More progressive suppliers and distributors/dealers are working to stay at the leading edge of building market trends, which can lead to not only how product is installed but also how it’s marketed and sold.
BY: LOU ROSSI
Finding new and creative approaches to deliver value is the hallmark of any successful company. More progressive suppliers and distributors/dealers are working to stay at the leading edge of building market trends, which can lead to not only how product is installed but also how it’s marketed and sold.
Take the insulation market, for example. Our research shows that the manufacturer-direct channel, including buying cooperatives, represented more than 55% of total unit volume demand (in square footage) in North America, making it the most common channel for distribution. The next largest channel is specialty one-step distribution, which accounted for 27% of demand in 2013.
The box channel followed with 13% of demand, then pro dealers at 6% (considering two-step to retail for all channels). For pro dealers to have a more relevant role in insulation, a different view of how to serve the market becomes an absolute necessity.
There’s some history and market reality here. Dealers have tended to be new construction-oriented; that’s a general statement but largely true. For new construction, insulation would be typically sold in truckload quantities and often cubes out before weighing out due to its density in the case of fibrous insulation like fiberglass, rock wool and cellulose. Therefore, insulation in these quantities sold direct doesn’t require much need for distribution, and with a low density, shipping insulation through multiple steps (once or twice to distribution, once to builder/contractor) doesn’t make economic sense.
On the remodeling/retrofit side, insulation contractors also specialize and purchase direct. For example, they’ll use blowing trucks to blow in loose fill insulation into attics or walls. Spray foam polyurethane (SPF) contractors have dedicated rigs for installing specific brands or products.
Creating value through market and sales support is a surefire way for dealers to have a bigger role selling insulation. So, where can dealers make a difference based on the main issues facing the insulation market? Insulation is part of more complex building systems and users need more education. Code is driving higher standards for materials and installation, and there’s an increasing contrast between new high-performance and old price-sensitive markets.
Principia recently surveyed builders and contractors about the impact of building codes, and many expressed frustration. Some noted that building codes are not consistent statewide. This displeasure suggests that manufacturers and distributors need to develop an outreach role to provide up-to-date information on local codes.