The latest instalment of The Pulse reveals a growing number of concerns for the merchant sector however, despite all this, confidence remains positive regarding the performance of their own businesses.
Merchants reported multiple problems affecting their business, including lead times and skills shortages, with supplier price rises and product availability being the greatest challenges.
However, the standout finding from the latest The Pulse research is the significant gap between builders’ merchants’ confidence in the prospects for the market (a new low of a net -35% month-on-month) and a net +30% who remain confident in the prospects for their own business. The big question is how long that gap can continue.
The Pulse, by MRA Research, is a monthly tracking survey of merchants’ confidence and prospects. Telephone interviewing took place between 1st and 9th June 2022.
Problems faced by merchants
Merchants continued to battle multiple problems in a challenging and uncertain environment — Chart 1. Nearly half (47%) of all merchants said supplier price rises were their single biggest problem in the last month. Lead times, product availability and squeezed margins were problems for over 7 in 10 merchants.
Sales expectations
Merchants’ month-on month sales expectations declined 23% points in June to net +18% — Chart 2. National (+29%) and Regional merchants (+19%) had the highest sales expectations. Expectations were weaker among Independents (-5%) and Large outlets (-10%).
Year-on-year sales expectations dropped from a net +21% year-on-year in May to +9% in June, indicating growth. Merchants in the Midlands (+26%), Small branches (+25%) and the Nationals (+37%) had the strongest expectations. Expectations were weak in Scotland (-6%), Mid-sized outlets (-5%) and Independents (-25%).
While quarter-on-quarter expectations weakened for the fourth month in a row, they remained strong overall. A net +23% expected June to August sales to increase compared to the previous three months (March to May) — Chart 3. Expectations were particularly strong in the Midlands (+61%) and among Regional and National merchants (+36% and +18% respectively).
Over half (53%) the merchants who expected sales to grow over the next three months, expected growth of up to 9% — Chart 4. One in three (32%) expected sales to grow by 10-20%, and a further 5% expected even stronger growth.
Confidence in the market
Month-on-month market confidence declined sharply in June. A net -35% of merchants were less confident in the market than in the previous month — Chart 5.
All sizes of outlet reported a drop in confidence, with Large (-50%) the least confident. Regionally, merchants in Scotland and the Midlands were least confident (-62% and -50% respectively).
Year-on-year, market confidence continued to decline with a net -33% of merchants less confident in the market in June than they were in June 2021. Mid-sized branches were still confident (+8%) but Large outlets and Small branches were less confident (-50%). There were marked regional differences with the Midlands (+4%) more confident in the market than the South (-58%) and Scotland (-44%).
Confidence in their business
While their confidence in the market had fallen sharply, merchants’ confidence in their own business remained relatively strong at net +30%, month on month — also Chart 5. Confidence was strong across size of branch (+30%) and particularly in the North (+43%). Scotland (0%) and Independents (-5%) were outliers with relatively low confidence in the prospects for their own business.
Merchants’ confidence in their own business declined Year-on-Year but was still positive (net +15%). Mid-sized outlets (+32%) were more confident than Large outlets (-5%). Merchants in the Midlands (+48%) were most confident and least confident in Scotland (-12%).
The full report can be downloaded for free from www.mra-research.co.uk/the-pulse or call Ralph Sutcliffe at MRA Research on 01453 521621.
The difference between the percentage of merchants expecting growth and those expecting a decrease is the net figure, expressed as a percentage. A positive net percentage indicates growth, a negative indicates decline. Net zero implies no change.
About the Pulse
The Pulse is a monthly trends survey tracking builders’ merchants’ confidence and prospects over time. Produced by MRA Research, the insight division of MRA Marketing, it captures merchants’ views of future prospects in terms of sales expectations, confidence in their business, confidence in the market, and the key issues and problems they experience.
This report is the 38th in the series, with interviews conducted by MRA Research between 1st and 9th June 2022 (5 working days). Each month a representative sample of 100 merchants is interviewed. The sample is balanced by region, size and type of merchant, including nationals, regional multi-branch independents, and smaller independent merchants.
Download the full report at www.mra-research.co.uk/the-pulse.
