Summary
• Shop items often attract higher margins.
• High fuel costs may cause tradesmen to buy more add-on products from timber suppliers.
• Eco-products could be an expansion area.

Investing in your merchanting branch, particularly if you are a small independent, needs to be a well thought-out exercise if it is going to yield results.

With the current economic climate, merchants looking to improve their shop and showroom areas (selling light building materials – nails, screws, adhesives, stains, power tools, hinges and all the other ancillary items) need to get the maximum results.

These add-on items typically attract a higher margin than the timber itself.

“One view is that if there is less business around you have to make your business look better and become more efficient,” said Mike Cairns, managing director of merchant interior fitout and storage solutions specialist Thistle Systems Group.

“You spend more on your existing branch and get more out of them, or you shut down the hatches and don’t spend anything -– but the latter ones tend not to be the most successful.”

Getting the look

Mr Cairns, whose company designs and fits out a large number of merchants’ shops including Wolseley’s Build Center outlets in Scotland, said there are ways of making things “look” very expensive without breaking the bank.

But, he said, spending a bit more on the entrance with features such as automatic opening double glass doors could be impressive and convey a positive impression to customers.

Thistle does a lot of mezzanine refits for merchants who want to offer a shop service but not lose storage capacity. This involves using some of the existing warehouse with a shop area on the ground floor and storage above.

“It’s great because it helps companies who do not have the space to extend their buildings and it also saves on rates,” said Mr Cairns. “Customers come in and see point of sale products all around the place and like it. And the merchant still has the storage space above.”

“If people are switched on enough to want to open a shop, it means they are entrepreneurial and usually ahead of the game,” he added. “They can make better use of areas and offer more consumerable products which attracts people into the door.”

One-stop shop

Arnold Laver said its philosophy was to create a one-stop shop for customers.

“Some of them do buy add-on sales and some of them get them from specialists, such as heating and plumbing merchants,” said Carl Limb, group building materials product manager at Arnold Laver Timber World. “We try to offer general items by putting in a core range, which saves customers time and effort running about.”

He said high fuel prices could lead tradesmen to buy more items from well-stocked merchants rather than travel to other outlets.

Lavers recently transformed its Kidderminster site, which included a showroom extension and an increased offering of shop products.

“It’s important to try and provide a better service to our customers. It saves them time and money if they can get everything they need from one place.”

Lavers stocks a cost competitive range of Einhell power tools, but also sells premium brands such as Makita, Bosch, DeWalt and Hitachi on a next-day availability basis.

Higher margins

Keith Fryer, director at T Brewer & Co, said additional shop items or “light building materials” accounted for a significant minority of business – about 8%, with higher gross margins than conventional building materials. Typically margins were 12% higher than for carcassing.

He said although T Brewer was very trade-orientated and did not have a big shop focus, tradesmen did expect to be able to pick up ancillary items to fix timber elements in one visit.

Parker Building Supplies has embarked on a programme of refurbishments to four of its showrooms, while at its Tonbridge branch it is drawing up a scheme to make an intermediary showroom promoting eco-friendly products.

It opened a joinery and kitchen showroom next to its Hailsham branch last year as part of a strategy to develop vertical market opportunities. On the ground floor the facility features windows, doors, staircases, roof windows and “sky tunnels”. Upstairs are 15 kitchen displays – a new departure for Parker – and a CAD studio. It holds £100,000 of stock and created six jobs.

Covers Timber & Builders Merchants has also been investing. Last year it built a trade centre at its Chichester head office to offer trade customers everything they needed from a single point, both timber and heavyside, plus an extensive stock of shop products. The centre allows Covers to have a separate shop for its trade customers and a separate area for retail customers – thus providing a better service for both.

Eco-products

It has also gone down the eco-product route with its Eco Centre offering solar panels, among other items.

“We want our Eco Centre to be the first stop for people to find out more about helping the environment by saving energy, using renewable sources and recycling,” said Covers managing director Steve Osborne.

Covers said it had seen increased interest in eco-friendly products from customers “once they see the long-term benefits of using the products”.