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2009-09-12 2

The Research

✒A on-going research programme about building material retail distribution channel✎The British market

✎The Swedish market

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Building Material RetailIndustry

✒ Retail of building material✎Retailer types

✎Customer types

✎The sales go to…

✒Big Retailers✎Consolidation

✒Manufactures move down

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The UK Story

Manufacturers Distributors Retailers

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Summary of the Major DIY Retail Chains

£900 million190+Travis Perkins plcWickes

£1.57 billion331(End of 2008)Home Retail GroupHomebase

£550 million180 (February 2008)Cerberus CapitalFocus

£3.8 billion(Year ended 31/01/2009)

Warehouse:120Mini-warehouse:123Supercenter:88Total: 331

KingfisherB&Q

TurnoverTurnoverNumber of StoresNumber of StoresOwnerOwnerCompanyCompany

Table 1. Major DIY Retail Chains in the UK Market

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Summery of the Major BM Chains

£3,14 billion(Year ended 31 July

2008)1900+Wolseley plcWolseley UK

£3,18 billion (Group Revenue)611Travis Perkins plcTravis Perkins

€17.5 billion (Group turnover)500+Saint-GobainJewson

€2673 million (Group Revenue)134Grafton Group plcBuildbase

TurnoverTurnoverNumber of BranchesNumber of BranchesOwnerOwnerCompanyCompany

Table 2. Major BM Chains in the UK Market

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Mapping the Purchase Requirements

Purchase Demands

Technical Commercial Logistical

Participate in RetailerDevelopment

Develop ProductStrategies

Competitive Price Strategies

Develop Promotion Strategies

Improve CustomerFocus

Develop LogisticsCapabilities

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Meeting the Purchase Requirements

DIY Sector• Product Range:

• All forest product needs• C&L goods, sheets, Edge

Glueed Panel (EGP)• Floorings, PAR’s• Architectural moudlings

• Service: • 1 or 2 delivery per week

nationally• Helpline• Full IT system facility• 98% delivery reliability• Merchandising and

marketing support

BM Sector• Product Range:

• BM core range of mini pack, deck boards

• C&L sets• Service:

• 48 hour delivery• Support and advice• 98% delivery reliability• Training &

environmental support

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Distribution Solution

Distribution Solutionsis SCA Timber’s concept for full service supply chain solutions for DIY retailers and building material merchants.

Adapted product range for Selected CustomersSupply from local as well as mill integrated further processing, completed by external sourcingCategory managementLogistic focus

•Warehousing, transportand sourcing

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Changing Distribution Channel for SCA

14%

37%

49% Wholesaler

Woodindustry

Builder’sMerchants

DIY and Builder’s

Merchants

Sales via wholesalers

Industry sales

Supply Chain Management

Growth 0%

Growth 2-3%

Growth 5-10%Percentage ofSCA Timber

Growth figures referto main markets

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Two Parallel Distribution Network

Supplier’s DC:ProducingSourcing

WarehousingDistribution

Retailer’sDCA Fully load Drop

A Multi Drop

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The Sweden Story

26LBC, NBC (70%), DIY (30%).1,500Optimera

20LBC (15%), DIY (85%)1,300K-Rauta

125LBC, NBC (65%), DIY (35%)7,000Interpares

3N/AN/AHornbach

38DIY (95%), LBC (5%)2,3-2,400Coop

60DIY (28%), NBC (2%), LBC (70%)2,800Byggtrygg

43Almost 100% DIY1,300Byggmax

50DIY (33%), LBC (34%), NBC (33%)3,000Beijer

15DIY (90%) and LBC (10%)1,000Bauhaus

Stores in SwedenStores in SwedenCustomerCustomer GroupsGroupsSalesSales (MSEK)(MSEK)CompanyCompany

Table 4. Summary of Case Companies

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Positioning of Retailers

100%

0%

0%

Ownership

Purchase Consortium

Custom

er Base

Public

Builders(LBC&NBC)

50%

50%

Bauhouse

International NationalRetail Chain

Beijer

Byggmax

Byggtrygg

Coop

Interpares

K-Rauta

Optimera

Hornbach

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Business Focus and Priorities of Retailers

✒Technical ✎Cost efficiency is a common focus✎New systems and products are required when selling

wood through retailers.

✒Commercial ✎Competitive price strategy✎Shift focus from volume to customer

✒Logistical ✎Reliabilities of suppliers

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Development of Building Material Retail

✒ Retailers are developing: ✎Size – large stores, big chains

• Purchasing in the “centre” of the operations✎Scope – a wider assortment

• Difficult to define - boundaries become blurred• More complex purchasing is starting to exercise their

purchasing clout• Act as gatekeepers

✎Distribution center – control of supply to branches✒ Shifting the balance of power from manufacturers to

retailers

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