Stat of the Week: Gross margins
Principia Consulting research breaks down pro dealer and retailer performance.
Managing gross margin is key to operating a profitable retail or pro dealer business. Gross margins vary by the type of dealer or retailer. Specialty retailers, such as those window and cabinetry retailers, have the highest margins at 32%— the result of focus on custom products, which add intrinsic and aesthetic value to the final customer and higher margin dollars back to the retailer. Principia’s findings show the average lumberyard has margins of 23% and specialty one-step dealers carry gross margins of 22%, both are lower than the big box gross margin of 28%.
Lumberyards and specialty one-step dealers have been expanding their product offerings and services to include custom design and installation, similar to specialty retailers. This addition to the lumberyard and specialty one-step channel enables the capture of additional channel margin and helps to grow their customer base.
Principia Consulting is a leading research and consulting firm focused exclusively on the building materials and construction industry. For 25 years, we have helped our clients grow faster and more profitably by providing high quality information, analytics, and insights.
For more information about pro dealer and retail distribution, contact Principia today.
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