26 Oct 2015

Builders Merchant Building Index: A new finger on the pulse of the market

If you’re engaged in marketing, one of the most telling differences between each market is the amount and quality of information that’s available.

If you’re engaged in marketing, one of the most telling differences between each market is the amount and quality of information that’s available. As a rule of thumb, business to consumer markets tend to be awash with information. Business to business markets often struggle to come up with the basics.

Generally that’s a reflection of the money companies spend on their marketing. It also reflects the demands of a particular channel. If you expect to sell to Tesco or Sainsbury’s they’ll expect you to convince them with insight and evidence that you know what you’re doing. They’re not big on trust.

In trade markets, and construction in particular, the routes to market and the influences on buying decisions are fragmented and complicated so researching them is difficult and expensive. So it tends not to get done, or it’s done piecemeal. Even big companies surprise you by how little market information they have. Big and important markets like Housebuilding are well researched. But other sectors struggle in the dark. Partly as a consequence they are virtually invisible outside the industry and often poorly understood. In contrast – a reflection of the amount of marketing and research they do – everyone knows B&Q, Homebase and Wickes while much of the public, media and Government is largely ignorant of builders’ merchants and their suppliers.

Does that matter? It does when you get left out of the loop.

From beginning to end the Green Deal has been a disaster. Instead of asking builders’ merchants who should have been at the heart of this upgrade of Britain’s housing stock, Government consulted everyone but. They asked ASDA, Next, B&Q, utility companies: who didn’t they ask! They didn’t ask merchants because they didn’t know what merchants do and how crucial they are. Merchants aren’t on their radar. So the Green Deal started with a flaw and ended in fiasco, causing massive disruption and disappointment. It was a lost opportunity for Government, the country, homeowners and the industry.

Construction is a vital component of the economy and its level and speed of activity are good indications of overall economic health. But construction is complex. Supply chains are long and tortuous. It takes a long time for inputs to become outputs. Government, economists, the media, industry and the public want to know what is happening but the available indicators are a jigsaw of variable quality and freshness which are hard to assemble into a picture.

Many of these jigsaw pieces are based on samples. And samples can get it wrong, as we’ve learned from polling in the national elections.

Within construction, Housebuilding is well covered, but you won’t find much on the important Repair Maintenance & Improvement (RMI) market.

Builders Merchant Building Index
A few years ago, David Smith, the Sunday Times’ economics editor half-jokingly created his own Skip Index to measure the level of RMI, as a good indicator of overall economic activity. For want of a better measure, he counted the number of builders’ skips in his road! He still looks down his street to assess the health of RMI.

Well now he won’t have to. He’ll have a better measure of RMI. The BMF’s Builders Merchant Building Index (BMBI) is the real thing. It is produced by MRA Marketing working with the BMF and GfK, and it’s based on GfK’s ground-breaking Builders Merchants Panel, and the BMF’s own Sales Indicators.

International market research group GfK is the gold standard in market information and insights. And the BMBI is accurate, reliable and fresh. And importantly, it’s not a sample survey. Merchants accounting for 80% of the market contribute sales-out data, so it isn’t a very small sample of a very large market. In effect, it is the market.

The Builders Merchant Building Index reports trend data monthly, and more detail every quarter which the BMF sends to members. From January 2016 a summary of the monthly and quarterly reports will be published in BMN magazine.

GfK’s Builders Merchant Panel and the Builders Merchants Building Index are milestones for the industry. They’ll provide the foundations for its marketing and branding, and with it we intend to transform the outside world’s understanding of our industry.

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