LBM/hardlines businesses are optimistic about the promise of online shopping and are increasing investments in ecommerce solutions, according to recent survey by ECI Software Solutions.
The results show the LBMH industry expects to face headwinds as so much activity in the space revolves around home construction and DIY projects, both of which are expected to slow down as interest rates and prices increase.
However, LBMH businesses are emerging from a strong year of growth. Sales volumes, margin, and revenue have all been trending in the right direction. Online sales, in particular, rose dramatically as a result of the market-wide shift to web-based, socially distanced shopping. With extra capital on hand, LBMH leaders have been able to invest more in technology to keep up with digital trends and expand online capabilities.
According to the survey, like many other industries, LBMH business owners are currently concerned about three primary threats:
- The cost of materials/goods (65%)
- A potential recession (55%)
- The ongoing pandemic (49%)
However, many businesses have increased investment in technology infrastructure (55%) to address these concerns, specifically to enable them to expand ecommerce offerings (58%) and maintain a competitive advantage in the market (54%).
The LBMH industry witnessed an ecommerce explosion during the pandemic as customers grew more comfortable with purchasing building materials online and other forms of socially distanced shopping. Consequently, business leaders have adapted their strategies to prioritize online shopping experiences. The survey found that 63% of LBMH professionals consider ecommerce to be one of the most important features in running their businesses, ahead of customer relationship management (41%) and cloud functionality (36%).
Although many expect a performance dip in the coming year, LBMH businesses have good reason to be optimistic. Consumers have readily accepted new ecommerce channels, and companies that launched effective solutions were able to take full advantage. The good news is that any investments in online capabilities will continue to generate attractive returns in a post-pandemic world.
“LBMH businesses that hope to compete during and after the coming recession will need to lean further into digital tools, like ecommerce, that boost revenues and lower costs,” said John Maiuri, president of the LBMH Division at ECI. “Being online will not only be the status quo in the future, but it will be a critical driver of innovation and differentiation. To do this at scale, leaders will need tools that integrate seamlessly with other business software.”