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1、How Building Material Suppliers Can Navigate a Changing Market 2025 Construction and Building Materials SurveyiStock/sculpies2DisclaimerAbout the MaterialsThis presentation and associated services(Materials)have been prepared by theSimon-Kucher entity specified within the Materials(Simon-Kucher)for
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11、ipient.The Materials,or any portion thereof,may not be reproduced,transmitted,distributed or disclosed to any Third Party without the prior written consent of Simon-Kucher.Simon-Kucher|Construction and Building Materials Survey|20253Agenda01Executive Summary02Key Insights03AppendixSimon-Kucher|Const
12、ruction and Building Materials Survey|20254Industry trends:How Building Material Suppliers Can Navigate a Changing Market Simon-Kucher|Construction and Building Materials Survey|2025Source:Simon-KucherMargin pressure persists despite revenue growthBuilders and contractors face tighter margins and li
13、mited ability to pass on cost increasessuppliers who provide value-engineered solutions,cost-efficient alternatives,and materials that reduce installation time can position themselves as indispensable partners.Price increases require a segmented approachGeneral contractors and remodelers are expecte
14、d to pass costs through more easily than residential builders.Suppliers must provide value-engineered solutions maintain a delicate balance between maintaining market share and defending margin.Home sizes are shrinkingA 6%reduction in average home size reflects a shift toward efficiency over excess.
15、Suppliers that can offer space-efficient solutions and innovative materials to maximize functionality in smaller homes will align with builder needs in this evolving landscape.Sustainability is still valuedBuilders still value sustainable options.Manufacturers and suppliers who offer high-quality,su
16、stainable,and energy-efficient materials at competitive price points will have a significant opportunity to differentiate themselves in the market.Digital purchasing is gaining tractionBy 2030,builders and contractors expect to source nearly 50%of materials online.While digital adoption is increasin
17、g,suppliers must overcome concerns around order complexity,availability,and service to gain traction.Loyalty remains strong,but service and reliability matter93%of builders and contractors stay with preferred suppliers,but price volatility,lead times,and customer service gaps threaten retention.Supp
18、liers must offer stable pricing,reliable inventory,and superior support to maintain loyalty.Executive Summary01iStock/Mr_Twister5Agenda01Executive Summary02Key Insights03AppendixSimon-Kucher|Construction and Building Materials Survey|2025Builders and contractors face tighter margins and limited abil
19、ity to pass on cost increasessuppliers who provide value-engineered solutions,cost-efficient alternatives,and materials that reduce installation time can position themselves as indispensable partners.6Key InsightsOverall,does your company forecast that revenue,costs,and profit margin will increase,d
20、ecrease,or remain the same?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200Margin pressure persists despite revenue growth:Most builders and contractors anticipate higher revenues,but their profitability remains influx due to rising costs78%15%5%2%78%18%4%1%47%40%11%3%Revenu
21、eCostsProfit MarginLess than half of respondents expect an increase in profit margins in 2025IncreaseNo changeDecreaseUnsure02The largest respondents(1,000 projects)are most confident about revenue growthSimon-Kucher|Construction and Building Materials Survey|2025Key TakeawaysGreater Pricing PowerGe
22、neral Contractors and Remodelers may be less price-sensitive,allowing you to pass through cost increases with less pushback.You should explore opportunities to optimize pricing and margin rather than absorbing cost increases.Lower Negotiation FrictionTheir familiarity with shifting costs downstream
23、can lead to more efficient pricing conversations.This may allow for smoother pricing discussions and potentially fewer delays in price realization.54%49%36%41%27%15%20%16%12%7%65%44%48%41%16%16%9%12%5%4%0%10%20%30%40%50%60%70%BuilderContractor7Key InsightsDo you plan to do any of the following in re
