Channel Shift With COVID-19: Opportunities and Challenges

Last month, we discussed the shifts we’ve seen with Building Product and Home Improvement brands, with over 60% of residential contractors surveyed stating they have tried a new brand in the past 2-3 months. This month, we look at shifts in channel behavior due to contractors’ changing needs and the impact of COVID-19.

Our research tracking contractor behaviors impacted by COVID-19 shows that pros are changing purchase behaviors. This may be due to several factors including availability and pricing. We recently surveyed over 500 residential contractors, including remodelers, plumbers, landscapers and electricians, to find that over 40% have tried a NEW supplier in the past two months.

Contractors Are Using New Suppliers

Our research revealed that 45% of contractors surveyed stated they have tried a new supplier in the past two months. While channel shift isn’t new, it’s typically below 20% within a ‘normal’ year based on our 30 years of studying building products and home improvement products.

Contractors cited several reasons for using a new supplier. The top reasons were:

Better quality products
Products were available
Better service
Better pricing

Channel shift and reasons behind that shift will differ by size of company, contractor segment and other potential factors, so it’s critical you understand your pro customer segments to determine what is driving their supplier preference.

Using Old Suppliers in New Ways

For those contractors not using new suppliers, there is a high chance they are using their existing suppliers more or less over the past two months than they did before. 60% of contractors surveyed said they have used some suppliers more or some suppliers less over the last two months. The number one reason: availability. Even more telling is the number two reason: being able to order online.

Online ordering has taken off among pros, particularly with larger contractor firms, as our COVID Home Improvement Tracker shows. Our recent study among 500+ contractors also found that 51% are doing more online ordering of building products over the past two months compared to normal. 90% of those are planning to maintain their increased use of online ordering after the COVID pandemic.

This represents a big opportunity for suppliers and manufacturers. Online purchasing puts more control in the contractors’ hands and offers them greater convenience, and possibly better service, by allowing contractors to purchase where they like, when they like, control of having it delivered or picked up in store, and transparency with availability.

What To Do?

Manufacturers and retailers are all impacted by channel shift. For some it’s terrifying, but for others, it’s a window of opportunity to finally attract or retain the pro customer that might have been tough to reach in prior years.

Understand customer behaviors on where they purchase your category and what is driving their supplier selection. How important is availability vs. service? What does quality really mean? Be sure to look deeper into the results to highlight differences by trade segment, age, tenure or company size. We use several demographic approaches in the work we do for clients that result in more targeted programs to ensure each customer audience is being addressed.
Capture market feedback on how you are meeting those needs by understanding where your company, brand or product stands. What are your strengths and weaknesses as they align with market needs? For manufacturers, this may be about a distribution strategy or product mix. For suppliers, this may be about merchandising or service elements.

The Farnsworth Group works with manufacturers and suppliers to reveal opportunities through custom research specific to your customer, your brand and your product. More than ever before, you must capture details beyond your sales teams and beyond broad industry reports to provide specific direction that will help you gain your share of those 45%+ switching suppliers.