Plumbing and HVAC/R Distribution 2013

Transcription

1 A SERIES OF DISTRIBUTION INDUSTRY REPORTS Plumbing and HVAC/R Distribution 2013 Build Your Own Business Case A dynamic Market Model and Forecast Tool is included in addition to the base report. This interactive tool allows for what if scenario-building market projections, and is a powerful business planning resource. More details inside The gold standard for information and insights in the building products industry

2 Plumbing and HVAC/R Distribution 2013 Plumbing and HVAC/R distribution in North America is an $80 billion industry and consists of a complex structure of buying groups, distributors, dealers, and retailers. Plumbing and HVAC/R Distribution Channel Map The outlook for the industry is optimistic based on the expected lift from new housing starts, residential remodeling, and commercial construction over the next five year period. Semi-custom and custom homes and higher end buildings typically bring an increase in demand for more expensive fixtures, faucets, hydronics, water heaters, and heating/cooling and refrigeration systems. Each of these factors will increase overall demand for plumbing and HVAC/R products within traditional distribution channels. Recent changes in market dynamics have created a new selling environment for plumbing and HVAC/R distributors, the primary link between manufacturers and the market. Economic factors, government legislation, a more educated consumer, and a larger DIY (do-it-yourself) consumer segment have changed the dynamics of the industry and will factor into channel shifts within the industry over the next five years. In addition, ongoing consolidation among plumbing and HVAC/R distributors is changing the channel landscape. To remain competitive during this period, companies involved in the distribution of plumbing and HVAC/R products will need to adapt their go-to-market strategy to align with market dynamics. Those who demonstrate this adaptability will have a distinct competitive advantage over the rest of the market. Changing Product Performance Standards Government legislation around sustainable plumbing products and energy efficient HVAC/R equipment has led distributors to re-think the breadth and depth of product offerings and 2

3 the way they service customers in terms of logistics, and pricing. As legislation is debated, distributors are being more cautious with some of their business decisions particularly in taking on new product lines that may be impacted by government mandates on equipment standards. These product performance changes may become cost prohibitive and could increase demand for distributors to stock spare parts for repair of older systems. An Educated Consumer The popularity of social media and e-commerce has enabled consumers to become more educated when making purchase decisions about plumbing and HVAC/R products. As a result, consumers are demanding more choices both in aesthetics and functionality. Distributors more frequently have design centers or showrooms to attract business directly from contractors, builders and property owners. In fact, the volume of products sold to the consumer direct from the manufacturer and through showrooms, design centers, or online is expected to increase during the next five years as well as lead to margin improvement within certain distribution segments. Property owners and contractors have several options within the distribution channel where they can purchase plumbing and HVAC/R products. The growth of big box retail has also cemented a DIY mentality in the minds of the consumer. Consumers are becoming more comfortable with doing some repair and remodeling jobs on their own rather than having the work done through a trade professional. These buying practices are cutting into the demand within traditional distribution channels. To adapt, distributors and dealers need to market to both the property owner or facility manager and the contractor, and carry the right type and level of inventory. On the residential side, many distributors are finding it necessary to restructure their business model by expanding their geographic coverage and making their locations more customer-friendly by adding showrooms and design centers. Industry Consolidation Mergers and acquisitions within this sector continue with the top 15 distributors accounting for over half of total industry revenue. The various routes to market and how each company is positioned to serve the local market still leaves the industry with a fragmented supply base. Dozens of deals have been announced in distribution thanks to a perfect storm of contributing factors that include a large number of owners who are ready to retire, significantly improved deal valuations and a group of larger distributors and private equity firms that have cash they need to deploy. One driver of the most recent consolidation trend is the desire to fill product or service gaps. Distributors are also focused on consolidating and building the ability to serve customers on a national basis, rather than reaching into new product areas. To understand the changing dynamics of the market and its implications on distribution, an in-depth strategic assessment is required. 3

4 About the Program The program will draw upon primary research with over 500 value chain participant interviews. An overall view of plumbing and HVAC/R distribution will be provided based on detailed portraits of the flow of each product category through all channels of distribution. Report Format The report will be structured for easy reference. The outline is shown below and is subject to change based on subscriber input. 1. Executive Summary / Introduction Executive summary of the current market size, trends and developments, keys for future success and outlook in plumbing and HVAC/R distribution. 2. Market Assessment A thorough analysis of the plumbing and HVAC/R distribution industry in North America will provide the baseline. A value chain/margin analysis will provide insights into gross margin through the value chain by product category. A three-year projection will provide insights into how demand is most likely to shift by channel, product, region, and market demand for selected plumbing and HVAC/R products (volume and value) broken down by: Distribution channel - Master distributor - Co-op / Buying group - Wholesaler - Kitchen and bath dealer - Big box / Retail - Specialty distributor - HVAC/R Boilers and furnaces Air conditioners and heat pumps Hydronic heaters Gas and electric water heaters Sheet metal / ducting Fans and ventilation Equipment, accessories, and parts (including but not limited to compressors and condensers) Geography - Regions (Five U.S. census regions and Canada) - Divisions (Nine U.S. divisions and East and West Canada) Markets - Residential - Commercial - Industrial Channel partners will be assessed with strategic implications on key factors including: Shifts within geographic regions and product categories Consolidation activity among distribution channels Pricing and promotion trends Product type - Plumbing Fixtures and faucets Pipes, valves, and fittings Equipment, accessories, and parts 4

