Builders’ Merchants: How to Arrest the Recent Sales Slump

A recent data set released by the Builders’ Merchants Federation in association with GFK revealed a significant slump in builders’ merchant sales figures over the final quarter of 2014.

12th April 2015

Builders Merchant Bricks

The figures suggested that sales had dipped alarmingly – 13.5% down on the previous quarter. Such a dip in 

sales is no doubt alarming for UK builders’ merchants, but what can you do to arrest the current sales decline? Is there more to the figures than meets the eye? Integrity Trader investigates...

First things first: is the slump significant?

Taken on face value, a 13.5% drop in sales is certainly an alarming statistic. It’s a significant slump – particularly over the course of a single quarter. However, the Builders’ Merchants Federation figures failed to mitigate for a number of seasonal factors. December – the final month of Q4 2014 – saw only 17 trading days. With so many fewer trading days over the course of the quarter, you’d expect to see a significant sales dip on the previous quarter. Adjusting for the reduced number of trading days, the dip in sales is actually just 5.2% – still significant but nothing like as shocking.

So, is there actually anything to worry about? Are the BMF figures indicative of a worrying trend or simply par for the course considering the time of year? Sadly we don’t have BMF figures from Q4 2013 to compare them against, so for now we can only speculate. What we do know, however, is that a number of different factors can affect sales figures – particularly in the construction retail sector. Adverse weather conditions, a lack of infrastructure projects, politics, war and industrial action can all cause unexpected dips in sales figures. The latest slump may not be so worrying after all.

Awareness of seasonal factors

All of this will come as cold comfort to UK builders’ merchants, however. A sales slump is a sales slump, no matter what caused it and whether it’s a one-off or a long-term trend. If the recent slump has caused cashflow issues in your business, the trick is to anticipate seasonal factors ahead of time and learn to recognise when a slump is likely to occur. Take a look at your calendar – do certain months have more weekends (five instead of four) than others? Are there any national holidays on the horizon? Such factors will invariably decrease the number of trading days in a month and reduce sales figures over that time period. Keep an eye on the weather forecast, too. Adverse weather conditions often halt construction projects – from the grandest large-scale jobs to little home improvement and DIY projects. During prolonged spells of bad weather, you can expect your sales figures to fall.

Improving sales figures

Fortunately, there are steps you can take to improve your sales figures and free up your cashflow to arrest any sales slump:

Stock management is more important during a sales slump than ever. Make sure you have the products your customers want so that they don’t end up going elsewhere, and ensure that your stockroom isn’t filled with dead stock during slow periods.

● Point-of-sale data. Use point-of-sale data to analyse customer purchase habits. With the data you’ve compiled, learn to spot patterns that indicate when sales slumps may occur.

Promotions. If you’re anticipating a slow month or a forthcoming sales slump, it may well be time to launch a promotion. Loyalty incentives, refer-a-friend deals and basic money off price cuts will all help to attract more customers through your doors when things are slow.

Builders’ merchant software can help you to run a more successful business when sales slumps are hurting your cashflow. Trader software comes with stock control and promotion management functions, point-of-sale data capture and numerous accounting tools as standard, meaning that sales slumps will no longer be a serious issue for your business. Contact us today to learn more about our point-of-sale software. 

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