LBM Dealers Neutral to Rising Number of SKUs

In the dynamic world of lumber and building materials (LBM), change is constant. One trend that has gained attention is the rise in the number of stock-keeping units (SKUs). While some may expect this proliferation to have a significant impact on LBM dealers, Principia’s recent LBM dealer survey exposes a surprising neutrality among dealers. The results were enlightening, revealing most respondents (74%) reported a neutral stance regarding the rising number of SKUs and the impact on their business.

The fact that only 18% of LBM dealers feel the rising SKUs has worsened, is notable. The perceived sentiment in the industry may suggest that this number would have been significantly higher and that dealers feel negatively impacted by the increasing number of SKUs.  So, neutrality is high, and the feeling of increased SKUs is fairly low, these results of surveyed dealers may mean:

1. Dealers have adapted to SKU proliferation. Dealers have gotten better at accommodating the increase in SKUs into their inventory management systems to counteract any negative impact.
2. The potential challenges posed by SKU proliferation, such as increased complexity in inventory management, are being mitigated by the benefits, such as the ability to offer customers a wider range of choices.
3. Product suppliers (manufacturers and 2-step distributors) are working hard to manage inventory themselves in order to get the right products into the hands of their customers.

Dealer insights can help manufacturers identify potential trends in the market and spot early indications of shifts within their markets.  Is there an overall shift in the management of SKUs?  What might this mean for the value chain? Check out another Principia blog which highlights another possible shift within the market regarding pricing here.