According to the latest instalment of The Pulse, as revealed in the May edition of PBM, all types and sizes of builders’ merchants across the country are now expecting sales growth. Indeed, short- and medium-term sales expectations are among the highest in two years.
Inflation is high, energy costs are squeezing disposable incomes for sure, and supply problems remain, but despite gloomy predictions from economists and Government, and journalists and commentators talking down the market, builders’ merchants have got their tails up.
Merchants base their confidence and expectations on what their customers say and do, and merchants have been getting more confident in the market — and very confident in the prospects for their own business.
The Pulse, by MRA Research, is a monthly tracking survey of merchants’ confidence and prospects. Telephone interviewing took place 3rd and 4th April 2023 (two working days).
Problems faced
Supplier price rises remained the single biggest problem for nearly 1 in 2 merchants (49%) — Chart 1. Squeezed margins (64%), Product availability (61%) and Lead times (52%) were also problems for over 1 in 2 merchants.
Trends in merchants’ problems
Supplier price rises and concern about squeezed margins were easing slightly, but remained concerns for most. Having eased in 2022, concerns about product availability were growing — Chart 2. They’re a concern for almost 6 in 10 merchants in the three months to April 2022.
Sales expectations
Month-on-month sales expectations had built to the highest level in the last 2 years. A net +78% expected to grow — Chart3. And all types and size of merchants expected growth with expectations being strong among Nationals (92%), Independents (83%) and Regionals (61%).
Expectations were particularly strong in Scotland (94%) and the Midlands (84%). Merchants in the North had strong but slightly lower expectations (65%).
Year-on-year sales expectations in April were strong (net +29), despite easing from last month. All merchants expected to sell more compared with last year. Expectations were strongest in the South (+44%), and among Nationals (+34%) and Independents (+33%).
A net +63% of merchants expected sales to increase in the six months April to September 2023 compared to the previous six months — Chart 4. Expectations had been solid in the first four months of 2023. All merchants expected growth. More merchants in Scotland (+75%) expected to grow than in other regions. But the South (+61%), North (+61%) and Midlands (60%) also expected growth. Fewer Small branches (+51%) expected to grow than larger branches.
A quarter (25%) who expected higher sales, expected them to improve by up to 9% in the next six months. Just over a third (35%) expected sales to grow by 10 to 20%, and 10% by more than that.
Confidence in the market
Confidence in the market had increased month-on-month to a net +30%, having dipped slightly in March. Confidence in the market was high in all sizes of outlet, regions and type of merchant. Scotland (+44%), the South (+33%) and Midlands (+30%) were most confident, but fewer merchants in the Midlands (+16%) were confident.
By size, Small outlets (+37%) were the most confident and Large outlets the least (+20%). Independents (+12%) and Regionals (18%) were less confident than Nationals (+53%).
Confidence in the market had also improved year-on-year, from a net +2% last month. A net +12% of merchants were more confident in the market in April 2023 than they were April last year — Chart 5. Nationals (+11%) and the North (+14%) were most confident. Independents (-4%) and Large outlets (-7%) were least confident.
Confidence in their business
Merchants’ confidence in the prospects for their own business has jumped up again, with a net +52% more confident month on month. By size, all merchants were equally confident. The South (+64%) and Nationals (+68%) were particularly confident. Independents (+25%) were less confident.
Merchants’ confidence in their own business had been building strongly year-on-year. A net +37% of merchants were more confident in the market in April 2023 than they were in April last year. Nationals (+45%), Regionals (+42%) and Small branches (+46%) were most confident. North (+26%) and Scotland (+31%) were less confident than the Midlands (40%) and South (40%).
The full report can be downloaded for free from www.mra-research.co.uk/the-pulse or call Yvette Kirk at MRA Research on 01453 521621.
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 48th in the series, with interviews conducted by MRA Research between 3rd and 4th March 2023 (two 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.
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.
