Residential roofing was a challenging market for the entire supply chain last year as market demand and dealer sell through was lower than expected. Industry shipments were further impacted by lower price discounting which led to channel destocking. However, a pickup in repair and remodeling is forecast for residential roofing in 2015, driven by general reroofing projects and projected storm activity. So how will this increased demand be served through LBM distribution and how can pro dealers compete for a share of this demand?
Roughly 70% of residential roofing demand (in squares) was distributed through the specialty one-step channel in 2014, which continues to be driven by builders and roofing contractors. Both lumberyards and big box each represent 12% of volume with direct-from-manufacturer accounting for the balance.
A small but recognized shift in residential roofing distribution has taken place over the past three years as the box channel has gained a full two percentage points of share, taken directly from specialty one-step distribution. This shift stems from an increase in repair projects installed by a smaller and diverse range of contractors who purchase from the box stores, coupled with increased homeowner purchase of installation services provided by the box stores. These trends are further supported by successful marketing strategies employed by the box stores, including an improved shopping experience, ease of purchase, competitive pricing and store-backed warranties.
According to recent Principia research roofing contractors are expected to continue to account for the vast majority of roofing installations and will generally buy roofing from a specialty one-step distributor or a lumberyard. Most homebuilders and general contractors will not buy from a box store but rather go to the traditional one-step distributor or, if large enough, buy directly from a supplier. Developing brand loyalty with contractors at this level is vital to offset market share driven off by big box retail to one supplier. Promoting and maintaining contractor volume incentive programs is a valuable tool in establishing brand loyalty.
When selecting a pro dealer, contractors favored competitive pricing, customer service, and convenience and choice options, such as rooftop delivery services and well-stocked inventory. Incentives were not of great importance.
When it comes to contractor loyalty, brand outweighs loyalties that contractors feel towards the dealer. If their primary dealer no longer carried their preferred brand, 69% of contractors would find a dealer who did. In fact, if the dealer no longer carried their preferred brand, 55% of those surveyed would not use whatever brand their dealer carried. However, contractors cited a number of factors that could influence switching dealers.
Pro dealers have strong interest in greater participation in the residential roofing market, according to Principia research. It’s crucial that the right product/ brand is carried and properly supported from manufacturer to the sales desk in the yard. Loyalty is the siren song that all companies aspire to reach, but few actually achieve. The right product and service will ensure that this goal can be reached and make the customer think twice about going elsewhere with their business.