Builders’ Merchants

As distribution channels blur, builders’ merchants face increasing pressure from big box players.

Builders' merchants focus mainly on professional clients such as craftsmen and contractors. The lines of distribution that bring building materials to market have blurred in recent years, adding complexity to the task of identifying the best route for a particular product.  DIY stores such as Home Depot and Lowes Home Improvement have added professional contractors to their target list, making them more of a threat to merchant players.

While these big-box DIY stores have some advantages, such as greater familiarity with digital channels and potential brand recognition, traditional merchants have built a business model around intimate customer engagement that includes variable pricing and long-term relationship management. The key will be to manage the best elements of both business models to be able to succeed in an increasingly competitive space.

A Sales Message for Builders’ Merchants

A sales message for builders’ merchants should take into account the roles and requirements of four decision makers.

Four Main Decision Makers Determine Building Materials Purchases

  1. End Customers. They make the final product choice and have increasing price sensitivity and involvement. Their primary purchasing criteria are competitive prices and their experiences in showrooms.
  2. Craftsmen. Their role in the purchasing process is the selection of distributors. Their critical purchasing criteria are logistics quality, rebates, prices, and service quality of field and internal sales.
  3. Architects and Developers. They make the preselection of craftsmen for tendering. Their important purchasing criteria are their experiences in showrooms and technical consultation quality.
  4. General Contractors. They make the negotiation of conditions with distributors and the selection of craftsmen based on tendering. Their criteria for purchasing are logistics quality, indirect kickbacks as a percentage of sales, and service quality of field and internal sales.
Industrial Goods