Mark Vitow Ltd Contributes to Builders Merchants Federation (BMF) Winter Forecast
With continuing uncertainty affecting the UK economy, the latest Forecast Report from the Builders Merchants Federation (Winter 2023) highlights the expected impact on building material sales. There are signs of the market worsening during the coming year as the Chancellor’s measures to counteract recession may further reduce consumer spending power. Price inflation is set to continue through the first half of 2023 before gradually slowing, while sales volumes are likely to drop below 2019 levels.
Given this scenario, the BMF’s baseline forecast predicts negative growth of -1.6% in 2023 over 2022. As the pressures of inflation begin to settle in the latter half of 2023, the market is expected to return to growth, with average growth forecast at 2.1% in 2024.
Mark Vitow Ltd’s Commercial Director, James Cranham, was invited to provide Supplier Insight to the Winter Forecast Report.
“For Mark Vitow Ltd, 2022 was a year of lots of highs and not too many lows! Although growth overall was lower than anticipated due to the market conditions and uncertainties, we were still able to progress as an organization, and we certainly exited 2022 in a great position to achieve our ambitious plans for the future. The business has more than doubled since 2018, and a slowing of the market in 2022 has allowed us to reevaluate and make the investment needed to continue our growth strategy.
There is a realization that volumes were flat across the P&H sector with increasing inflationary pricing making up the growth in the sector. The state of the market in 2023 remains uncertain and unpredictable as the war in Ukraine, high fuel costs, high inflation, government instability, and even Brexit remain constant ongoing challenges.
2023 is clearly going to be a year of challenge, consolidation, and less activity across the sector but one that brings opportunity too. We as suppliers have little influence on the market conditions in the short term, but we can adapt and shape our businesses to make them better equipped to cope with the undoubted challenges.
The obstacles from 2022 remain although there is a degree of pragmatic optimism in the industry that inflationary costs will decrease and we will benefit from the positive effects as an economy. As a distributor we have been affected significantly by the 2022 inflationary costs due to branded supplier increases and fuel and delivery cost increases. However, our business is incredibly robust in a challenging market. We offer merchants reductions in stock holding, fast reliable service and delivery, and choice and competitiveness which can be invaluable in tough trading conditions.
What are my predictions and forecast for 2023? I certainly think 2023 will be challenging with lower organic growth. A lot I think will depend on interest rates and the ability to access affordable borrowing across housing, development and homeowner renovation. Our industry is incredibly resilient and consumer demand and appetite in the sector is historically pretty robust.
As a business we are forecasting double digit growth in 2023 partly due to inflationary costs but predominantly from growth in our new customer groups and market share redistribution as well as new product category development.
It’s definitely going to be an interesting year…and one we are looking forward to!”
The 36 page BMF Forecast Report combines a comprehensive analysis of merchant market performance from July 2014 to November 2022, taken from the Builders Merchants Building Index (BMBI), coupled with analysis of key factors affecting builders’ merchants’ sales to project future sales in 2023.
The Builders Merchants Industry Winter Forecast Report 2023 is supplied free to BMF members and priced at £250 for non-members. Contact Thomas Lowe, BMF Industry Analyst/Economist at firstname.lastname@example.org to request a copy of the latest report or if you have any questions.