In building products sales, as in real estate, a lot depends on location. We often see building materials manufacturers promoting the number of locations where their products can be purchased or pro dealers listing the number of their branches. Yet further analysis by Principia of over $200 billion in LBM dealer sales shows that where your distribution locations are is more important than the absolute number of distribution points.

Building products channel revenue (sales to builders, contractors, and DIY consumers) moves through over 45,000 locations nationally according to Principia BuilderSeries® platform. In the United States there are 3,140 counties and yet just 515 of those counties – or 16% – account for 80% of the channel revenue. The highest tally revenue is over $4 billion alone as shown in Figure 1. Many companies stress the number of locations they are in but are the locations in the right places? We’re not suggesting not to serve the smaller communities but we are suggesting that making sure that you have strong representation in the largest revenue counties can help accelerate your revenue and market share growth.

Location selection is a critical aspect to growth either through local market share expansion, greenfield construction of new facilities or acquisition of existing facilities. In addition, careful distribution analysis will ensure that investment and resources are allocated by the best opportunities for profitable growth moving forward.

The 515 counties that comprise 80% of demand are distributed by Census division in Figure 2. The South Atlantic has the largest number of counties at 142, more than one-quarter of the total compared to the West North Central, the high plains, which has the fewest. Channel revenue by division ranges from nearly $40 billion in the South Atlantic down to about $10 billion in the West North Central. To illustrate our view, Principia prepared a brief analysis of a national pro dealer as an example. Although this company has hundreds of locations nationally, they are in only 195 of the 515 top counties, roughly 40%. Even in the South Atlantic where they have excellent coverage, they are in just over half of the top counties. This indicates that there are pockets of opportunity to grow through a solid assessment of current and future demand potential. Principia has conducted hundreds of distribution assessments for material suppliers, distributors, and pro dealers leading to identifying growth opportunities regardless of the extent of current distribution.

More information about building materials distribution is available for purchase in three product offerings designed to meet your specific distribution needs: LBM Dealer LocatorSupplyBuilder®, and BuilderSeries®.