LBM Channel Revenue Forecast to Increase by $26 Billion
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 $34.5 billion to over $40 billion over the same time period, a $6 billion increase and an average annual growth rate of 5%. Two-step distribution and lumberyards will grow closer to 6% annually due to greater participation in new construction, which is projected to experience faster growth than repair and remodeling throughout the forecast period.
Lumberyards Will Be See Biggest Increase
The lumberyard channel is projected to increase its category lead in total revenue growing from $45 billion to $54 billion, and from $9 billion in total margin up $11 billion, a 6% annual growth rate due to the high increase in new housing starts. Overall, specialty retailers will grow less quickly due to a greater reliance on repair and remodeling but will retain the largest overall share of the margin pool and account for $11 billion in margin by 2017.
Lumber will have the largest overall change in channel revenue with $6.6 billion predicated on continued growth in housing starts while it is projected that cabinets and countertops will have the greatest growth in the total margin pool with $1.5 billion. In the figure above the greatest margin growth opportunities by product category and channel is shown above indicated by the size of the circle.