Andrew Tavener, Head of Fleet Marketing EMEA, Descartes, unpacks the BMF recent report on the Branch of the Future. He explains that more effective customer communication tools, routing and telematics technology for deliveries and drivers, and electronic proof-of-delivery tools can enhance the entire buying experience for all generations and kinds of merchants as they support all tradespeople and construction project needs.

With a new generation of customers coming through, builders’ merchants stand at a pivotal moment in their evolution, where they must adapt to new demands and delivery expectations, or risk falling behind.

The recent ‘Branch of the Future’ report, written by Steve Collinge and co-sponsored by the Builders’ Merchant Federation’s (BMF) and L.E.K. Consulting, has highlighted the industry's required structural change.

Paraphrased, it explains that customer expectations are now being reshaped by the speed, visibility and convenience of modern ecommerce. A traditional branch-led, relationship-driven model is being updated with an Amazon-style customer experience that is digital, transparent and on-demand. For many merchants across the UK, this represents a challenge to adapt, and to incorporate new ways of taking orders, communicating with customers, executing deliveries and managing proof of delivery.

The report also points out the important different buying requirements between generations, raising the question for the industry of how it plans to meet them. ‘Older tradespeople’, defined as Generation X (1965 – 1980) and Boomers (1946 – 1964), expect to visit a merchant to pick up goods. In comparison, ‘younger tradespeople’, referred to as Gen Z (2000+) and Millennials (1980 – 1999), prefer a ‘Click and Collect’ or an ecommerce-like delivery experience.

A shift in buying power is afoot

The BMF’s research is quick to point out that a shift in power dynamics, driven by buyers, is happening. In the past, suppliers would decide which retailers and merchants would stock their products. They drove the market and would stipulate when orders for goods would arrive. Tradespeople were often at the mercy of  their logistics and supply chain operations. The went for merchants, passing on goods deliveries and collections down the chain. 

Thanks to ecommerce and the ‘Amazon’ shopping experience we have all come to appreciate, this is changing. Tradespeople are now in the driver’s seat. They have more options available to them these days. Meaning that they can pick and choose where to buy and specify when and where they want materials delivered.

The report is keen to highlight that the sector is facing a skills shortage, as older tradespeople consider retirement. It states there are age-based differences between customers' buying needs – essential for merchants to acknowledge if they are to serve loyal older tradespeople and foster sales with younger clients.

Older tradespeople’s expectations

For instance, the report says the average typical builders merchant customer is 53 years old. Older tradespeople typically stick to well-known brands. They have their preferred trusted suppliers, which they have used for many years. They value relationships with in-store staff and reps for quotes and advice. They are likely to buy in bulk, stockpile materials, and depend on traditional invoicing and paperwork. If they are on social media for work, they will likely use Facebook.

Given their years of experience, they tend to understand long-term pricing trends, and expect trade discounts based on loyalty and bulk buying. They prefer traditional credit with merchants and tend to be more patient, and unlikely to try fast delivery choices.

Younger tradespeople’s expectations

Younger tradespeople have a different approach to buying. The report says they are open-minded to trying new brands, based on good reviews and pricing. They prefer shopping around for the best deals both in store and online. They, too, value in-store relationships, but are more influenced by online reviews and recommendations. When seeking materials, they will likely buy online frequently and make use of ‘just-in-time’ delivery options, instead of stockpiling products. When purchasing online, they expect almost instant quotes from an array of modern channels including WhatsApp, email or app notifications. When handling payments, they prefer digital invoicing, online credit accounts and contactless payments. Their use of social media is sophisticated. They can be found on Instagram, TikTok and YouTube for industry insights and tool reviews.

A key differentiator, though, is that younger tradespeople expect – and will test – fast service: next-day or same-day delivery (including click & collect). Although they will also buy in store, they are less likely to visit stores as often as older tradespeople. They understand lead times and are less patient with delays and mistakes generally. They are more open to self-service tools online and in apps: such as chat, FAQs, and are happy to check out current stock levels instead of talking to a sales rep.

Convenience, personalisation and sustainability

Convenience, personalisation and sustainability are some of the key factors that the builders' merchant ‘branch of the future’ must consider as it evolves, says the report. The in-store proposition remains key, as brands are encouraged to create communities/hubs where exclusive demos can be provided to tradespeople, or just become meeting places for peers.

But what has come to light is the importance of offering a digital / ecommerce purchasing and delivery experience via apps, web, phone or in branches. All these systems must be linked and support access to current stock data, pricing and delivery capability. Merchants must now ensure that they can offer tradespeople frictionless services including click and collect; on-time last-mile delivery to sites; a drive-in and drive-through model that supports the move to click and collect; and 24/7 collection lockers. All these options provide tradespeople with choice and confidence. 

Naturally, ‘online’ opens more doors for partnerships and a stronger range of options, something that appeals to the price-conscious younger tradesperson. Alongside this, merchants must consider offering loyalty programmes that go beyond discounts. For instance, including tiered rewards for priority service, extended credit and special pricing – or access to training events and exclusive product previews. They may want to consider creating a loyalty scheme too and linking online/offline purchases more effectively.

Sustainability is increasing in importance, too. Branches are evaluating how to become more energy efficient. But one area that is ripe for improvement is across merchants’ fleets of last-mile delivery vehicles. It is one thing to offer that convenience to today’s modern customer, but, how ‘green’ are those deliveries? How can merchants reduce mileage on deliveries, to keep costs and CO2 emissions down.

To meet the need for convenience and sustainability, merchants ought to consider how they execute their last-mile deliveries for tradespeople, be it via delivery to the site or ‘click and collect’ to the store. Today, routing and telematic tools enable merchants to optimise the use of their vehicle fleets for deliveries. This includes using artificial intelligence (AI)-enhanced algorithms to support planning teams with what orders to pack into vehicles to meet the urgent delivery requirements of tradespeople.

Effective technology integrates with ecommerce platforms seamlessly, and enables tradespeople to select the best delivery slot for themselves when ordering. This helps them with planning deliveries to sites on time and can reduce the risk of theft of those materials, as they can be scheduled to arrive just in time for use on jobs. Further, this technology enables merchants to select the most efficient fulfilment centres and routes for deliveries reducing mileage, CO2 and costs.

Effective customer communication and electronic proof of delivery is an important part of the Amazon-like customer experience. After an order is placed, can the merchant confirm that order and communicate with customers via email, apps and WhatsApp? How can tradespeople be reached if there are any delays with an order or, how can tradespeople communicate with the merchant or driver in the event a change in logistical operations is required? For instance, explaining that the delivery needs to go to ‘Gate B’ instead of ‘Gate A’ due to an accident on site that is preventing access for vehicles.

Additionally, what happens when the delivery is received? Is there a way to sign for it via a mobile device using electronic proof of delivery and what is the process for seeking feedback, supporting reviews and loyalty? Modern customer communication technology is supporting merchants as they evolve to meet changing customer needs.

The future is on the merchants’ doorstep. The customers, relationships and revenue are there for the taking.