Contractors' multi-year embrace of big-box dealers appears to be waning, a new survey suggests, with building material dealers likely to gain most and online services benefiting a bit less.
The poll of 550 contractors by L.E.K. Consulting--fifth in a series that dates back to 2006--found contractors reporting that big-box retailers' share of their purchases, which had risen from 26% in 2006 to reach 29% in 2011 and 2013, was likely to slip to 28% in 2016. Meanwhile, building material dealers, whose share of purchases slid from 66% in 2006 to 62% in 2003, should see their take rise to 63% in 2016. And purchases online rose from 1% in 2006 to 2% in 2013, with growth expected to 3% in 2016.
Prior to this year, "we'd heard [from contractors] that 'I'm shopping more at the big box now but when I'm busy I'll return,'" Robert Rourke, managing director of L.E.K. Consulting's Chicago office, told ProSales in an interview on Feb. 12. "This time we heard 'I'm shopping less at the big box and more to the pro channels,' and I expect this trend to continue.
"It's not like the pro stores are adding innovation," Rourke cautioned, "but the importance of job site delivery, better product selection, and the depth of SKUs all matter when your crews are busier."
Indeed, L.E.K.s poll found that only 26% of the contractors surveyed reported dropping their prices in late 2013 to win jobs. That's a marked difference from the 44% of respondents to a similar poll in 2010 who said they were reacting to price pressure by cutting margins. In the latest survey, conducted last November, roughly four out of every 10 contractors surveyed said they were selecting fewer jobs that were more attractively priced.
All 550 of the contractors surveyed were professionals with decision-making authority in firms that have been in business for at least three years and had at least three full-time employees. Because the group included electricians, painters, plumbers, and other trades, they did roughly five times as much business at one-stepper and specialty building material dealers as they did at two-step facilities such as lumberyards.
"As in previous L.E.K. surveys, contractors stated price and convenience as the primary reasons for shopping at big-box stores," the consulting group's report on the survey noted, "but [survey participants] professed no loyalty to these outlets, complaining that the big-box channel was underperforming on other services relative to pro channels. Specifically, contractors felt big-box stores lack knowledgeable staff, a reliable delivery service, depth of product selection and several other valuable attributes."
As for the growth of Internet shopping, "I don't want to say it's coming, because it's kind of like saying Brazil will always be the country of the future," Rourke said. "But I do think the Internet is an important part of how pros get informed. They've purchased online in the past, and they expect that to increase going forward. The only thing that's notable is the rate of increase going forward; the expectations have decelerated."