5 3. Major Distributor Profiles Leading distributors will be profiled including information on: Company background Key financial measures Product line review and market strategy Services offered and points of differentiation Estimated revenues by product group Distribution strategy Strategic partnerships Apparent business direction 4. Industry Trends and Developments We will be conducting interviews along the value chain to provide a fresh industry perspective. You will learn what key players are saying about the current and future direction of the market. Trends in the plumbing and HVAC/R distribution industry: Changes in channel strategy Down channel marketing approaches Impact of supply chain shortening on the industry Measures of loyalty to key channel partners Impact of channel decisions on margins Rationale for using specific channels by product category Shifts in service requirements within distribution channels Projected changes in future purchase patterns Product proliferation impacts Product lines changes and level of activity for each product Comparative product prices by channel Value propositions Changing consumer requirements Changing industry structure Impact of big box and buying cooperatives on the channel Influence of information technology and social media on marketing 5

6 Demand Analysis Report Example: Plumbing and HVAC/R Product Type by Region CANADA NORTHEAST WEST MIDWEST SOUTHWEST SOUTHEAST PRODUCT Fixtures and Faucets PVF Hydronic Heaters AC and Heat Pumps Boilers and Furnaces Gas and Electric Water Heaters Sheet Metal and Ducting 5. Forecast and Business Assessment A realistic forecast and business assessment to help and define industry opportunities Forecast volume, value, and gross margin to 2015 broken down by Distribution channel Product Region Market Size of opportunity by channel and by product Changing customer requirements Changing industry structure Implication of size and scale on the future of plumbing and HVAC/R distribution Ability to create value in each distribution channel Value creation from new products, services and operational efficiencies Critical path to serve new opportunities 6

7 Subscription Features Plumbing and HVAC/R Distribution 2013 is an invaluable tool providing all industry participants a 360 degree view of the business. The foundation of each subscription is a written report detailing the key metrics for the industry, broken down by product category, channel to market and overall industry margins. All key issues impacting the current and projected state of the industry will be detailed. Background on major industry participants will be provided in snapshot profiles. In addition, subscriptions will include the following unique elements: Voice of Customer Survey Results: Understand Critical Market Success Factor Voice of Customer will be captured directly from over 500 interviews with plumbers, HVAC/R technicians, builders, contractors, distributors, dealers and other relevant trade sources. The results of the interviews will be portrayed in graphical and tabular form to provide insights on the current and projected future state of the market. Correlations and contrasts will be depicted among the different industry participants, plumbing and HVAC/R product categories and geographic regions. Subscribers will be able to zero in on the issues most pertinent to their business. What drives success at each step in the channel? Wholesaler and distributor requirements from plumbing and HVAC/R manufacturers Drivers of distributor share Contractor services received from distributors Penetration into retail outlets Prerequisites for direct to contractor or consumer models Graphs shown are representative and do not contain actual data Plumbing and HVAC/R Categories in Focus: Channels Master distributor Co-op / Buying group Wholesaler Kitchen and bath dealer Big box / Retail Specialty distributor Products Plumbing Fixtures and faucets Pipes, valves, and fittings Equipment, accessories, and parts HVAC/R Boilers and furnaces Air conditioners and heat pumps Hydronic heaters Gas and electric water heaters Sheet metal / ducting Fans and ventilation Equipment, accessories, and parts (including but not limited to compressors and condensers) Plumbing and HVAC/R Distribution Database: Identify Key Distribution Relationships Plumbing and HVAC/R Distribution 2013 subscribers will have access to an extensive database of North American distribution outlets. The searchable database will enable users to assess product manufacturer relationships with master distributors, co-ops and buying groups, wholesalers, specialty distributors, kitchen and bath dealers, and retail outlets. Leading channel participants in each product category will also be detailed. Overall, this valuable resource will break down plumbing and HVAC/R distribution along the following parameters: Markets Residential Commercial Industrial Distributor name Location (city, state) Channel type Product categories Manufacturers 7

