Contractors are buying from fewer wholesalers than they did in the early 1990s. The simplest explanation is there are fewer wholesalers around due to consolidation, although it may also be that contractors have figured out the same thing many wholesalers have in recent years. That is, while it's good to open lines of credit with multiple companies for the sake of special orders, and in case a major supplier relationship turns sour, you get better bang for the buck consolidating purchases.
PM magazine's “National Profile of Purchasing Trends in the Plumbing Industry” study completed late last year found that only 4% of plumbing and mechanical contractors typically purchased from a single wholesaler in a month's time. That's about the same as the 3% who answered the same way to a similar study performed by PM in 1992. But from there the results diverge significantly.
Some 56% in the latest survey said they bought from two or three wholesalers, compared with only 36% in 1992. In 1992, 40% of respondents said they patronized four to six wholesalers, compared with only 30% in last year's survey. Those who said they bought from more than six supply houses in a month's time dropped from 21% in 1992 to 10% in 2003. Clearly, wanderlust is on the wane.
That which remains is driven mainly by “Product Availability,“ listed by 89% of respondents as a reason for patronizing multiple supply houses. It's a sign that most contractors are quite fussy about their favorite brands.
And yet, responses to another survey question give lie to the notion that wholesalers are mere order takers at the mercy of contractor preferences. Our research department (PM is published by the same company as SUPPLY HOUSE TIMES) asked contractors: “How often is your brand selection influenced by wholesalers who offer special services …?”
Only 8% said “Never.” “Sometimes” was the answer given by 48% of respondents, 39% said “Often” and 5% said they were “Always” influenced in their brand selection by the wholesaler. (I bet every wholesaler reading this wonders who these star-struck patrons might be!)
The second most commonly cited reason for patronizing any given wholesaler was “Location” (74%). I suspect it was mostly service contractors responding this way. It stands to reason they aren't going to drive across town to pick up some item needed for an emergency repair. This also explains in part why precisely half of our survey respondents said they made some plumbing purchases from home centers. Much has been made of the big boxes' push for contractor business, but it appears that few plumbing contractors use them for more than fill-in items.
A most telling reason is revealed by two similar questions asked in the PM survey: “How often do wholesalers have the product you need in stock?” - and the same question repeated with “home centers” substituted for “wholesalers.” The responses:
-- “Always” - Wholesalers, 7%; Home Centers, 2%.
-- “Often” - Wholesalers, 84%; Home Centers, 43%.
-- “Sometimes” - Wholesalers, 9%; Home Centers, 47%.
-- “Never” - Wholesalers, 0%; Home Centers, 8%.
So there you have it. In the most important category of “Product Availability,” contractors rate PHCP wholesalers miles ahead of the big box competition.
Nor do the big boxes come close to competing with wholesalers in brand influence. When asked, “How often is your brand selection influenced by home centers that offer special services?”, a whopping two-thirds of contractors answered “Never.” Remember, only 8% said that about wholesalers. Only 7% said their brand selection was “Often” influenced by home centers, compared with 39% who said that about wholesalers.
Ah, but what of that supposedly all-important category of “Price”?
Some 64% of survey respondents cited it as a reason for doing business with a given supply house. Yet, only 47% of contractors cited it as a reason to do business at a home center.
There is, however, one category in which the big boxes outshine PHCP wholesalers. Ranking fourth in response to the question of why contractors purchase from home centers was an “Other” category. The most commonly cited open-ended explanation in that category was “Hours of operation.” More than 11% of respondents to this inquiry took the trouble to write in that they purchased from home centers due to extended hours of operation, i.e., open nights and weekends.
The full 59-page study, “National Profile of Purchasing Trends in the Plumbing Industry,” can be purchased for $295. Go to our Web site, www.supplyht.com, and click on the link titled “Exclusive Industry Research.”