UK Focus: Efficiency under pressure

The backdrop

UK construction continues to contract. In September, the S&P Global UK Construction PMI rose to 46.2 (from 45.5 in August) — the ninth consecutive month below the neutral 50.0 mark, still signalling ongoing contraction.

The slowdown has forced many firms to freeze hiring and cut staff, while abandoned projects and tighter order books remain widespread.

Across the merchant sector, the Builders Merchant Building Index (BMBI) shows July value sales were flat year-on-year (+0.1%), while volumes rose +0.6% — clear evidence of pricing and margin pressure.

The reality? Top-line demand is weak, while fuel, labour and material costs continue to rise. Knife-edge margins mean merchants must look inside their operations to protect profit.

Case in point: logistics efficiency supporting margin resilience

One of the Nordic region’s largest builders’ merchants and an Alrik customer has shown how better logistics can protect margins even when sales slow.

In 2024, the company’s net sales fell by 2.1%, yet its gross margin improved from 33.4% to 34.7%, and EBITA margin rose from 2.9% to 3.9%, according to its 2024 Annual Report.

In its annual report and interim updates, management credited the improved margins to “efficient operations, optimised inventory, and improved e-commerce logistics.”

Entering 2025’s high season with more efficient logistics and well-stocked inventories, the merchant grew sales by 5.6% in Q2 while increasing its EBITA margin to 10.8%.

Better logistics don’t just cut costs but lift margins. And this isn’t an isolated result. Across Alrik’s customer base, merchants report:

• Delivery accuracy improving from around 67% to 95%
• Failed deliveries falling below 1%
• Fleet utilisation increasing by roughly 25%

Together, these outcomes show that logistics efficiency directly supports stronger financial performance, a practical response to today’s margin pressure across the merchant sector.

Benchmark insight: Fleet utilisation is a hidden lever

Industry observation: many merchant fleets operate at 65–70% capacity on average (due to dead miles, partial loads and scheduling gaps). With smarter loading, routing and scheduling, that can reach 80–85%.

That 15–20-point improvement means:

• Lower fuel use
• Fewer trucks
• Lower maintenance cost
• More throughput without adding capacity

If Alrik can help you identify unused capacity or reduce “waste minutes” per run, that’s real margin recovered. Same fleet, just working smarter.

Industry signals

Recent data shows a mixed picture for UK merchants and reinforces the need for efficiency.

• BMBI: In Q2 2025, merchant value sales grew +2.8% year-on-year, driven by volume growth (+4.0%) as prices fell around –1.1%, according to the BMBI Q2 2025 report.
• In July, growth slowed: value +0.1%, prices –0.6%, volumes +0.6%, reports the BMBI July 2025 summary.
• PHMI: Plumbing & Heating merchants reported value +4.1%, volumes –2.1%, according to the BMF PHMI July 2025 release.
• S&P Global UK Construction PMI: 46.2 (September) still signals contraction and weaker order books, according to S&P Global.

These mixed signals underscore how fragile margins are. Sales volume isn’t translating into profit: merchants are moving more materials but earning less per load.

The PMI trend (ongoing contraction, weaker new orders and staff reductions) reinforces that merchants can’t wait for volume growth to recover. Efficiency has to do the work.

Alrik in the news

Builders’ Merchants News featured Alrik in the October issue with the article “Bridging the Digital Gap.”

In the piece, CEO Nici Sundén-Cullberg explains how more than 1,000 merchant branches have moved from manual coordination to AI-powered delivery operations.

The article argues that digitalisation is no longer about efficiency alone, but about turning logistics from a cost centre into a strategic sales advantage. By combining better data with strong relationships, merchants gain the confidence to deliver under pressure and impress customers.

“Digitalisation doesn’t replace the relationship-driven character of the industry, it strengthens it.” — Nici Sundén-Cullberg

Your takeaway

If this sounds familiar (slow demand, rising costs, tighter margins) then optimising logistics isn’t optional. It’s essential.

That’s why Alrik offers a free logistics pilot. We’ll evaluate your current fleet use, loading and routing, then show where margin is hiding (in unused capacity, wasted minutes, or unnecessary runs).

No upfront fee, no obligations, just insights.

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