8 Plumbing and HVAC/R Distribution Market Model and Forecast Tool: Create Your Own Forecasting Scenarios Subscribers also have access to the plumbing and HVAC/R Distribution Market Model and Forecast Tool. This interactive tool enables subscribers to evaluate the market through whatever lens they choose. The Principia Market Model and Forecast Tool is based on Principia s proprietary process used to develop industry forecasts and demand assessments. Key variable data include: Base year assumptions Forecasts of year-over-year GDP growth Population growth, market trends and other related metrics This powerful analytical and planning tool will enable clients to construct their own what-if scenarios of future demand and growth to develop their go-to-market strategies. Inside the Principia Market Model and Forecast Tool Information from different sources is compiled and analyzed to create demand forecasts based on a wide range of scenario assumptions, including your own. Modify Your Own Forecast The Principia Market Model and Forecast Tool lets you insert your own assumptions and what-if scenarios. 8

9 Using the Study This report will serve as an important baseline analysis for forecasting and business planning purposes by existing and new industry participants. Using 2012 as the baseline, the study will analyze the drivers and trends of the plumbing and HVAC/R distribution industry by region, distribution channel, market and product, and will provide forecasts covering the next three years. The report also provides business insights on: Voice of Customer on major trends in products, services and market conditions Up-to-date assessment of distributors serving the residential, commercial, and industrial markets Channel strategy evaluation for plumbing and HVAC/R product manufacturers Market share review for leading distributors Strategic insights into the growth segments of plumbing and HVAC/R distribution Why Subscribe? The study will serve as an essential reference for executives responsible for business planning and forecasting at all companies currently involved in or seeking to participate in the plumbing and HVAC/R distribution industry in North America. The study will be invaluable tool for: Evaluating current and potential channel partners or suppliers Developing action plans to build market share Optimizing distribution channels to drive higher margins Expanding business in high growth channels, products and regions Subscription Information Scope The study focus is on the plumbing and HVAC/R distribution chain, from manufacturer through to contractors and property owners. Geographical scope is North America (US & Canada). Study Timing The report will be launched in the first quarter of 2013 with the study completed in third quarter of We are prepared to discuss the findings to meet your individual information needs. To Subscribe To subscribe to Plumbing and HVAC/R Distribution 2013, please fill out the attached form and return to us. The subscription price is $20,000 prior to March 31, 2013 and $25,000 thereafter. Contact Ken Jacobson Direct: US Fax: US

10 Plumbing and HVAC/R Distribution 2013 Subscription Agreement This agreement is between Principia Consulting, LLC and (Client). Client agrees to subscribe to this multi-client study focused on Plumbing and HVAC/R Distribution Client agrees to maintain the report as company confidential for a period of three years from the signature date herein. Client will not reproduce in part or in whole the report by any means, will refrain from oral or written publication of any information presented in the report, and will take every precaution to prevent the disclosure of information in the report to any third party. Principia Consulting, LLC will not provide the information contained in this report, in whole or in part, to any party that is not a subscriber to the program except for limited use for marketing purposes. Client agrees to subscribe to this report for $20,000 if payment is received on or before March 31, 2013 and $25,000 if payment is received after March 31, 2013 (payable in US currency). Principia Consulting, LLC will provide an electronic copy of the report for limited distribution upon completion and after the receipt of payment. Principia Consulting, LLC will invoice Client for the full amount of the subscription fee upon official launch of the study. All invoices are due upon receipt. Client understands that if a sufficient number of charter subscribers is not obtained, the study will be canceled before the Client is invoiced. To confirm your acceptance of this proposal, please have an authorized employee sign and return a copy to Principia Consulting, LLC. Once signed by both parties, this document shall constitute a legal binding agreement between both parties. Please check one Before March 31, 2013 Subscription Price: $20,000 Cardholder Credit card number Signature After March 31, 2013 Subscription Price: $25,000 Exp. date VISA & MC Security # AMEX Security # AGREED AND ACCEPTED Principia Consulting, LLC Signature Name Title Date Company Signature Name Title Date BILL TO: Name Title Company Address SHIP TO : Name Title Company Address City City State ZIP State ZIP Phone Phone 101 Lindenwood Drive Suite 225 Malvern, PA Fax: PrincipiaReports.com Info@PrincipiaConsulting.com

11 Principia Visit us at: PrincipiaConsulting.com Principia is a leading consultancy serving the building products industry with a range of consulting and research services. Principia is knowledgeable about the basis for participation throughout all levels of the value chain, and what it takes to be successful. London Hamilton House Mabledon Place Bloomsbury London WC1H 9BB United Kingdom Philadelphia (main office) 101 Lindenwood Drive Suite 225 Malvern, PA Main: Fax: PrincipiaReports.com Info@PrincipiaConsulting.com Shanghai 1388 North Shaan Xi Road Putuo District Shanghai China