Trend Tracker May/June 2023June 14th, 2023 by Nathan Hobbs
Changing Landscapes: If LBMs Aren’t On Your List, You Could Be Leaving Money On the Table
By Michael Collins
Newly published research involving most of North America’s biggest building material dealers shows the vital role these companies play in recommending and installing doors and windows. In its 2023 Construction Supply 150 list, Webb Analytics analyzes changes in operations at 150 large lumber and building material (LBM) dealers, home centers and hardware chains. Among other useful industry data, this year’s report sheds meaningful light on the current state of important customer channels utilized by many fenestration manufacturers.
Webb’s report found that 28.6% of dealers responding to the firm’s survey reported they install windows. Another 3.4% said they plan to begin offering window installation. In addition, 29.3% of respondents said they install entry doors, with another 1.4% planning to do so. Finally, 20.4% install interior doors, with 2% envisioning such work in their future.
Clearly, lumber and building material dealers, home centers and hardware stores represent a large and lucrative potential customer channel for door and window manufacturers.
More Than Just Chump Change
No other building materials get installed by more dealers than doors and windows, and with good reason. Doors and windows serve as the first and last line of defense in protecting homes against the elements. Thus, installations require skilled hands doing the work, and the consequences that builders can suffer from a poor installation can be high. It makes sense to hand over installation duties to a business that handles the product daily and, as the distributor, has a vested interest in seeing an optimal installation.
The importance of dealers as customers shows up much earlier in the process than the installation step, though. Nearly a quarter of all dealers on Webb’s list have people on staff who design entire homes. Let’s face it, those people can influence which brands are used in those homes.
The slump in lumber prices that ran through 2022 and continues into 2023 is likely to make dealers everywhere place even more importance on selling custom-ordered products, such as doors and windows.
Like all companies, dealers want steady growth, not wild gyrations. Working with doors and windows helps make that possible. While the sale of fenestration products is a much more technical process than thatutilized with, say, lumber or other commodities, the higher margins are worth the additional effort. Due to the high level of customer touch required to sell doors and windows, LBM dealers nearly always utilize different sales professionals to sell each product segment.
Also, sales professionals for lumber are focused on selling large quantities that are sorted and graded according to long used and very familiar grading standards. Doors and windows vary with regard to energy efficiency, design pressure, resistance to forced entry, hurricane resistance and myriad other technical aspects. None of these performance characteristics are left to qualitative descriptions. Rather, they are all characterized and measured with technical test results, the import of which must be explained to customers to command the higher margins these features bring.
Michael Collins is an investment banker and a partner in EquiNova Capital Partners. He specializes in mergers and acquisitions in the door and window industry.
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