Two-Step Distribution 2018 is now available for pre-purchase with full delivery planned for Q4 2018. This latest addition to Principia’s subscription-based data products will be delivered in a series of interactive dashboards and key insights summarized in three sections: Industry Revenue, Leading Distributors (interactive database) & Supplier Relationships, and Industry Growth and Customer Insights.
Two-Step Distribution 2018 will provide a vital benchmark analysis for business planning, forecasting and investment. Using 2017 and 2018e as a baseline, this data analyzes channel revenue by participating two-step distribution firm, major product, supplier and region, and provides a year-over-year forecast through 2021. To learn more about this deliverable download the brochure now.
Far too often we see companies not recognize the power of integrating external and internal data. Powerful insights can be developed by combining market and supply data with your own sales figures – or in combination with sales from your distribution partners – to drive revenue growth.
Recently Principia partnered with a building products manufacturer who wanted to focus its two-step distribution partners in underserved markets. The company had its own view on what it believed market demand to be and one distributor had another. An integrated view of the entire market including demand and supply was needed to make the case with its distribution partner on where the best opportunities existed for sales growth.
Utilizing Principia’s customized data products platform, the manufacturer was able to map current demand for its products within uniquely distributor-defined sales territories. Data visualizations provided demand in units, market value and number of projects, in the distributor’s sales footprint. Dealer coverage was overlaid on top of demand for selected distribution centers, with specific dealers and current suppliers carried also referenced by name. The integrated data highlighted where the current level of sales focus didn’t match up with demand. Sales personnel for both the manufacturer and its distributor were redeployed to aim these resources at specific demand pockets within each territory.
The Power of Integrating Market Demand and Supply Data
The result was nearly $10 million of new sales in the first year of using Principia BuilderSeries® data. The company continues to use this supply-demand data to drive engagement with its distributors and their dealer customers in current and other targeted territories.
Click here to learn more about Principia BuilderSeries®.
While wood trim continues to account for 53% of the $1.7 billion exterior trim market in the United States, wood-alternatives like cellular PVC, fiber cement and engineered wood continue to take share. The market remains evenly balanced between new construction and repair/ remodel.
Exterior trim is one of over 12 residential building product categories currently monitored through the Principia BuilderSeries® set of data products. A short list of 5 observations from our recent industry research is shown below:
- Prefinished wood trim products competing on performance, branded for market identity
- Fly ash composites making inroads against traditional incumbent trim products
- Specialty 1-step channel growing as distributors expand further into siding and trim
- Several cellular PVC trim producers now offering complementary cellular PVC siding products
- Expected rationalization based on acquisition of quality suppliers, exit by low margin producers
Exterior Trim Demand Overview – Principia DemandBuilder® Exterior Trim
The image above provides a high level snap shot of Principia’s data product DemandBuilder® Exterior Trim. DemandBuilder® subscribers have the ability to:
- Accurately measure current share and revenue potential
- Identify opportunities to pursue in sales territories
- Set benchmarks for business using comparative market data
To learn more about Principia’s data products or exterior trim market data please contact us today.
Hurricane Harvey has set records for total rainfall and overall damage of residential housing and commercial buildings. Unfortunately, the total economic impact has yet to be realized but the total damage of Hurricane Harvey is estimated to fall between $70 and $108 billion. Rebuilding will take years, similar to other devastating storms such as Katrina, Sandy and Andrew.
So, what does this mean for the building materials industry? How can suppliers, distributors and dealers support the effort over the longer term? One step is to understand the scale of rebuilding required and have sufficient supply of building materials stocked and accessible to the Houston and Beaumont areas. Principia Consulting has compiled an analysis of the level of building materials inventory that may be needed in each product category for residential home rebuilding.
Overall, there are 1.8 million housing units (single and multifamily) in the Houston and Beaumont Core Based Statistical Areas (CBSA) with an estimated total replacement value of $474 billion. Of course, not every housing unit will require replacement but the total existing housing stock gives pause to consider the overall potential level of building required. The detailed map for these two CBSAs in Figure 1 depicts the relative total replacement value of housing at the county level.
