This Key Note Market Report analyses the UK builders' merchants market, which, in 2003, was estimated to be worth £10.1bn, an increase of 3.5% on 2002. During the past 2 years, growth in the UK construction market has supported a widespread increase in demand for builders' materials through a well-established network of builders' merchants.
The builders' merchants market encompasses sales of heavyside materials, which include cement, bricks, gravel and concrete building blocks; lightside materials, which cover bathroom accessories, ironmongery, heating and plumbing equipment; and tools/tool hire, including power drills, pumps and compressors. The prime market for builders' merchants is the private contractor market, although some sales are made to the general public.
Several factors have affected the market over the past 3 years, including health and safety issues for builders' merchants employees, the contentious issue of the imposition of full rate value-added tax (VAT) on repairs, maintenance and improvements (RMI), consolidation within the industry as three major companies - Wolseley PLC, Saint-Gobain Building Distribution Ltd and Travis Perkins PLC - dominate the market and potential competition in the market from DIY stores. In addition, major issues that affect the construction industry in general - notably the Sustainable Communities Plan and skills shortages - indirectly influence the builders' merchants market.
Consolidation within the builders' merchants market provides a strong infrastructure and has the advantage of offering high levels of investment and human resources. However, this trend produces a challenge for the large number of smaller builders' merchants operating in the market. In order to gain buying power that is even broadly comparable to that of the major players, small companies make purchases through buying groups, although the combined spending power of these groups decreases as smaller companies are taken over by large groups - the past 3 years (2001 to 2003) have seen numerous acquisitions of small and medium-sized builders' merchants. Another issue of concern is the possible threat posed by DIY stores in the small contractor sector of the builders' merchants market. Although these stores do not offer trade conditions, they have considerably longer opening hours. In addition, DIY stores have a high standard of store presentation and packaging.
The builders' merchants market is likely to develop over the next 5 years (2004 to 2008) through further consolidation and increasingly attractive presentation, which will appeal to the wider DIY market. In addition, the Internet will be used more to obtain business in the Eurozone countries. A growing number of products will be specified and sold in accordance with CE marking and it is possible that new components and types of customer will emerge as new construction techniques are developed. Overall, the builders' merchants market will be influenced by government building plans, interest rate increases and possible difficulties with consumer debt, the latter two factors having a depressing effect on market growth.
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