Why they buy where they buy

All channels of distribution are not created equal.

But what are the strengths of each channel of distribution in the mind of the contractor?

Part of the answer can be found in "Building Products Distribution 2012," a 350-page study from Malvern, Pa.-based Principia. The findings at right are excerpts from the research, which is the result of direct interviews with more than 600 professionals representing building product manufacturers, wholesalers, distributors, dealers, builders, contractors and installers to offer a full picture of an increasingly complex, $100 billion industry.

The chart at top right shows the relative importance of several key purchase motivators for the contractor — ranging from the breadth of the offering to the relationship with the supplier representative. (The relative importance of the factors are indexed on a 1 to 100 scale.)

"At the dealer level, supplier relationships are more important than ever to drive share with contractors and builders," according to Principia, repeating a time-honored concept of the lumber business. Relationships may be gaining in importance, but they're not the leading purchase motivator in any of the channels, according to the study.

When contractors turn to manufacturers, they typically do so out of desire for breadth of assortment. When contractors turn to the big box, the leading reasons are a combination of low price and convenient location. Service delivery to the job site drives business to lumberyards.

According to Ken Jacobson, partner at Principia, recession and recovery continue to shape the data dramatically. "The industry has been challenged since the economic downturn with lower revenues, margins and inventory turns," he said. "Many smaller or weaker participants have either closed operations or been acquired. On the other hand, it's been a case of survival of the fittest, whereby the industry has consolidated and the larger, stronger players are poised to reap huge benefits when the construction market picks up."

Principia provides the building products industry with services including strategy consulting, market research, and industry conferences and reports. VisitPrincipiaConsulting.comfor more information.