Predictions for 2024 have already proved contradictory. Another tough year for construction, or are green shoots now appearing? Chris Hayward, Chief Executive of NMBS, shares his views on what we are likely to see this year in the merchanting industry.
According to construction analysts Barbour ABI, last year’s rising interest rates, political uncertainty and price inflation left construction spending significantly depressed. There were thousands of insolvencies and businesses experiencing critical financial distress. Many developers, housebuilders and private households were expected to continue withholding projects in the hopes of better financial news in 2024.
This was reflected in the merchanting sector too. 2023 was a difficult year. Admittedly, it started better than expected, but the merchanting industry soon faced a stiffening market and, as the year went by, there was increasingly frequent news of projects and investment put on hold.
Price inflation, driven by both increased operating and energy costs have pushed up product prices and boosted merchants’ revenues, but this hid the truth: while turnover looked superficially good, volumes were dropping, along with profit margins.
Since the New Year, a few tiny signs of hope have returned to the market. Persimmon reported it was entering 2024 with private forward sales ahead of last year and a favourable longer-term demand outlook for new homes. Average house prices are nudging upwards, says Rightmove, a sign of cautious optimism, with property listings for sale increasing, with the cost of fixed rate mortgages starting to reduce, although they still remain much higher than they used to be.
Growth will come from new ideas, new ways of operating and adopting new technologies and processes, not the traditional ways.
But I think we are prudent to expect another tough year for builders’ merchants. In a year of electioneering and promises of jam tomorrow, not today, we are likely to see a certain amount of industry paralysis and volumes still declining.
Every merchant will want to use this year to look closely at its margins and costs.
Interestingly, I hear real confidence among some NMBS members that 2024 will allow them to build their businesses and their resilience, even in a depressed market. But they say they will do this by working in a different way – working smarter, not harder, as the saying goes. Growth will come from new ideas, new ways of operating and adopting new technologies and processes, not the traditional ways.
So, I predict 2024 will be the year of improved prospecting and much more active selling, more digitalisation and use of online PIM systems like One Place, and a greater focus on customer service and efficiencies in all working practices.
NMBS is committed to helping independent merchants achieve these efficiencies by providing product insight and software developments that will help streamline supplying and buying processes.
We are also focusing on implementing environmental, social and corporate governance best practices in 2024, so that we can grow responsibly and support our members to do the same by acting as an example in the merchant industry. We are declaring 2024 the ‘Year of Independent Builders’ Merchants’ to celebrate the huge value that these businesses provide to builders, installers and their local communities.
And finally, I can confidently predict that this year will be another to bring skills shortages to the fore yet again.
That’s why NMBS is also maintaining its commitment to supporting new apprenticeships in the industry to help reduce the skills gap in the industry. In 2024, NMBS will continue to work with LEAP and the BMF to provide programmes that are designed around specific builders’ merchant industry and construction sector needs and include Level 2 to 7 courses to provide a more specialised approach to training the next generation of construction workers.
NMBS is also closely involved still in the BMF’s pledge to achieve 15,000 apprentices across the BMF membership by 2030.
Click or tap here to learn more about NMBS’ apprenticeship work for 2024.
