Taking your eye off the ball

They say if you are made redundant, you're the last to see it coming. It's not that the signs aren't there; we just chose to ignore them, or dismiss the possibility of it happening. We see the market too through rose tinted spectacles. We have a 'mental map' of how the market works that defines who is a competitor and who not, what customers want and what will win them, and what it takes to exploit new market opportunities.

But assumptions need testing and retesting. Markets, customers, and competitors change and keep on changing. To ignore that is short sighted and dangerous.

The threat to builders' merchants from 'retail companies that sell building materials' as the BMF puts it has been a long time coming. The news that it has opened its doors to DIY sheds simply confirms what many have known for some time - they are a significant force in trade supply and to exclude them stretches definitions to breaking point. And the sheds have set their sights on winning a major share of merchants' core business.

It's always been assumed that DIY stores served the moonlighters and less professional part of the trade market, and given a choice, serious tradesmen and builders would invariably choose a builders' merchant over a DIY store or warehouse. The range, type and quality of materials, service, opening hours, discounts, credit, and staff knowledge would beat free parking and convenience any day. But large-scale research we did, as part of a major project to find what would make the difference, showed conclusively that in some areas professional tradesmen, and small to medium sized builders voted with their feet, preferring the best performing sheds rather than the best builders' merchants. And it wasn't a matter of price.

In the last 20 years I have seen builders' merchants become increasingly self-absorbed in growth by acquisition while ignoring both significant threats to their core business and failing to exploit several large, profitable opportunities.
Merchants are scrambling now to take advantage of some major market opportunities, but others are slipping through their fingers. Perhaps its time to test those assumptions, rethink the basics, and adapt formats and business models to exploit the opportunities before others get there first.

Agree? Disagree? Want more information? Email Mike Rigby at mike@521621.com