Purpose: Home improving is an attractive segment of retailing, benefiting from long-term demand for more new housing and more frequent home renewal. Many kinds of building materials and products are traded in the market. In recent years, a transformation has been observed in the timber material and products distribution channels, in which Do-It-Yourself (DIY) retail chains are pushing more and more responsibilities back to their suppliers. Especially for low value and bulky wood products, there are increasing requirements on suppliers to support retailers’ supply management and in-store business development. This paper aims to investigate the strategic challenges arising from this transformation, thereby obtain a better understanding of building material distributors’ requirements in supply and their consequences for suppliers.
Research Approach: The research approach was primarily exploratory. Qualitative multiple case studies with respondents from wood-based products suppliers and leading DIY retail chains and builders’ merchants in the UK market were conducted. Semi-structured interview and nonparticipant observation were used to collect data.
Findings and Originality: The strategic aspects of the distribution channel, especially the distribution channel for low value and bulky products-wood based products, have received little research attention. The results of our case studies show that multi-location strategy is common for retailers. Manufacturer brands are almost non-existing in the timber section, where retailer brands are dominate. This study also indicates that instead of passively taking over the delivery service from retailers, supplier’s proactive strategic moves, such as becoming a “one-stop shop” supplier for retailers by providing complete product portfolios and wide range of service solutions, are changing the structure of supply chain.
Research Impact: It is important to note that distribution channel, a field combining marketing and logistics, provides rich research opportunities. From a theoretical perspective, this paper aims to provide insights into the strategic management of distribution channels and its impact on the value of offerings.
Practical Impact: Findings from the case studies suggest that retail chains are looking for large suppliers that carry comprehensive product assortment and offer distribution solution as well as in-store support. Consequently, suppliers that used to be production oriented need to widen their focus further down the supply chain, in order to develop offerings that are more aligned with the development in the retail markets. Strategically managed distribution channel is an area that deserves suppliers to pay attention on because it can be a source of long-term competitive advantage.