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As the housing recovery has taken hold, demand for lumber and building materials has also lifted. However, since the downturn, the industry has transformed in many ways that pre-2008 business models can no longer be employed without adjustment to the new reality. The importance of understanding these new dynamics at the channel level is needed to develop a winning strategy.

LBM distribution channel revenue is forecast to increase from $147 billion in 2014 to $173 billion by 2017, which represents a net $26 billion increase. The total gross margin pool is projected to grow from $34 billion to over $40 billion over the same time period, a $6 billion increase and an average annual growth rate of 5%.

Changing Channel Dynamics

Overall, 2014 was a noteworthy year for consolidation as large companies just keep getting bigger. Acquisitions and mergers that took place in 2014 occurred mostly to the east of the Mississippi River. There are no signs showing that this trend will slow, as the market is ripe for mergers and acquisitions. After years of good performance since the economic downturn, low- interest rates, and banks willing to lend, the environment is receptive for both buyers and sellers. Overall, there have been more than 50 major acquisitions in the industry in 2014-2015 with some of the largest recent ones listed below:

  • ABC Supply acquired Norandex in the fall of 2015
  • Beacon Roofing Supply acquired Roofing Supply Group (RSG)
  • Builders FirstSource acquired ProBuild
  • Building Materials Holding Company (BMC) and Stock Building Supply merged to create third largest pro dealer
  • US LBM made 11 acquisitions in 2014 and has grown significantly since 2009

The lumber and building products distribution business is a core sector of the North American economy, and as a result, there will always be a need for connecting suppliers to ultimate users of these products. The building and construction sectors tend to be cyclical and closely tied to the overall economy and demographic changes. Accordingly, political changes, technology advances and economic cycles can result in and short-term turmoil can cause many operational and financial challenges. Distributors and dealers who invest in relationships with customers and suppliers, stay current with industry trends, keep their business processes flexible to rapidly adapt to shifts, and hire and retain smart professionals can create shareholder value.

Principia’s LBM Distribution 2015 report provides detailed market analysis and insights for every industry participant’s business planning efforts. Using 2014 as its launch point, the report combines primary research with voice of the customer insights from qualitative and quantitative surveys conducted with the marketplace.

This comprehensive review of the industry, completed by Principia’s team of experts, relied on interviews with over 1,850 industry participants across the LBM distribution value chain. The report provides an in-depth analysis of the industry along with an extensive discussion of channel dynamics.

2015 Lumber and Building Materials Distribution Report Deliverables

  • Channel revenue and profit pools by product category
  • Voice of the customer research depicting product usage and preference trends
  • Product and channel trends and impact on each other
  • Supplier and distributor-dealer relationships for each product
  • Industry outlook to 2017 and opportunities and challenges ahead

To learn more about the report, please contact Brooke Cowell, VP Marketing at