Each May, some of the industry’s supply channel-focused publications release annual reports, listing the industry’s leading LBM dealers and distributors as well as the economic trends that have shaped their businesses the previous year.
This year saw the release of two new lists—the LBM Journal 100 and the Construction Supply 150 from Webb Analytics—which were published in May following one of the most unprecedented years in construction history. From the uncertainties at the onset of the pandemic to the housing and remodeling boom that soon followed to the supply and pricing challenges going on now, the building supply industry has been challenged in ways most had never seen before. And many dealers navigated extremely successfully.
Here are a few observations from LBM Journal and Webb Analytics for how dealers and distributors weathered 2020 and what trends are shaping up in 2021.
• Acquisitions continued: LBM dealers continued to scoop each other up. The most high-profile was Builders FirstSource purchasing BMC, growing from 440 locations to 550 locations in the process. But the moves weren’t limited to the big players, with dealers of all sizes taking advantage of opportunities to expand in size and geography via acquisition.
• Retail sales big, commercial suffers: With the surge in home improvement and DIY projects, it’s not surprising that home centers and dealers with heavy percentages of retail customers posted some of the biggest growth last year, as reported by the Construction Supply 150. Unfortunately, companies selling commercial-heavy inventories, such as steel studs and ceiling systems, saw declines. “It’s pretty clear that homebuilding will remain strong, and surveys suggest big-ticket remodeling will rebound as homeowners become less fearful of having remodelers working in their kitchens and baths,” Craig Webb wrote in the CS150.
In looking ahead to this year, a majority of CS150 respondents believe new construction and remodeling will continue to grow, but most expect retail sales, as well as multifamily and commercial, to remain the same.
• Labor remains a challenge: 77% of the LBM Journal 100 reported challenges with recruiting, hiring, and retaining employees, with drivers and yard workers the hardest-to-fill positions.
• The power of relationships: LBM dealers have always touted the importance of employees and customer relationships, but the pandemic drove that home even more. “The silver lining of the pandemic for us has definitely been relationships,” Charlie Parks, co-owner and vice president of Parks Lumber & Building Supply told LBM Journal. “We have developed stronger relationships with our customers, suppliers, and even with other supply houses in the area that we have done some dealing back and forth with during the shortage.”
• Installed sales: More than half of the Construction Supply 150 conduct installed sales. The most popular product categories include entry doors, cabinets, countertops, interior doors, and bathroom vanities.
• E-commerce expanding…slowly: The construction industry is notorious for slow adoption of technology, but the pandemic helped speed things along. LBM Journal found that while only 33% of leading dealers are offering online sales, 78% said online sales were significantly or slightly higher than the year before. As Webb noted in the Construction Supply 150, “true online shopping is unlikely to become ubiquitous until dealers figure out how to automatically adjust a price based on the customer.”