Ahead of his presentation at The Hardware Conference in April, The Hardware Journal spoke with Mathias Lönneker, Executive Vice President, Group Chief Strategy Officer and part of the Executive Committee in STARK Group with responsibility for business development across the company, about his thoughts on where the retail construction industry is heading in 2025 and beyond.
Recently, I saw a survey ranking industries by their level of digitalisation. Construction was near the bottom, ranked 21st out of 22 industries. Only agriculture and hunting were ranked lower by the Harvard Business Review.
This isn’t the only study showing that the construction industry struggles to achieve productivity gains on par with the rest of society. In fact, construction has been outgrown by a factor of 1.6 on productivity vs. other industries since 1995.
Therefore, it doesn’t take much imagination to envision our industry being disrupted by digitalisation, new materials, innovative technologies, and construction methods. The ideas and opportunities for disruption are plentiful.
The Future Calls – We Know the Words
I spend most of my days thinking about where the construction industry is heading and how we can lead one of Europe’s largest distributors of building materials to where we can create most value for our customers.
It would be foolish not to believe that construction will look different in 2035 than it does today. Surprises are on the way, but the biggest one I believe will likely be excelling on the essentials becoming more important!
We Have Learned an Important Lesson
Over the past five years, STARK Group has quadrupled in size and is now one of Europe’s largest distributors of building materials serving the professional craftsmen. Originating in the Nordics, we have established a European platform through Merger & Acquisition, first in Germany and Austria and later in the UK, with e.g. Jewson joining our family in 2023.
Thirty acquisitions have taught us the same lesson: Well-run companies focus on their customers and their pain points.
Struggling companies have their heads elsewhere.
Amazingly often, we have found that simply removing bureaucracy and giving each branch manager the responsibility and license to operate back from a head office, boosts the relationship between customers and our company. As a winning formula, it’s old school – but it really works, in a business where winning the local zone is key.
The Construction Industry is Evolving
Despite claims to the contrary, the construction industry is steadily evolving. On the construction site, robots, 3D printing, prefabricated structures and AI will also play a more prominent role as helping hands for craftsmen. In the distribution chain, development is relatively rapid. It is often invisible but can be felt when successful. Customers experience their daily lives becoming easier.
Digitalisation and Transformation Must Solve Pain Points
- Delivery delays
- Damaged goods
- Assortment and availability
- Inconsistent pricing
- Regulatory and administrative changes
- Unclear communications
These are pain points because they lead to work delays and thus lost working time every day. They contribute to the lost productivity that the construction industry struggles to achieve. Once, a Builders’ Merchant was a Small Business In our world, once, a Builders’ Merchant was a small business that had the essentials and could order the rest within a few days. Today and in the future, they are local businesses empowered by distribution platforms of scale, conveniently located on the way to the construction site (no matter where in the city the craftsman works), that have almost everything you need and can get special items within hours. In fact, STARK Group is today operating 24/7 branches in several countries. It is the place that delivers goods right to the construction site where they are needed, at prices that are transparent and consistent.
It is the partner that provides product carbon documentation as simply as a consolidated invoice. It is also the company where the craftsman meets a person face-to-face when making an agreement or seeking advice on everything from products to new regulations and sustainability.
It may sound simple. From the inside, it is anything but that. The distribution of building materials is complex. Digitalisation and transformation are underway and advanced in several areas. They rarely take the form of robots instead of people, but often people being helped by robots and AI.
Who Wants a Craftsman Robot?
I once tried to close my eyes and imagine a robot craftsman flying around my old aunt’s living room working on a renovation project. Just my aunt’s frightened facial expression convinced me that there is plenty of room for people in construction.
We will get more and more help from technology, and in the craftsman’s back office, which builders’ merchants are part of, we will see rapid renewal and improvement in the coming years. Winners will be those who reserve the futuristic images from Google for thought experiments and small trials. The future lies with those who focus on solving customers’ pain points and making an already hard workday easier.
Short bio of Mathias Lönneker and Facts about STARK Group
Mathias Lönneker is EVP, and Group Chief Strategy Officer, part of the Executive Committee in STARK Group with responsibility for business development across the company. He joined the company in 2018 and has been part of the transformative journey of building STARK Group of today.
STARK Group consists of 19,000 people working across more than 1,100 branches and distribution centres in Europe. We are local builders’ merchants focusing on professional builders in thriving communities – from Klagenfurt in southern Austria to Tromsø in northern Norway and everywhere in between.
Brands include Jewson in the United Kingdom, Raab Karcher in Germany, Beijer Byggmaterial in Sweden, Neumann in Norway and STARK in Denmark and Finland.
