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REAL ISSUES. REAL ANSWERS: LBM Consolidation: Good Or Bad?

QUESTION 2
Consolidation among LBM dealers of all sizes is reshaping our industry’s competitive landscape. In your view, is consolidation a good thing or a bad thing…and why?


“It’s just a thing. Like the change in seasons. Or icebergs. It’s a natural process shaped by our changing economy that will be good for some and bad for others.”


“Probably a good thing. The industry landscape is always changing, and new players move in and out of areas resulting in the changes. As younger companies grow, they always merge with other companies. As the original owners retire, the dynamics of the second generation either grow the company better or allow it to decline.”

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“At present time it is a bad thing, but I feel in time the hedge fund-controlled groups will be wanting a better return on investment and we independents will be able to pick up market share and locations. Independents are better at servicing our customers and will be the true winners in the end. Currently, manufacturers tend to allow the consolidators to bleed them dry. They will need to get
over this as well. There will be a correction in the right direction. We will pick up locations—in a profitable way—from the large groups who cannot control what they have.”


“In my opinion it’s a bad thing. In some cases, it takes away a good competitor who knows and understands the local market. You work hard for margins and then someone new shows up and wants to buy the work.”


“We are an employee-owned business that takes pride in providing great customer service, quality products and reasonable prices. The consolidation of smaller chains into larger chains always causes pricing pressure and erodes margins for our locations. It is usually a bad thing in our markets.”

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“If consolidation can help sustain the value of the independent, local and regional dealers that focus on the professional trades and offer outstanding service, it is a good thing. If the mentality of the acquisition is to try to compete against the big box, it is a bad thing.”


“I believe consolidation will eventually be the demise on the local lumber dealer in metro areas. Being good or bad is a relative thing depending on who it effects. It would be good for the customer, in the fact that he could have one stop to look at everything he needed, but bad in that he might not get the personal service and attention he might need for advice in a project. It certainly would be bad for small businesses in competition with the big boys.”


“It can be good, bad, and downright ugly. In a nutshell, consolidation is like a chameleon with ever-changing market impact tied to a variety of market variables and channels.”

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“It’s Corporate America taking over, which is a terrible thing.”

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