Top five major builders' merchants have grown their market share to over 80% and the acquisition of independent merchants is set to continue, according to analysis by PricewaterhouseCoopers LLP.

Independent Builders' Merchants remain acquisition targets. The top five major builders' merchants have grown their market share to over 80% and the acquisition of independent merchants is set to continue, according to analysis by PricewaterhouseCoopers LLP. The acquisitive growth strategies of the major merchants will underpin ongoing transaction activity and a degree of healthy competition in the sector.

Jonathan Hook, UK construction and house building leader, PricewaterhouseCoopers LLP, commented: 'The major builders' merchants have been increasing market share by two to three percentage points per annum since 2000'.

'Maturing store portfolios, reducing available plot sizes for new store openings and increased competition for acquisitions present a challenge to sustaining this growth but acquisitions, new stores, and expansion into new areas - such as electrical equipment and specialist joinery - continue to drive growth above the overall market'.

'Leading independents, with a turnover of over GBP35 million, which represent 9% of the market, may also make acquisitions; however these are likely to be smaller scale, potentially of single branches'.

While the major merchants can benefit from scale advantages and network coverage, the leading independent merchants are able to compete successfully in a variety of ways.

PricewaterhouseCoopers work, which has included surveying customers, suggests that independents have differentiated themselves and succeeded.

Quality of service, specifically speed of branch service, product knowledge of staff, flexibility and speed of product delivery have been highlighted as advantages by customers who actively select an independent merchant.

Chris Temple, director, PricewaterhouseCoopers LLP, concluded: 'Acquisitions of independent builders' merchants are set to continue in 2007 and beyond'.

'Attractive independent targets for majors are likely to stand out as offering margin uplift potential, sustainable growth and the ability to drive increased market share'.

'They may also present specialist propositions or represent expansion into new product areas and offer geographic fit'.

'Leading independents also have acquisition opportunities going forward in order to further differentiate to their key customer groups.'