Figure 1: Houston & Beaumont CBSAs – Total Housing Replacement Value (in $MM) by County
Source: DemandBuilder® from Principia
These replacement value housing figures can be translated into demand for specific building product categories with Principia’s DemandBuilder® data products. DemandBuilder® Roofing reveals an estimated 54.5 MMSQ of existing roofing in the Houston-Beaumont areas with a replacement value of $3.7 billion in materials alone. The bulk of this volume is in the Harris County area with 35.4 MMSQ valued at $2.4 billion. Although these figures represent 100% replacement, a more complete assessment of the impact on material demand will only be finalized after the complete damage of the storm has been determined. For example, if a quarter of the roofs in Harris county need to be replaced, this would represent 8.9 million squares or $600 million of roofing that would be needed.
Further, as flood damage reports become available, Principia will pinpoint specific estimates of roofing demand at a zip code level to focus on the hardest hit areas. A detailed map of replacement roofing potential by zip code is shown in Figure 2 as an example.
Figure 2: Houston & Beaumont – Roofing Replacement Demand (in $MM) by Zip Code
Source: DemandBuilder® from Principia
Principia is in the process of developing detailed assessments for additional categories including lumber, siding, insulation, flooring, windows, doors and weather resistant barriers for the Houston and Beaumont CBSAs and other regions in Texas and Louisiana affected by the storm.
Contact Principia for further detail on projections for building materials demand within the storm’s affected areas.
Principia recently conducted its second annual survey with business management professionals at all levels within manufacturing and distribution companies serving the building materials industry. The purpose of this effort is to identify preference and usage patterns for market share data to manage key business activities.
Importance of Market Share
The survey results prove that market share data is an important metric for companies to measure performance and progress, and gauge success in the market. Detailed and accurate data can support how to leverage this information to drive specific programs around product, price, channel and customer to create a winning strategy.
As shown in the figure above, respondents believe market share statistics are an important metric to measure. In fact, 90% of building materials and construction industry executives believe market share statistics are somewhat or very important to managing their business.
However, 60% of respondents indicate that they are currently dissatisfied or neutral about their satisfaction with their current market share as indicated in the figure below.
Additional Findings on the Use of Market Share
A summary of the additional findings from the market share survey including a comparison to last year’s results are available for download.
- How companies are addressing dissatisfaction with market share
- Other metrics used for measuring company performance
- Initiatives to implement based on market share statistics
- Sources of market share
- Internal company data tracked and integration with third-party data
- Challenges of using market share
To access the full summary, please Click Here.
Are you curious how other professionals in the building and construction industry use market share data? As a leading research and consulting firm in the building and construction industry we are are conducting our annual assessment to gauge how building material companies use market share data to manage their business and we would like your insight. Topics addressed within this year’s survey include:
- Importance of market share data
- Use and implementation of market share data
- Challenges of using market share data
Your responses are completely confidential. You will not be identified in the reporting, and your responses will only be seen in the aggregate with other survey responses.
Please use this link to access the survey:
Our questions will take less than 5 minutes to complete. As a thank you for taking the time to participate, Principia is offering a free summary report of the results.
Situation: A leading building products company was under-performing in properly serving its short-line distributors. The company had lost ten share points over a three-year period.
Approach: Principia helped define the needs of the company’s distributors and trade customers and then developed a new strategy to better serve the channel.
Outcome: Recommendations included expanding value-added services to the portfolio and reorganizing resources to more effectively serve distributors in multiple regions in the U.S. The client gained a better understanding of serving the market, including demand patterns and customer requirements. Ultimately, the client recovered over seven share points and improved profitability within 18 months in this important market channel.
Situation: A specialty roofing manufacturer felt it was not leveraging its overall market position as several related businesses with separate commercial and operational resources competed with one another.
Approach: Principia surveyed the market – distributors, contractors, competitors, the client’s sales organizations – and mapped the buying process. Market needs were identified by customer type and also the gaps between customer requirements and the performance of the client’s individual businesses.
