How Building Material Retailers Plan for Long-Term Growth

Building material retailers plan years ahead, and the housing cycle sets the pace for those plans. When new construction slows and completions run below long-term averages, the smart move is to time investments rather than chase volume, a lesson that applies to builders and suppliers alike. The relationship between housing completions, market timing, and long-term strategy shows why retailers watch permit data, interest rates, and inventory levels before committing capital. In late 2024, one of the largest U.S. home improvement chains laid out its long-term growth plan at an investor conference, organizing the business around five initiatives: professional customer growth, online sales, home services, loyalty, and store productivity. Each initiative translates into practical lessons for anyone selling building materials to contractors, remodelers, and homeowners.

Growing the Professional Contractor Segment

Professional customers, the contractors, builders, and remodelers who buy materials for paying projects, have become the most valuable segment in home improvement retail. Industry reports put pro penetration at roughly 30 percent of sales at major chains, and the share keeps climbing because pros buy in larger volumes, return more often, and plan purchases around projects rather than impulse. A contractor juggling three or four jobs at once can spend in a week what a typical homeowner spends in a year.

What separates pro buyers from DIY shoppers

• Order size: pros buy by the pallet or truckload, DIY shoppers by the unit.
• Frequency: pros shop weekly or daily on active jobs, DIY shoppers seasonally.
• Decision drivers: pros weigh price, availability, and delivery speed; DIY shoppers weigh aesthetics and guidance.
• Service needs: pros want quotes, credit terms, and job site delivery; DIY shoppers want installation advice.

Because the two groups behave so differently, successful retailers run separate programs for each. Dedicated pro loyalty tiers offer faster checkout, volume pricing, and rewards that redeem against future purchases. One popular model gives pro customers 5 percent back every day when they pay with a store-brand credit card, which locks in repeat traffic and builds transaction data at the same time. The same logic explains why pro loyalty programs keep getting redesigned around speed and simplicity: earn faster, redeem easier, and the contractor keeps coming back.

Serving pros well also means understanding the trades they actually run. Plumbing contractors, for example, rely on specialized methods such as selective soldering to repair pipe valves without damaging internal components, and a retailer whose staff understands that work earns trust that general merchandising never will. Large special orders get their own treatment: sales associates plug directly into supplier systems to check inventory, pricing, and services such as jobsite or rooftop delivery, then produce quotes quickly. Faster quoting raises the close rate on big orders, which is where the real margin lives.

Cutting Labor Costs Through Smarter Methods

Labor is the single largest line item on most construction jobs, so anything that removes hours from a project changes the economics for contractors and the retailers who supply them. The push for productivity shows up in everything from preassembled components to rental equipment programs, but the most reliable gains come from better methods. A deck project is a good example: experienced crews have developed labor-saving deck building strategies that cut framing time by working in repeatable sequences instead of measuring each joist twice.

Three labor-saving moves that pay off quickly

1. Precut and prefinish off site, so crew time on the scaffold is assembly only.
2. Standardize fastener schedules so one drill setting and one box of screws serves the whole job.
3. Stage materials by work zone, placing everything for a section within arm’s reach before starting it.

Retailers reinforce these gains by offering delivery to the jobsite, stocked tool rental counters, and cut-to-length services. When a contractor does not have to leave the site to fetch a missing component, the saved travel time shows up directly in the bid price, and the retailer captures more of the project spend.

Technology That Expands Assortment Without Expanding Warehouses

Online sales growth does not have to mean building more fulfillment capacity. The first product marketplace in the U.S. home improvement industry lets outside sellers list their full catalogs alongside the retailer’s own inventory, covering price points from value to premium. The marketplace model carries a simple trade: the retailer offers a wider selection without owning the inventory, setting the prices, or investing in new fulfillment centers, while the seller gains access to millions of shoppers.

