Building Material Dealers
Description
Companies in this industry are primarily engaged in retail sales of new building materials and supplies. Major companies include Home Depot, Lowe's, and Menards (all based in the US), as well as Beijing Easyhome Investment Holdings Group and Red Star Macalline (both based in China), Home Improvement Hirose (Japan), Kingfisher (UK), Bauhaus and Tengelmann-owned OBI (both based in Germany). Some independently owned stores belong to wholesale cooperatives, such as Ace Hardware and True Value Company in the US, that buy materials in bulk and resell them to members.
The do-it-yourself (DIY) home improvement retailing market is expected to grow by about $244 billion during between 2024 and 2029, with a compound annual growth rate (CAGR) of over 5% during the forecast period, according to Technavio.
The US building materials dealer industry includes about 57,000 establishments (single-location companies and units of multi-location companies) with combined annual sales of about $304 billion. The industry includes home centers and hardware stores and paint and wallpaper stores, which are covered in separate industry profiles, as well as specialized building material retailers such as electrical supply and plumbing supply stores.
COMPETITIVE LANDSCAPE
Demand is driven mainly by residential real estate construction and renovation. The profitability of individual companies depends on merchandising and customer service. Large companies enjoy economies of scale in purchasing and have the ability to offer more products. Small companies can compete effectively by catering to contractors, by offering specialty products and services, and by serving areas unattractive to larger companies because of limited customer concentration. While store location continues to be a key competitive factor, digitization and the ease of online shopping make omnichannel capabilities increasingly important to success. The US industry is concentrated: the 50 largest companies account for about 65% of industry revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are hardware and hand tools (about 45% of revenue), plumbing and electrical supplies (about 20%), paint and sundries (10%), as well as home lawn and garden tools (about 10%). Other products include major household appliances and related parts as well as flooring and floor coverings.
A typical building supply store has about 20,000 square feet of floor space; big-box home improvement retailers like Home Depot or Lowe's have more than 125,000 square feet of indoor and outdoor selling space. The items sold in largest volume by most companies are lumber and plywood panels -- commodity products with relatively low margins. Some companies sell only lumber, but larger stores also carry an assortment of higher-margin goods. Inventory management is a major operating concern for most retailers, including stocking the right products, pricing, re-ordering, and tracking sales. A typical Home Depot or Lowe's store carries between 30,000 and 40,000 items.
Big chains buy many products directly from large suppliers, while smaller companies buy from a large number of regional distributors. Lowe's buys products from more than 7,500 vendors. Chains with many retail outlets often operate their own distribution centers.
The do-it-yourself (DIY) home improvement retailing market is expected to grow by about $244 billion during between 2024 and 2029, with a compound annual growth rate (CAGR) of over 5% during the forecast period, according to Technavio.
The US building materials dealer industry includes about 57,000 establishments (single-location companies and units of multi-location companies) with combined annual sales of about $304 billion. The industry includes home centers and hardware stores and paint and wallpaper stores, which are covered in separate industry profiles, as well as specialized building material retailers such as electrical supply and plumbing supply stores.
COMPETITIVE LANDSCAPE
Demand is driven mainly by residential real estate construction and renovation. The profitability of individual companies depends on merchandising and customer service. Large companies enjoy economies of scale in purchasing and have the ability to offer more products. Small companies can compete effectively by catering to contractors, by offering specialty products and services, and by serving areas unattractive to larger companies because of limited customer concentration. While store location continues to be a key competitive factor, digitization and the ease of online shopping make omnichannel capabilities increasingly important to success. The US industry is concentrated: the 50 largest companies account for about 65% of industry revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are hardware and hand tools (about 45% of revenue), plumbing and electrical supplies (about 20%), paint and sundries (10%), as well as home lawn and garden tools (about 10%). Other products include major household appliances and related parts as well as flooring and floor coverings.
A typical building supply store has about 20,000 square feet of floor space; big-box home improvement retailers like Home Depot or Lowe's have more than 125,000 square feet of indoor and outdoor selling space. The items sold in largest volume by most companies are lumber and plywood panels -- commodity products with relatively low margins. Some companies sell only lumber, but larger stores also carry an assortment of higher-margin goods. Inventory management is a major operating concern for most retailers, including stocking the right products, pricing, re-ordering, and tracking sales. A typical Home Depot or Lowe's store carries between 30,000 and 40,000 items.
Big chains buy many products directly from large suppliers, while smaller companies buy from a large number of regional distributors. Lowe's buys products from more than 7,500 vendors. Chains with many retail outlets often operate their own distribution centers.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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