24、sponse to the expected increase in costs in 2025?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Price increases require a segmented approach:Contractors express ability to pass costs through more easily than residential builders;indicating less price elasticityN=156Increas
25、e pricing to customersNegotiate supplier pricesImprove operation efficiencyOptimize labor costsAdopt new techPass costs to partnersLeverage economies of scaleAccept lower marginsSwitch to lower cost materialsDelay non-essential projects02Simon-Kucher|Construction and Building Materials Survey|2025Wh
26、at measures did you take(or do you plan to take)to address the business challenges you faced in 2024?What is the current avg.size(sq.ft.)of homes you build and what do you expect it to be in the future?Key takeaways:Market Response to Affordability Pressures:Residential homebuilders are reducing hom
27、e sizes to keep price points attractive,reflecting a 6%decrease in average home footprint.Efficiency Over Excess:Builders are designing smaller homes to optimize costs and meet evolving buyer preferences.8Key InsightsSource:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Home size
28、s are shrinking:There is a general trend towards residential homebuilders designing homes with a smaller footprint to address housing market challengesCurrentFuture75thpercentileMedian25thpercentile(sq.ft.)022,0001,9382,2932,1502,5252,4151,8001,9002,0002,1002,2002,3002,4002,5002,600-6%54%47%42%31%Ac
29、cept lowermargins and/orprovideincentives tohomeownersDesign homeswith simplerconstruction orinstallationmethodsBuild and designhomes with lessexpensivematerials andfinishesReduce thefootprint andoverall size ofhomes we buildSimon-Kucher|Construction and Building Materials Survey|2025Environmentally
30、 friendly materials are becoming the norm rather than the exception,with nearly half of all residential projects integrating them.9Key InsightsHow often do your end clients request sustainable or environmentally friendly building materials?Source:Simon-Kucher 2025 Construction and Building Materials
31、 Survey,n=200 Sustainability is no longer optional:Respondents,especially homebuilders,see a higher demand for sustainable materials with nearly half of projects including sustainable materials17%7%32%16%34%27%17%39%1%10%BuildersContractorsNeverRarelyOccasionallyOftenAlwaysWhat%of projects of homes
32、incorporate sustainable building materials or practices?49%Mean:31%25%10%43%25%75%60%0%10%20%30%40%50%60%70%80%BuildersContractorsN=200N=20075thpercentileMedian25thpercentile02Simon-Kucher|Construction and Building Materials Survey|2025Most(80%+)of builders and contractors are purchasing through onl
33、ine channels at least occasionally,and respondents believe they will source almost half of their materials online by 2030 10Key InsightsSource:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Digital purchasing is gaining traction:Selling to builders and contractors through digital
34、 platforms will become table stakes by 20301%11%56%13%19%Yes,exclusivelyYes,primarilyYes,occasionallyNo,but Imconsidering itNo,and Im notconsidering it31%45%30%43%0%10%20%30%40%50%CurrentFutureBuilderContractor+14%Approximately what percent of all your material do you expect to source online by 2030
35、?BuildersContractorsDoes your company currently source and purchase building materials online?5%20%57%13%5%02Simon-Kucher|Construction and Building Materials Survey|202511Key InsightsHow frequently do you stick to specific manufacturers when buying building materials?Source:Simon-Kucher 2025 Constru
36、ction and Building Materials Survey,n=200 Loyalty remains strong,but service and reliability matter:Suppliers must offer stable pricing,reliable inventory,and superior support to maintain loyalty.0%1%7%72%21%NeverRarelyOccasionallyOftenAlwaysWhen selecting a building materials supplier or distributo
37、r,what purchasing factors are most important to you?(%who ranked in top 3)51%44%58%19%20%17%72%58%43%27%19%6%0%10%20%30%40%50%60%70%80%BuildersContractors02Simon-Kucher|Construction and Building Materials Survey|202512Agenda01Executive Summary02Key Insights03AppendixSimon-Kucher|Construction and Bui
38、lding Materials Survey|202513AppendixSimon-Kucher|Construction and Building Materials Survey|2025Source:Simon-KucherYour Simon-Kucher contactsWill HumsiPartnerAtlantaThomas McClureDirectorChicagoErin KilbrideHoustonManagerFull team can be reached at:BuildingMaterialsSurveysimon-0314Agenda01Executive
