BUSINESS FOCUS


WHAT’S HAPPENING WITH NMBS HEAVYSIDE?


BMJ talked to NMBS’ head of sales and marketing, Dean Hayward to find out what challenges and issues were discussed at the latest Heavyside Committee roundtable.


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ow we are in the second half of 2023, the merchant industry is in a position to look back at financial highs and lows of the year so far and find opportunities for growth ahead. Quarter one challenges, cash flow issues, and the impact of inflation were up for discussion at NMBS’s latest Heavyside Committee roundtables.


The committee reported a challenging start to the year with a mix of wins and trials but held out hope for more stable trading for the rest of the year.


Reduced sales


Reports of sales were down across the members, with some reduced by a third during Heavyside Committee merchant discussions. Members Gilmore Building Supplies Ltd, Leicester Doors & Timber Ltd T/A Build Yard, Joseph Parr Building & Timber Materials, George Tufts & Son Limited and Henshaws Roofing & Building Supplies Ltd confirmed they were still seeing a reduction in deliveries and footfall in the yard but are expecting second-quarter figures to show improvement.


Impact of inflation


For heavyside merchants, an inflation-tackling solution has been to upsell product ranges and carefully assess which products are the most profitable. This requires the merchant team to have great knowledge and oversight over their product ranges and fully understand their customer market.


Cash flow challenges As the industry is hit by increasing costs and inflation, trade customers are having cash flow issues, which are being passed on to heavyside merchants.


Heavyside merchants are regularly chasing customers to pay, so their cash flow remains consistent. To maintain customer loyalty, even


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in these challenging situations, merchants are only putting a stop to the account and giving gentle reminders to pay, rather than opting for tougher measures. This is so far helping to protect customer relationships. Merchants also revealed customers are increasingly asking for cash accounts that allow them to get paid by the job, to better protect personal cash flow. Doing so means they can segment each project, preventing impact on other projects if their customers don’t pay.


To compensate for poor cash flow, some of the larger national merchants appear to be reducing their prices in the short term. Merchants will have to decide to compete or use their personal relationships with customers and consistent stock levels to maintain their competitive edge. Geographical location is also having something of an impact on cash flow. Merchants with yards in more financially impacted areas are seeing much bigger issues with credit risk, customers not paying on time and a reduction in sales.


Customer buying patterns are changing. They are seeing more sporadic purchasing


processes, compared to the more consistent levels customers had pre-pandemic. The Heavyside Committee found customers stockpiled products when the supply was low during COVID-19 and the subsequent shortage of materials continued in 2022, following the war in Ukraine and shock to energy supplies and certain raw materials. In 2023, this has had a knock-on effect on the volume of products that customers are buying because they currently have more than they need.


Buying pattens


Heavyside customers are also changing the types of products they are buying. As retrofit projects continue to increase, customers are finding new specialisms, so require a whole solutions approach to retrofit, rather than a single product range.


Customers also want more convenience. Some national merchant businesses are offering same-day or even one hour delivery, so independent merchants feel the need to compete. Merchants now understand that customers are willing to pay more for convenience, so businesses don’t need to reduce profit margins to provide enhanced customer service.


As the economy continues to fluctuate, heavyside merchants are adapting their stock, profit margins and customer interactions to stay competitive. Adapting to customer requirements and trends is key to remaining profitable. BMJ


www.buildersmerchantsjournal.net September 2023


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