake out’ is likely.
It will be important for individual businesses, therefore, to review their current status and examine future options. That is something TABMA will be looking to help members with in the future.
It is also clear that product purchase arrangements being developed by the larger multi site building materials buying groups and suppliers should send an unambiguous message to wholesalers. The message here is similar to that for merchants.
In blunt terms, the take away line is get bigger or get out.
The cost of doing business as a wholesaler, plus the squeeze on margins that is occurring will put real pressure on smaller wholesalers.
Don’t think for a moment that industry associations are somehow immune from these market place pressures and the need for change.
All timber industry associations should take stock and have a hard think about their future direction and activities.
Certainly TABMA has been attentive to market signals and to advice from members and political ‘suggestions’ about better positioning ourselves to provide for the ‘total solution’ needs of the timber industry.
TABMA has some exciting initiates in the pipeline to do just that in a NSW, Queensland and Western Australia.