Outcome: A $30 million first-year sales lift resulted from a single sales organization created with national and strategic account designations and a more coordinated effort on A+D specification selling.
The flooring market, like most other building products categories, has experienced periods where one product is vastly more popular than another. In 2017, carpet has become less popular in the main living area of homes. Idealistic, minimalist interior designs fostered by today’s leading influencers like HGTV’s Chip and Joanna Gaines, have reframed what residential flooring looks like today. Designers and homeowners are focusing on the use of products such as solid wood, engineered wood, laminate, vinyl, linoleum, and ceramic tile to achieve this design aesthetic.
The luxury vinyl tile (LVT) segment within resilient flooring has benefited from this trend and is largely responsible for the growth of resilient flooring segment. According to a recent article posted by the Floor Covering News, LVT sales have increased by over 50% in the last three years from $948 million in 2013 to $1,451 billion in 2015.
Vinyl’s Rise and Fall
Vinyl was an ideal choice for the modern American family in the post-war housing boom of the 1950s and 1960s – right through to the 1970s. The product was known for its versatility and flame resistance and easy cleanup for the busy family. Vinyl took over kitchens across the market, as well as bathrooms and laundry rooms even entryways and foyers.
Every generation has its own take on the latest, most popular design trends. We can see a product go from “what’s hot” to “what’s not” almost overnight. Over time, the geometric patterns and bright colors of vinyl flooring lost homeowner appeal and didn’t offer the warm look that was becoming increasingly more popular. Vinyl also didn’t wear particularly well, became a target for purported health risks due to its chemical composition, and was viewed as “cheap” rather than “inexpensive” or “value” – and gave way to hardwoods and laminates in many areas of the home.
Hardwoods and great real wood lookalikes such as faux hardwoods and laminates together with a minimalist design gained significant share at the expense of vinyl in the 1990s. The rapid growth of carpet further accelerated the decline of vinyl as a preferred material of choice in flooring.
Other flooring design trends also took over the 1990s, including beige and white carpet, Japanese influenced clean hardwood floors, and blond wood floors. The elegant sophistication of these trends gave homes new appeal and moved away from the look and feel of a modestly appointed middle-class home – again, at the expense of vinyl flooring.
Resurgence through LVT
The decline of vinyl had vinyl flooring manufacturers searching to find a way to keep the product alive. Out of this necessity to survive, a new and innovative vinyl flooring product was born. Luxury vinyl tile (LVT) – featuring design authenticity to replicate wood, stone and tile – propelled vinyl flooring back into the mainstream market to former users as well as to an entire new set of homeowners. The product addressed some of the past performance issues of vinyl flooring while providing more design friendly features.
Also, key to LVT’s repositioning strategy was taking the product’s versatility to the next level. Today, LVT is desirable because of added value attributes, including waterproof, scratch resistant, slip resistant and eco-friendly. In addition to these features, LVT is also cost-effective compared to hardwoods and various types of engineered wood.
Three Lessons Learned
A few lessons that can be gleaned from examining the growth and decline of vinyl flooring, followed by its resurgence.
- Monitor market demand. One of the most important lessons is that product preference and usage trends and resulting market demand change over time. Staying abreast of these demand shifts – by product type, new construction vs. remodel & repair, single family vs. multifamily and region – is critical to managing your business direction.
- Listen to the customer. Another key takeaway from the up and down and up again fluctuation in vinyl flooring demand is to know how well your product fits with the needs of different customer types. Product positioning can assess the product against what the customer values most, and whether changes to your current product or introducing a new product will be well received.
- Innovate, don’t stagnate. Competitive survivability and product innovation go hand in hand to ensure a product’s longevity. Flooring products don’t generally introduce new products year after year like the consumer electronics industry. But effectively responding to market changes can help protect or even extend the life cycle of a product. Customer-driven new product development that ties to usage and preference trends can let you stay ahead of competition.
LVT exemplifies how these lessons can breathe new life into a product or market segment of an industry. Knowing your market, understanding your customer, and developing products that meet evolving consumer preferences ensure that you’re delivering value to the customer.