Where AI is already producing results

• Search and product recommendations that learn from browsing behavior.
• Sourcing engines that match supply to demand before shortages develop.
• Demand planning tools that smooth orders across seasons and regions.
• Generative AI assistants that help frontline associates answer customer questions faster.

The same standardization discipline applies on the construction side. Firms rolling out digital workflows get better outcomes when they follow a structured BIM implementation strategy for construction than when tools are adopted piecemeal, and retailers rolling out AI report the same pattern: a standardized development process beats scattered experiments.

Marketplace versus owned inventory

• Owned inventory: higher margin per unit, but working capital tied up in stock and warehouses.
• Marketplace: wider selection with near-zero inventory risk, but thinner margins and less control over the customer experience.
• Hybrid: keep high-turn items in owned stock and let marketplaces cover long-tail products.

Building a Home Services Business

Home services, meaning installation, repair, and maintenance performed for homeowners, turn a product sale into a recurring relationship. A homeowner who buys a water heater rarely knows how to install it, but every homeowner needs hot water, so the retailer that arranges the install captures the whole project. Services also smooth out the seasonal swings that plague pure product sales: maintenance contracts generate revenue in months when new construction is quiet.

The operational key is quoting speed. When a service request comes in, the teams that quote fastest win the job, and the same supplier-integration tools used for pro orders apply here. Detailed estimates that itemize materials and labor convert at higher rates than ballpark numbers. On the plumbing side, for example, a repair visit that involves selective soldering of copper pipe valves can be quoted accurately only when the technician knows exactly what the valve replacement involves.

How to price installation services

1. Cost the materials at retail, not wholesale, so the product margin funds the service overhead.
2. Add labor hours at the fully loaded rate, including travel and cleanup.
3. Build in a contingency for conditions you cannot see until the wall opens.
4. Offer tiered warranties: a basic install and a premium package with extended coverage.

Loyalty Programs and the Renovation Market

Loyalty has become an ecosystem rather than a punch card. The current direction is to bring do-it-yourself shoppers and professionals into one program with a single rewards currency, so a homeowner earns points on a weekend project and spends them on the next one, while a contractor earns on every job. One currency keeps the math simple for the customer and the data unified for the retailer, and it lets both groups redeem rewards in the same online checkout.

Renovation activity drives much of that repeat demand. Homeowners who buy a fixer-upper and run a structured renovation and resale strategy make multiple trips to the building material store in a single project, and flippers rank among the most loyal repeat buyers because every property means a full house worth of purchases. Programs that recognize that pattern, by offering project-based rewards or trade-in events, capture spending that generic point programs miss.

What a unified loyalty program should include

• One account, one currency, across online and in-store purchases.
• Fast earn and fast redeem, with no expiration games that erode trust.
• Spend-based tiers that reward frequency without punishing occasional buyers.
• Integration with the store credit card so everyday savings are automatic.

Store Productivity and the Affordability Question

Space productivity, the sales generated per square foot of selling area, forces retailers to treat floor space as a scarce asset. Slow-moving lines get cut, fast movers get more facings, and the freed space converts to pickup lockers, service counters, or expanded pro departments. Store expansion is part of the strategy too, with plans calling for 10 to 15 new locations per year in fast-growing U.S. markets, but new stores only pay off when the surrounding housing market can support them.

What space productivity really measures

• Sales per square foot by department, which exposes underperforming categories quickly.
• Inventory turnover per linear foot, the metric behind cut decisions and resets.
• Labor hours per transaction, which drops when self-checkout and pickup lockers absorb routine work.

That brings the strategy back to housing affordability. When entry-level homes are scarce, demand shifts toward smaller formats, accessory units, and creative density, and the building product industry has to serve those projects profitably. Programs that adapt, such as the tiny home strategy used for affordable housing development in Detroit, show how compact housing changes material demand: smaller footprints, more prefabrication, and tighter budgets per unit. Retailers and builders who plan for that mix, rather than assuming every project is a 2,500-square-foot single family home, position themselves for the next housing cycle instead of the last one.