Content writer Grace Murphy explores the impact of the Coronavirus on the builders’ merchants sector.

The Coronavirus has turned out to be one of the worst pandemics to plague mankind in more than a century. While the crippling financial impacts of the epidemic have not spared any industry entirely, neither has it affected every segment equally.

Let’s take a look at the impact the pandemic has had on builders’ merchants directly, as well as their supply chains.

If we were to take a report from May by the Construction Products Association into consideration, then it seems the UK construction industry will lose nearly 25% of its expected output in 2020. In light of the present and ongoing lockdown, however, there is a chance for it to grow worryingly higher. Take a look at the following key stats, as provided by the official report:

  • Never had the British construction industry seen a worse output figure in recorded history before April 2020
  • In April, the output lost was as high as 60% overall in the country
  • During the same month, thousands of builders’ merchants, contractors, promoters and others associated with the construction industry reported £0 in revenue
  • The loss seemed to be particularly serious in Scotland during that time, as the construction output loss there was put at 83%
  • Industrial, road construction and other non-residential construction outputs didn’t fall as severely, since that subsector only reported a 20% reduction
  • In Scotland, the output losses were 85%, 60% and 60% in residential construction, industrial construction and residential renovations respectively.

While construction was not the worst hit sector initially, it became one of the worst hit sectors in the UK after just one month, from being one of the most profitable segments.

As a result of these figures, every sector and subsector in construction, renovation and builders’ merchant retail is going to take an unavoidable hit to their bottom lines this year.

This hit will likely produce a slog that may remain prevalent in 2021-2022 as well, although the optimistic wing of the study puts the industry at a 0.5% gain by the end of 2021 - that figure still puts it behind 2019 by six per cent though.

How bad is the impact on the supply chain?

The impact on the supply chain as a whole has been mixed because of the versatility it enjoys. Multiple delivery companies had shifted to delivering PPE, medicine, food, water and other emergency supplies during the pandemic’s worst stage.

However, if your business is associated with the supply chain that works closely within the builders’ merchant sector, negative impacts plaguing the merchant industry might make it necessary for you to cutdown on expenses as best as possible.

One obvious option is to negotiate discounted pricing with your current service providers, whether they are insurance companies, finance providers or energy suppliers. For instance, there is a significant amount that can be saved by asking for a discount from your present van insurance company, especially if you have multiple delivery vans just sitting around due to the absence of a sufficient workload for them to be of any use.

An even better and more economic option could open up if your van insurance policies are coming to the end of their respective tenures soon. Search for the best insurance policies and compare them side-by-side at Quotezone. Use the growing competition between the various business van insurance providers on their website to land deals on van insurance policies. It can make insurance much more affordable and in line with the present market conditions, as well as your own company's financial condition.

It should be noted that the UK is under lockdown again in some areas. If the ongoing lockdowns indeed turn out to be as severe as the last few months, fluctuations will once again be noticed, and these stats and numbers will change as a result of that.

Nevertheless, the industrial trends we also discussed are not likely to be affected enough to bring about any drastic negative impacts in comparison to what has already been seen.

The UK is better prepared to handle the next lockdown and the merchant industry in particular is not expected to go haywire this time around.