Building Contractor Optimism Shifts Purchasing Priorities and

Building Contractor Optimism Shifts Purchasing Priorities and Channel
Selection, According to L.E.K. Consulting Study 
Survey Also Ranks Highest-Performing Manufacturers in 14 Building
Products Categories 
BOSTON, MA -- (Marketwire) -- 12/13/12 --   Renewed optimism has
residential contractors projecting revenue growth during the coming
years, which is changing their strategies for how they bid jobs,
select products and where they shop for building products. L.E.K.
Consulting's third Contractor Behavior Survey finds that shifting
contractor behaviors will have an impact on building products
manufacturers and the channel.  
With the building and construction market improving, more U.S.
contractors are walking away from jobs that won't provide appropriate
margins (39% taking lower margins on jobs in the 2012-2013 survey, a
5% decrease compared to the 2010-2011 survey). Residential
contractors' purchasing behaviors also show diminished price
sensitivity.  
When selecting products, contractors prefer to remain loyal to
trusted brands and high-quality products rather than trade down and
purchase less expensive alternatives or lower-grade products from a
popular product line or less trusted brand. Most contractors (72%)
said durability was a key purchasing driver, followed by price at
69%. Reputation (66%), manufacturer guarantees (63%) and energy
efficiency (57%) also ranked high in importance.  
As the importance of price becomes slightly deemphasized among
contractors, survey findings indicated that purchasing frequency at
the big box channel has plateaued and is subsequently expected to
decline over the next three years and shift to pro channels including
specialty independent stores and specialty chains. While price was
the major factor driving contractors to spend more at big box stores
during 2010 and 2011, this year more than half of contractors said
that convenience was the major factor. Contractors are also
decreasing their searches across multiple retailers to purchase
preferred products at the lowest prices.  
"It's difficult for pro channels to trump big box stores on the
convenience factor; but what they can offer contractors in terms of
reliability, guarantees and staff knowledge are favorable attributes
that will win customers over the long term," said R
obert Rourke, Vice
President and Head of L.E.K. Consulting's Chicago office. "Building
products manufacturers can gain share by refining their pro channel
sales strategy -- where profits and differentiation are more
sustainable than in big box channels -- to sell new and premium
products that contractors highly value, with factors such as
durability and energy efficiency." 
Ranking the Highest-Performing Manufacturers
 For the first time
since the inception of the L.E.K. Contractor Behavior Survey,
contractors were asked to identify the highest-performing
manufacturers across 14 product categories. The ranking centered on
four attributes: product breadth, quality, price and service level. 
"The winners in these categories have the right mix of innovation,
quality and price that attract contractors to their products instead
of the alternatives next to them on store shelves," said Mr. Rouke.  


 
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Category               Highest Performing    Highest         Difference to  
                       Manufacturer          Performer Score the Avg.       
                                                             Overall Score  
----------------------------------------------------------------------------
Carpentry              American Woodmark     5.7             0.4            
----------------------------------------------------------------------------
Concrete/Foundation    Lafarge               5.8             0.4            
----------------------------------------------------------------------------
Drywall                USG Corporation       6.0             0.3            
----------------------------------------------------------------------------
Electrical/Lighting    GE                    5.5             0.2            
----------------------------------------------------------------------------
Flooring               Anderson Hardwood     5.4             0.4            
----------------------------------------------------------------------------
Framing                Georgia-Pacific       5.4             0.2            
----------------------------------------------------------------------------
HVAC                   Trane                 5.3             0.2            
----------------------------------------------------------------------------
Insulation             Owens Corning         5.6             0.2            
----------------------------------------------------------------------------
Paint                  Sherwin-Williams      5.6             0.2            
----------------------------------------------------------------------------
Plumbing               Toto                  6.0             0.7            
----------------------------------------------------------------------------
Roofing                Owens Corning         5.9             0.3            
----------------------------------------------------------------------------
Siding                 James Hardie          5.6             0.3            
----------------------------------------------------------------------------
Tile                   Dal-Tile              5.5             0.3            
----------------------------------------------------------------------------
Windows/Doors          Andersen              6.0             0.6            
----------------------------------------------------------------------------

 
The L.E.K. Contractor Behavior Survey: Optimism Creates New Openings
for the Building Products Industry report was written by Robert
Rourke, Thilo Henkes and Aaron Smith -- all Vice Presidents in L.E.K.
Consulting's North American Basic Industries Practice. Additional
L.E.K. Contractor Behavior Survey findings are available online at
here. 
About the Survey
 L.E.K. Consulting surveyed more than 650
residential contractors across the United States to examine their
purchasing priorities, preferences and future strategies. Contractors
surveyed for the study, fielded in fall 2012, each had at least five
years of experience, worked at companies with at least three
peak-season employees and were involved in purchasing decisions for
their company. The survey provides a nationwide barometer of
contractor sentiment
 across multiple contractor trades. 
About L.E.K. Consulting
 L.E.K. Consulting is a global management
consulting firm that uses deep industry expertise and analytical
rigor to help clients solve their most critical business problems.
Founded nearly 30 years ago, L.E.K. employs more than 1,000
professionals in 20 offices across Europe, the Americas and
Asia-Pacific. L.E.K. advises and supports global companies that are
leaders in their industries -- including the largest private and
public sector organizations, private equity firms and emerging
entrepreneurial businesses. L.E.K. helps business leaders
consistently make better decisions, deliver improved business
performance and create greater shareholder returns. For more
information, go to www.lek.com. 
L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC.
All other products and brands mentioned in this document are
properties of their respective owners. Copyright 2012 L.E.K.
Consulting LLC 
For further information contact: 
Alex Wallace
L.E.K. Consulting
(617) 951-9507
a.wallace@lek.com 
Andrea Friedman
Bliss Integrated Communications
andrea@blissingtegrated.com 
 
 
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