39、 Summary02Key Insights03Appendix Respondent Overview Financial Trends Buying Trends and Preferences OutlookSimon-Kucher|Construction and Building Materials Survey|202515AppendixSource:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Survey Demographics:Simon-Kucher surveyed 200 res
40、pondents across the construction and building materials industry across various roles and project focusesTotal:200 participantsHigh level value chainResidential builder typeValue chainProject volume5338129710397201812307196845293210%)Moderate increase(5-10%)Slight increase(10%)Moderate decrease(5-10
41、%)Slight decrease(5%)I am unsure50%23%18%18%8%8%0%10%20%30%40%50%60%Volume decreaseLoss of revenuestreamsPrice decreaseMix deteriorationOtherI am unsureHalf of respondents who project no change or decreases in revenues attribute it to decreases in volumeN=10N=40Why do you believe your companys reven
42、ue will not increase in 2025?03Simon-Kucher|Construction and Building Materials Survey|2025To navigate rising costs,companies should leverage strategic pricing,enhance procurement efficiency,explore cost-saving technologies,and optimize labor and project management to protect margins and maintain co
43、mpetitiveness22AppendixHow do you expect the following specific types of costs to change in 2025?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200Costs:Rising costs across all categories will put pressure on margins,making it critical for companies to proactively manage prici
44、ng,procurement,and operational efficiency19%12%6%51%40%30%29%40%51%1%7%10%0%2%0%0%0%3%Material costsLabor costsOther costsSignificant increaseModerate increaseSlight increaseNo changeDecreaseUnsureMaterial costs have higher expected increases than labor/other costs;70%expect material cost increases
45、to be moderate to significantN=15603Simon-Kucher|Construction and Building Materials Survey|202523AppendixWhat are the biggest threats to ongoing profitability for your company in 2025 and beyond?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Profit:Highly anticipated incr
46、eases in costs are the key threat to profitability,but companies able to raise prices are more likely to achieve profit expansion in 202531%17%13%64%78%39%3%35%22%13%56%77%32%5%59%18%5%64%86%27%0%0%10%20%30%40%50%60%70%80%90%100%Inability to raise pricesInability to win newbusinessInability to retai
47、nexisting businessRising labor costsRising material costsIncreasing or changingregulationsOtherExpect increasing profit marginsExpect no change in profit marginsExpect decreasing profit marginsCompanies who are better equipped to raise prices are more positive about their ability to maintain profit
48、margin growthAcross all respondents,there is consensus that labor and material costs are largest threats to profitability03Simon-Kucher|Construction and Building Materials Survey|202524Agenda01Executive Summary02Key Insights03Appendix Respondent Overview Financial Trends Buying Trends and Preference
49、s OutlookSimon-Kucher|Construction and Building Materials Survey|2025Affordability Drives Decision-Making:While multiple factors influence builders,housing affordability stands out as the dominant pressure,shaping project choices and business strategy.25AppendixWas your company affected by any of th
50、e following challenges in 2024?Percent who rated impact as 4-5 on scale 1-5 is shown.Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Builder Challenges:Builders are especially sensitive to housing market affordability,while other factors have near equal impact on business p
51、erformance53%42%41%37%36%35%7%0%10%20%30%40%50%60%Housing affordability Material availabilityand lead timesLabor availabilityFaulty or defectivematerialsIncreasing orchanging regulationsLabor qualityOther53%of builders rated housing affordability as a mid-high to high impact factor on their business
52、03Simon-Kucher|Construction and Building Materials Survey|2025Key takeaways:Remodelers appear to be ready to face 2025s challenges with only 25%of such participants willing to accept lower margins The average general construction contractor will employ more than one of the listed measures to prevent
53、 top line losses Residential homebuilders are the most passive value chain member,with 64%of respondents accepting lower margins as a result of changing market factors26AppendixWhat measures did you take(or do you plan to take)to address the challenges you faced in 2024?Source:Simon-Kucher 2025 Cons
