The timber trade industry is a dynamic one. Gone are the days of predictable seasonal trends – a reality many merchants have grappled with in recent years. We’ve seen a disruption in predictable sales patterns thanks to global supply chain issues, interest and mortgage rates, fluctuating timber prices, and ever-tightening construction legislation, leaving merchants scrambling to adapt.
So, how can you navigate these uncertain waters and stay ahead of the curve?
One interesting approach that we like to recommend lies in the concept of “prophecy products” and “prophecy customers.”
- Prophecy products: These are specific products that experience an unexpected surge or slump in sales before a broader market shift takes place. This could be a specific type of engineered wood product, a particular hardwood species gaining traction in sustainable construction projects, or even a specific size of plywood experiencing a pre-peak demand.
- Prophecy customers: These are customers who deviate significantly from their usual buying patterns ahead of a market change. A historically high-volume buyer suddenly placing smaller orders might indicate a general tightening of budgets within their industry.
By analysing historical sales data, timber merchants can identify customers or products that consistently spend more (or less) ahead of the general market – valuable early indicators for anticipating broader market shifts and making informed business decisions.
IDENTIFYING YOUR PROPHETS
The key to unlocking the power of, and finding your own, prophecy products and customers lies in robust data analysis. Modern software can be a game changer in this process, allowing you to visualise historical sales data as a “common trend” line graph (see figure 1) without spending hours poring over spreadsheets.
By overlaying individual customer purchase data or product sales figures, you can easily identify deviations from the norm, potentially revealing those early indicators of a shifting market.
So, how can you identify your own “prophecy products” and “prophecy customers”? Here are a few tips:
- Use robust industry-specific software with advanced analytics capabilities to delve deeper into your historic sales data.
- Segment your customer base by purchase history, product type, or industry. Are there specific segments consistently reacting earlier to market shifts?
- Track individual product sales trends. Are there specific products experiencing unexpected surges or dips outside of their usual seasonal patterns?
- Analyse sales data across different time frames – monthly, quarterly, and annually – to identify recurring patterns or sudden deviations.
Once identified, tag these products within the system as “prophecy+” or “prophecy-“ (representing a period of growth/slump), to allow you to easily track these products over time. By proactively managing your “prophecy product” tags, you can gain a valuable head start in adjusting inventory levels, pricing strategies, or even supplier negotiations.
BUILDING A BROADER PICTURE
While “prophecy” strategies can be insightful, it’s crucial to remember they’re just one piece of the puzzle. Building a comprehensive picture of the market requires looking at a wider range of factors:
- Stay informed about upcoming projects, legislative changes, and global market trends by keeping an eye on industry news and reports.
- Maintain open communication with suppliers to understand potential disruptions or shifts in timber availability.
- Monitor economic indicators that might influence construction activity levels and timber demand.
A PROACTIVE APPROACH
Software can be an invaluable ally when it comes to navigating market uncertainty. Systems like Merchanter, for example, allow you to easily analyse historical sales data, identify trends, and generate reports to support your decision-making.
By combining your own “prophecy” analysis with these other strategies, you’re able to develop a more holistic understanding of the market, enabling you to react swiftly to changing trends, optimise your inventory management, and ultimately, secure a critical edge over competitors.
