Normally the installer buys at the specialised wholesaler and the specialised wholesaler buys from the manufacturer. This is a simple three step market approach. Therefore, the specialised installation wholesaler has had a very strong position in the market for decades. Results of the Q3 2019 European Mechanical Installation Monitor show that in the last couple of years, online buying and faster and better distribution possibilities have started to change this model.
Specialised installation wholesaler most popular purchase channel
Looking at the percentage of European HVAC installers and plumbers buying at the specialised wholesaler, we see that the role of the specialised wholesalers is still very dominant in all countries. It is the highest in Poland; 99%, and the lowest in the UK; 90%. So generally, this channel is used by 90% or more of the installers in all countries.
However, the Q3 2019 European Mechanical Installation Monitor does show a clear shift in purchasing channels. In Germany, 45% of the installers buy directly from manufacturers. After the specialised wholesaler, this is the largest channel. The same goes for France and the Netherlands. In Poland, the DIY store is the second most used channel.
In the period 2017-2019, more UK installers have started buying at different channels. In the Netherlands, the share of installers buying directly from manufacturers has increased from 30% to 35%, and in Germany, the users of pure online channels have grown to 15%.
Largest share of wallet
To get the complete picture, the share of wallet is also an important indictor; how much do installers spend at the different channels? In France, the installers spend the most at the specialised wholesaler; 83%. The UK installers spend the least at this channel; 61%. This means that they spend 39% at other channels, like the traditional building material wholesaler, traditional hardware store, DIY store, pure online shops, and directly at the manufacturer. In the UK, the channel with the highest share of wallet after the specialised wholesaler is direct supply from manufacturers, with 15%.
The specialised installation wholesaler still has a very strong position when it comes to both the percentage of the installers buying there and the share of wallet. However, we do see that in a country like the UK, almost 40% of the share of wallet is spent via other channels. The main contender is direct supply from manufacturers.
For manufacturers this is a big opportunity. Because they can provide direct supply, they are able to send their products to the jobsite in less time. This means they have more control over the process, they build relationships with installers and they do not have to pay the specialised wholesaler. This is understandably a strong danger for the specialised wholesaler, as their share of wallet will slowly decline. For more detailed information we refer you to the Q3 2019 European Mechanical Installation Monitor.