54、truction and Building Materials Survey,n=200 Builder Challenges:High portion of residential home builders plan to accept lower margins to address market challenges and should explore different approach to counter market shifts53%36%64%49%2%41%22%49%38%5%42%42%25%25%8%0%10%20%30%40%50%60%70%Design ho
55、mes withsimplerconstruction orinstallation methodsReduce the footprintand overall size ofhomes we buildAccept lowermargins/provideincentives tohomeownersBuild and designhomes with lessexpensive materialsand finishesOtherResidential homebuilders are more likely to accept lower margins than general co
56、ntractors or remodelers03Simon-Kucher|Construction and Building Materials Survey|202527AppendixHow frequently do you stick to specific manufacturers when buying building materials?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Brand Loyalty:93%of respondents report staying
57、 with their suppliers“always”or“often,”highlighting the importance of trust,reliability,and consistency0%1%7%72%21%NeverRarelyOccasionallyOftenAlways72%90%92%93%86%97%60%65%70%75%80%85%90%95%100%1000ProjectsRespondents with larger volume are the stickiest with their suppliers%of respondents who stic
58、k with suppliers/manufacturers always or often03Simon-Kucher|Construction and Building Materials Survey|2025Local Distributors Remain a Key Channel:Despite industry shifts,builders continue to source a significant portion(over 33%)of materials locally,underscoring the role of regional supply network
59、s in construction.N=20028AppendixWhat proportion of those materials do you purchase from the following types of suppliers?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Sourcing:More than one-third of construction materials purchases flow through local distributors,highlig
60、hting their importance in supply chain accessibility and serviceLocal distributorsNational distributorsRetail storesManufacturer-directOnline MarketplaceOther75thpercentileMedian25thpercentile03Simon-Kucher|Construction and Building Materials Survey|2025Key takeaways:Sourcing challenges are consiste
61、nt across segments of the value chain,with increased cost of materials,price volatility,and limited product availability as leading issues Lack of customer service is a larger pain point for builders compared to contractors29AppendixWhich challenges in sourcing building materials has your company fa
62、ced over the past 12 months?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Sourcing Challenges:Highly anticipated increases in material costs are a key challenge in sourcing and pose threats to builder and contractor profits03Simon-Kucher|Construction and Building Material
63、s Survey|2025Increased cost of materialsPrice volatility or sudden increasesLimited availability of productsLonger lead timesFreight/shipping delaysSupply chain disruptionsPoor quality or inconsistenciesPoor inventory managementRegulatory challengesLack of customer serviceNo challengesSustainable ma
64、terial sourcingOther0%10%4%20%17%17%21%33%34%35%41%40%59%0%4%5%12%15%16%25%26%31%40%42%44%66%ContractorsBuildersSupplier Selection Varies by Role Builders favor high-quality materials,ensuring durability and performance,while contractors prioritize affordability and access to materials to manage cos
65、ts and timelines.30AppendixWhen selecting a building materials supplier or distributor,what purchasing factors are most important to you?(%who ranked in top 3)Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Purchasing Factors:When choosing suppliers,builders prioritize mate
66、rial quality,while contractors prioritize price competitiveness and product availability51%44%58%19%20%17%72%58%43%27%19%6%0%10%20%30%40%50%60%70%Price competitivenessProduct availabilityMaterial qualityOn-time deliveryDelivery speedPricing transparencyBuildersContractorsTop 3 purchase factors when
67、selecting a supplier/distributor differ in importance for builders vs.contractors03Simon-Kucher|Construction and Building Materials Survey|2025Key takeaways:Contractors are extremely keen on products with lower defect rates and decreased installation times,with 45%of such respondents noting interest
68、 in such innovations Builders have sustainability in mind,with 25%of respondents interested in sustainable and energy efficient products,while contractors pay less attention to these categories Innovation desires present opportunities for manufacturer to tailor their products and marketing to differ
