SIC 5211 Lumber and Other Building Materials Dealers

SIC 5211

This industry consists of establishments primarily engaged in selling lumber or lumber and a general line of building materials to the general public. While these establishments may sell primarily to construction contractors, they are known as retail in the trade. The lumber that they sell may include rough and dressed lumber, flooring, molding, doors, sashes, frames, and other millwork. The building materials may include roofing, siding, shingles, wallboard, paint, brick, tile, cement, sand, gravel, and other building materials and supplies. Hardware is often an important line sold by retail lumber and building materials dealers. Establishments that do not sell to the general public and those that are known in the trade as wholesale are classified in the Lumber and Other Construction Materials industries.

NAICS CODE(S)

444110

Home Centers

421310

Lumber, Plywood, Millwork, and Wood Panel Wholesalers

444190

Other Building Material Dealers

INDUSTRY SNAPSHOT

According to the National Retail Hardware Association (NRHA), which takes into account hardware stores, home centers, and retail-oriented lumberyards, industry revenues totaled $217.3 billion in 2003 and $236.3 billion in 2004. That year, hardware stores accounted for $28.8 billion; home centers, $143.7 billion; and lumberyards, $63.8 billion. The NRHA predicted that the industry would reach $281.7 billion by 2008.

The lumber and building materials industry is dominated by do-it-yourself (DIY) giant Home Depot Inc., which markets its goods both to DIYers and contractors. Lowe's Inc. has gained ground on Home Depot by investing heavily in friendly, well-lighted, well-stocked stores and exceptional customer service. A new focus for all home improvement stores is drawing in the growing number of women who are making home improvement decisions and spending an increasing amount of time on DIY projects. As of 2004, the highest year for housing starts in three decades, the industry was continuing to grow and consolidate.

ORGANIZATION AND STRUCTURE

There are several types of establishments that fall into the retail lumber and building materials category. The largest categories, by far, are lumberyards, home centers, and warehouse home centers.

Lumberyards, whether as single establishments or parts of a chain, rely heavily on the industry's traditional customer base of contractors, builders, remodelers, and other professionals. Most of their business, anywhere from two-thirds to three-quarters, comes directly from the sale of lumber and building material. Most of these businesses average annual sales of about $3.8 million per unit. Sutherland Lumber, Grossman's, and 84 Lumber fall into this category.

Home centers, which often sell hardware as well as lumber and building materials, generally occupy about 30,000 to 35,000 square feet. Due to their size, they greatly outsell the smaller lumberyards. Many of these sales are to do-it-yourselfers, as well as professionals. Hechinger, Lowe's Companies, and Payless Cashways are home centers.

By contrast, warehouse home centers have an average of more than 100,000 square feet of floor space. They boast a wide selection of merchandise at lower prices, although they offer fewer frills than the smaller stores. Home Depot, Builder's Square, and HQ (Home Quarters) are warehouse home centers. At the end of 1999, annual sales reported by the U.S. Department of Commerce included totals from both home centers and warehouse home centers. The sales per unit averaged almost $13 million annually.

Competition has driven many retailers to find new ways of attracting customers. Many outlets offer custom bath and kitchen design and installation, home decorating merchandise, garden centers, and "how to" classes. Some, such as Lowe's, have moved into even more diverse areas, such as electronics, appliances, home office equipment, accessories, and software.

Establishments in this industry purchase lumber from wholesalers or direct from factories and mills. Most of the lumber and wood products come from the Pacific Northwest and the Southeast. Other building materials, such as paints, cement, hardware, and related supplies, usually were purchased through wholesalers, specialty distributors, or direct from the manufacturer. Some larger chains carried their own labels on products they sold through contractual agreement with manufacturers. Larger stores...