Jim Mather: taking a robust approach to business incentives.

Don’t rely on RMI 2/2

Published:  02 June, 2011

The Scottish loans will be time-limited and operated on a first-come first-served basis. People interested in applying for the loans are being advised to call the Energy Saving Scotland Advice Network or visit the Energy Saving Trust website.

“The Scottish deal is fundamentally an interest-free loan,” says Mr Pateman. “The cost to the Scottish exchequer is negligible."

He hopes that the scheme succeeds. “It could be held up as an example to urge our government to quit delaying and to find a way to launch the scheme now.”

Of course, in the ‘Palace of Westminster’ ministers do not think, talk or reason the way business does, and certainly not builders’ merchants. “As an industry, one of our problems has been that we only approached government speaking the language of builders’ merchants,” Mr Pateman explains. “Unfortunately, if you don’t speak the Government’s language, they will never see things through your eyes,” he says.

Enter Brett Amphlett, the BMF’s policy manager, and the Federation’s ‘man in the Ministry’. “In his two years at BMF, Brett has accomplished more for our industry than any amount of political lobbying of the past,” Mr Pateman states.

“It’s hard graft and he is very good at it,” Mr Pateman relates. This work has definitely paid off.

These days, BMF and the merchant sector appear in Hansard, the printed transcript of Parliamentary debates, in relation to the Lords’ debate on the Energy Bill.

And, builders’ merchants also merited a paragraph in the Government’s Green Deal. They were recognised as being a viable route to market. This is a profound transformation in the way our industry is being perceived. “We are getting results,” Mr Pateman says.

Howard Grant, managing director of Unimer is positive that this year will still see a solid RMI market. “Despite the bad weather, some merchants saw a spike in sales as people began buying goods before the VAT increase.

“Due to the low level of housing transactions and new house builds, the need for people to spend on their properties to improve or maintain is still quite strong,” he says. “There is a need and a demand for RMI work.”

Mr Grant believes this will be the case throughout the year. “However, because of the lack of government spend overall, construction will probably take a step backwards,” he concedes. That, in turn, will put pressure on the nationals who are exposed to the public sector. It will make them chase business they might not normally pursue.” The nationals currently account for around 75% of the merchant market.

“There will definitely be more competition for any work that is out there,” he says. “Although the nationals may still struggle to compete with the independents on a customer service basis, they are already starting to pay more attention to extra business that is available.

Most merchants, he believes, need to become more proactive in chasing business. “They need to be more progressive with their marketing plans to attract the customers to them,” Mr Grant says.

All merchants should be exposed to online trading, he states. There are still too many merchants who do not have an online presence.

“At the FEST lightside conference in Dublin last year, the vice-chairman of Saatchi & Saatchi said that every business – whether a multi-national or a one-man band – should have a digital presence. This could range from TV and radio advertising, down to apps and websites,” Mr Grant relates.

Unimer’s links with eBuildingSupplies lets its members use an internet-based trading platform, connecting buyers and sellers of a wide range of building, timber, heating, and landscape products and materials.

eBuildingSupplies also undertakes internet marketing activity to attract buyers of a wide range of building materials to its website. “It generates orders and enquiries for the merchant to follow up,” says Mr Grant.

Once on the site, merchants are presented with over 10 000 products to browse in over 1000 categories. “All products are priced,” says Mr Grant.

“The prices displayed to visitors are managed by builders’ merchants, referred to as ‘Partners’, as well as a number of other sources of price information. Customers can choose to purchase, request a quote, send an enquiry or telephone a merchant. Payment is taken online or by the merchant in traditional ways.”

Unimer’s links with BuildStore – the company that specialises in self-build, renovation and conversion products and services, helps consumers research projects, from finding land for sale, finance and insurance to buying building materials.

BuildStore’s huge customer base is primarily fed through its mortgage brokering capability and through its National Exhibition centre in Swindon.

“This creates a big customer base that can be made available to Unimer’s merchant members. It gives them a genuine opportunity to grab hold of a spend which averages out at £75 000 a customer.”

This scheme has started well, Mr Grant reports. To-date, over 180 merchant branches have signed up to that national network of supply for that market sector.”

Self-build is estimated to be in the region of 20 000 houses a year and has remained at that level for some time, Mr Grant says.

“It would be good if it could grow for two reasons: it gives people an opportunity to design and create the home of their choice and it gives them the opportunity to create an amount of equity value.”

Going forward this year, total construction will go backwards, as indicated in the recent forecast by the Construction Products Association.

“For those sectors of the construction market that merchants are most interested in, they are looking reasonably positive,” Mr Grant concludes.

The big shortfall for independents is the lack of finance available to small property developers. That, says Mr Grant, is something that needs to be addressed.

This article was first published in the March edition of  Builders' Merchants News.

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