69、ent segments of the construction industry31AppendixAs you look to 2025 and beyond,please select up to 3 innovations you would most like to see.Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Innovations:Innovations in product quality,such as durability and lower defect rate
70、,are highly desired within the industry03Simon-Kucher|Construction and Building Materials Survey|2025Lower defect/failure ratesIncreased durabilityDecreased installation costs/timesIncreased warranty coverageLower maintenance productsSimpler installation processSmart/internet connected devicesIncrea
71、sed water and mold resistanceIncreased sustainabilityProducts with increased energy efficiencyIncreased fire resistanceOther0%18%23%27%22%21%24%34%28%21%39%29%1%6%13%10%16%20%29%20%30%45%37%47%ContractorsBuilders Across all building materials,41%of builders anticipate buying more premium products mo
72、ving forward.This is compared to only 21%of contractors,suggesting quality may be of more importance to builders and their customers A minimal percentage of respondents,across both builders and contractors,plan on purchasing lower quality materials,despite rising costs within the industry32AppendixD
73、o you expect to change the types of products you purchase in the following categories?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200Product Trends:Builders are 2x more likely than contractors to shift to more premium products moving forward based on their clients demands03
74、Simon-Kucher|Construction and Building Materials Survey|202521%41%75%57%3%2%ContractorsBuildersMore PremiumNo ChangeLess Premium33AppendixWhy do you think your company will/will not purchase a significant percent of materials online within the next 5 years?Source:Simon-Kucher 2025 Construction and B
75、uilding Materials Survey,n=200 Digital Purchasing:Persuading buyers with preference for current purchasing methods will require detailing the time savings,scheduling efficiency,and inventory visibility1%25%34%35%41%42%46%58%0%10%20%30%40%50%60%OtherPromotions/discountsIntegrationProduct research24/7
76、 accessInventory visibilityDelivery/scheduleTime savings55%42%39%32%32%32%10%6%3%0%10%20%30%40%50%60%Preference for current methodsAccuracyLack of personal touchComplex ordersSupplier limitationsCost concernsLimited FunctionalityOtherTechnology BarriersReasons forBarriers againstN=113N=3103Simon-Kuc
77、her|Construction and Building Materials Survey|202534Agenda01Executive Summary02Key Insights03Appendix Respondent Overview Financial Trends Buying Trends and Preferences OutlookSimon-Kucher|Construction and Building Materials Survey|2025Key takeaways:89%of all respondents have positive or very posit
78、ive opinions of business performance for 2025 Only 3 respondents report a negative very negative outlook for 2025,and all fall in the category of mid-sized contractors Large firms maintain a more positive outlook,with minimal numbers of indifferent respondents35AppendixWhat is you companys general o
79、utlook towards 2025 and beyond as you assess your business performance?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Outlook:Despite projected business challenges,the construction industry enters the new year with a positive outlook36%24%42%24%55%71%42%63%9%5%17%10%0%0%0%
80、2%0%0%0%1%0%10%20%30%40%50%60%70%80%90%100%Residential homebuilderGeneral constructioncontractorRemodeler/renovationspecialistSpecialty or trade-specific contractorVery negativeNegativeNeitherPositiveVery positive03Simon-Kucher|Construction and Building Materials Survey|2025Triple Threat for Builder
81、s in 2025:Escalating costs,labor shortages,and tariffs are set to challenge profitability in the construction sector.36AppendixHow do you expect the following challenges to impact your company in the next 1-2 years?Source:Simon-Kucher 2025 Construction and Building Materials Survey,n=200 Future Chal
82、lenges:In 2025,rising costs,availability of labor,and tariffs will be the major challenges facing the construction industry57%45%43%37%35%30%29%29%6%0%10%20%30%40%50%60%Rising costs ofmaterialsWorkforceavailabilityTariffs onbuildingmaterialsSupply chaindisruptionsIncreasingregulationsAccess tofinancingCompetitionShiftingcustomerdemand/trendsOther57%of respondents rated rising costs as a mid-high to high impact factor on their business03Simon-Kucher|Construction and Building Materials Survey|2025www.simon-