52 | Sector Focus: Software & IT
SUMMARY
■ Building material costs are still elevated from pre-pandemic levels
■Pricing, inventory control and margin management are interconnected levers
■ Seasonality adds another layer of complexity
■ Local and regional merchants have a competitive edge in their agility
STRATEGIC STOCKING
Brian Bowerfind, division president, LBMH and distribution at ECI Software Solutions explains how smarter inventory management protects profit
In the UK’s timber and building materials sector, volatility has become the norm rather than the exception. From fluctuating prices and erratic demand to lingering supply chain friction and inflationary aftershocks, UK merchants are facing pressure on every front. The squeeze is particularly acute for independent and regional suppliers, as large national retailers leverage economies of scale to undercut on price and outpace on stock availability. For many, it’s becoming evident that legacy pricing tactics and outdated inventory practices no longer offer the protection or performance needed to stay competitive.
Recent data underscores this instability. Whilst Department for Business and Trade reports show building material price indexes slowly decreasing over time, overall costs are still significantly elevated from pre-pandemic levels. As of May 2024, the UK’s ‘All Work’ Construction Materials Price Index remains 39.5% higher than in February 2020, before the pandemic began.
Above: Brian Bowerfind is division president, LBMH and distribution at ECI Software Solutions
TTJ | July/August 2025 |
www.ttjonline.com
Despite this uncertain trading climate, many timber businesses continue to operate with fragmented strategies. Pricing, inventory control and margin management are often treated as standalone functions, rather than interconnected levers. That disjointed approach carries real cost. If a pricing model doesn’t reflect what’s actually in stock – or if inventory decisions aren’t aligned to margin objectives – the business risks capital being locked up in dead stock, missed sales, and profit erosion. The most effective merchants now understand that these elements must work in unison, not isolation. It’s time for UK timber leaders to take a more integrated approach, one that views inventory management not just as a cost
centre but as a strategic driver of both price optimisation and margin growth.
THE INVENTORY-MARGIN LINK Inventory has long been one of the most significant investments for building materials retailers and wholesalers. It’s more than just product on shelves; it’s potential profit or loss. When stock levels don’t align with customer demand or pricing opportunities, the bottom line quickly reflects this disconnect. In fact, Builders FirstSource, one of the industry’s largest players, reported an inventory turnover ratio of 12.42 in 2023, which reflects how efficiently it was able to move product and manage stock levels. High turnover like this can play a key role in supporting margins by minimising carrying costs, reducing the risk of excess or obsolete inventory, and keeping operations tightly aligned with demand.
Consider the timber price spike that occurred between 2020 and 2021, when UK costs jumped up by more than 80% in a short space of time, only to plummet the following year. Merchants who stocked heavily during the peak in hopes of meeting demand were left with overpriced inventory they couldn’t sell profitably. That wasn’t just a pricing issue; it was a disconnect between inventory forecasting, price sensitivity, and margin strategy.
Seasonality adds another layer of complexity. Stocking up on cold-weather products, such as ice melt, or warm-season items such as decking materials, requires more than just a look at historical sales. Without proactive alignment between stocking decisions and pricing plans, businesses risk markdowns, dead inventory, or missed margin potential when the window for selling closes.
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