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Key Areas

Executive Summary

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KEY AREAS

Market Overview

• Total market size for building materials and home improvement products - review of £30 billion + market.
• Analysis by product sector.- key sectors
• Review of key influences - construction trends, housing, consumer spending etc.
• Distribution overview - share by channel (DIY Multiples, Builders Merchants, Independent Hardware/DIY, Others). Key changes and recent trends

Distribution Review

• DIY Multiples - analysis of market size and recent trends 1990-1999. Review of major multiples - market share, number of outlets, market positioning, etc. Product mix review by major multiple - review of strengths and weaknesses by product.
• Builders Merchants - analysis of market size/recent trends 1988-99. Market share of major merchants, recent restructuring and rationalisation of sector. Review of key players, market positioning, product strengths etc.
• Independent Hardware & DIY - analysis of market size/recent trends. Market share of major players. Review of leading wholesalers in terms of market share, product specialisations etc.

Product Review

• Review of each major product group. Decorating, Bathrooms, Garden/Leisure, Hardware, Kitchens, Adhesives/Sealants, Electrical, Heating/Plumbing/Drainage, Roofing/Insulation, Bricks, Timber/Glazing, Cement/Plaster.
• Analysis of each product group - market size, product mix, review of distribution channels for each product - relative importance of channels between products.

Consumer Survey

• NOP Consumer Survey of approx. 1000 adults commissioned exclusively for AMA to review purchasing trends, type and number of stores visited, quality of advice received etc, with analysis by socio-economic profile.

General

• Analysis of construction sector - Newbuild/RMI, Housing/Non-Housing, Private/Public Sector - Review of trends over last decade, key areas of growth, future prospects.
• Review of future prospects and changes in distribution.

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EXECUTIVE SUMMARY

The Building and Home Improvement products sector is valued at over £30 billion within our definition of the market and is a key component of the UK economy. Heavy building materials, such as bricks, roofing, heating, timber, cement etc, are the major product sectors, accounting for around 60 percent of the market.

Following a difficult period in the early-mid 1990s for the construction sector, activity levels have steadily increased to a total annual level of over £60 billion at contract prices. Output is rising across most construction sectors, with private RMI and new office/leisure sectors particularly buoyant.

Public sector construction has been the most depressed over the last decade, but output is set to rise strongly over the next few years, following recent government commitments to the health and education sectors.

Builders Merchants represent the largest channel for the distribution of building materials at around 27 percent, with DIY Multiples accounting for an estimated 12 percent and Independent Hardware/DIY outlets accounting for around 3 percent. Direct supply, particularly for heavyside materials, is a key factor, while there are a wide range of other channels specialising in specific product sectors e.g. Electrical Wholesalers, Timber Merchants, Garden Centres, Mail Order etc.

Builders merchants sales have risen steadily in recent years to over £8 billion in 1999, with indications that heavyside materials are expanding more rapidly than lightside sales, which would suggest some erosion of share to other channels in these sectors e.g. DIY Multiples.

The Builders Merchants sector has experienced a period of consolidation over the last 2 years, with Jewsons, Travis Perkins and Wolseley Centers emerging as the major national chains, together accounting for around 40 percent of the market.

The DIY Multiples have grown strongly in recent years, with sales increasing by around 100 percent since 1990. DIY Multiples have taken share from Merchants, Independents and specialised retailers such as Garden Centres and are particularly strong in decorating, bathrooms, kitchens, hardware and garden products.

B & Q have been the most successful chain in the sector with around 40 percent share and are competing more directly in heavyside materials with the expansion of their Warehouse format.

Homebase are the second largest DIY Multiple with around 27 percent of the sector, with the company having established 2 joint site operations with Jewsons in 1999.

The Independent Hardware sector has experienced a steady decline in market share of building and home improvement sales. The growth of out-of-town DIY Multiples have been the major cause, but independents are still successful in many areas of the country. Wilkinsons are the major national Independent, but have achieved growth through product diversification as well as new store developments.

Mica is a buying and marketing organisation embracing over 50 independents that has grown strongly in recent years to compete with the Multiples.

Prospects for the building products sector are relatively optimistic as we enter the new Millennium. The UK economy is in good condition by historical standards with steady growth in GDP, low inflation and a buoyant housing market all contributing to rising consumer confidence through 1999.

Spending on home improvements is buoyant and both new housing and commercial/industrial output is forecast to experience growth, while health and education will provide good opportunities in the public sector.

Further changes in distribution are inevitable with more consolidation in the Builders Merchants and DIY Multiples sectors anticipated and further share erosion of the Independent sector likely to continue.

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TABLE OF CONTENTS

LIST OF TABLES AND CHARTS

Text © 2000 AMA Research

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Last updated by Jacob van Eldik 26th February 2000