In the Viewpoint column of PBM’s April 2024 issue, editor Paul Davies reflected on the findings of the magazine’s annual ‘Top 20’ countdown of the UK’s largest merchant businesses…
From the acquisitional maelstrom of recent years, it is interesting to note that PBM’s latest annual ‘Top 20’ merchant listing (based on the turnover figures of the UK’s largest merchant sector businesses) retains a rather familiar feel in what has been an especially challenging year for the sector and the wider construction industry. Indeed, our league table features the exact same names as last year with only a couple even shifting positions whilst – perhaps more significantly – no major ownership changes or new funding models coming into play.
However, given the merchants’ position as the fulcrum of construction industry supply chain, it is abundantly clear that the squeeze is being felt at both ends. With subdued activity in housebuilding and the cost-of-living crisis curtailing the market for RMI, the merchant sector must also contend with the well-publicised pressures on materials prices and the broader impact of inflation on business costs.
So, broadly speaking, whilst reported turnover numbers are relatively static year-on-year, this only serves to highlight the real pressures being placed on bottom lines. As the BMBI and others have been consistently reporting, while sales volumes are down this is masked by inflated sales values.
Given such challenges, it is unsurprising that ‘boosting efficiencies’ and ‘stripping out costs’ are a common refrain from our respondents. In many cases, and especially at some of the largest firms, this has sadly included staffing reductions.
“Despite the obvious common threads contained within the answers provided by the merchants for our Top 20 survey — both from those who hit the threshold for inclusion and the firms narrowly missing out — there is no universal answer to the challenges the sector faces. Instead, encouragingly, there are plenty…”
Yet despite the obvious common threads contained within the answers provided by the merchants for our Top 20 survey — both from those who hit the threshold for inclusion and the firms narrowly missing out — there is no universal answer to the challenges the sector faces. Instead, encouragingly, there are plenty…
Considerable numbers, for example, continued to expand their networks by adding new depots. Investment in estate upgrades and renovations was another common response, often incorporating additional in-branch services — such as equipment hire facilities, kitchen & bathroom showrooms or dedicated renewables centres — to attract existing and new customers alike. Improving the ‘customer experience’ was a mantra repeated in many of our responses.
Whilst day to day difficulties cannot be ignored, what was clear was a confidence in the underlying strength of the sector. The need to address the sustained housing shortage coupled with the requirement to upgrade the nation’s existing housing stock, for instance, are simply beyond question.
Accordingly, and doubtless recognising the value of experience and the ongoing difficulties in terms of recruitment, far from reducing headcount, many merchants cited reinvigorated plans to invest in staff training and development. This includes apprenticeships and dedicated initiatives to recruit, retain and promote talented individuals including those from demographics still all too underrepresented in the industry.
Further ‘digital innovation’ was also referenced across several of the responses we received. Enhancing back-office systems and investing in websites and ecommerce capabilities continues to be an area in which merchants feel they can drive efficiencies, improve service levels and grow market share.
Collating our annual Top 20 is always a valuable exercise, and we truly feel it offers a revealing temperature test of the industry. Whilst no-one can pretend it is easy out there, we are nothing but heartened by the sheer calm on display. The steely resilience of the sector and its willingness to continually look forward, to strive for improvement and to seek out new opportunities is the clearest marker one could hope for that 2024 can see a corner turned.
Click the link below to read of full commentary on the stories behind the numbers, detailing the 2023 activities of the UK’s ‘Top 20’ merchants and their plans for the year ahead:
UK merchant sector Top 20 – 2023 calendar year – Professional Builders Merchant
