MALVERN, Pa. - Building products distribution is expected to increase from $100 billion in channel revenue with $21 billion in gross margin in 2011 to $122 billion in revenue with $26 billion in gross margin in 2014. This represents growth of 6% annually for revenue and 7% for gross margin, respectively. The two leading channels in terms of gross margin are specialty 1-steppers and lumberyards. and the biggest margin contributors from the product standpoint are roofing, dimensional lumber and sheathing.

Principia has released Building Products Distribution 2012, a comprehensive groundbreaking program that provides a thorough review of the channel dynamics impacting the lumber and building materials industry, including a roadmap of gross margins earned throughout the industry by channel, product, subproducts and region. Principia conducted direct interviews with more than 600 professionals representing building product manufacturers, wholesalers, distributors, dealers, builders, contractors and installers.

According to Ken Jacobson, Partner at Principia, “The industry has been challenged since the economic downturn with lower revenues, margins and inventory turns. 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.”

The industry is projected to benefit greatly from the rebound in new housing starts and expansion of spending in the commercial sector as well. Both strategic and financial investors are expecting to capitalize on the growth and trying to build bulwark positions with such tactics as product line extensions, geographic expansion, and service additions, along with active acquisition programs. Building Products Distribution 2012 identifies the best growth opportunities through 2014, strategies for value creation and competitive advantage, and the changes in distribution channels across 14 product categories and 37 subproduct categories in building products distribution. The report also provides business insights on:

• Up-to-date assessment of the state of the building products distribution industry

• Voice of Customer (distributors and contractors) feedback on major drivers and trends

• Identified channel opportunities for major product categories

• Detailed profiles of more than 50 leading industry participants

• Strategic insights into building products distribution segments

The program also includes a unique interactive Market Model and Forecasting Tool that allows subscribers to model market performance scenarios based on their own assumptions of metrics such as housing starts, remodeling investment, and demand shifts in the channels. In addition, the program includes an interactive, online database of more than 25,000 distributor locations, products offered, and suppliers represented.

Source: Principia