Building Material Dealers

Brief Excerpt from Industry Overview Chapter:

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.

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...