The building materials supply channel is changing.

Major acquisitions have brought new scale to the market. Contractors are becoming more willing to add suppliers to their networks. Technology is changing how work gets done. Yet even as the industry evolves, some of the fundamentals of supplier success remain surprisingly consistent.

In this Shop Talk, Grant Farnsworth sits down with Craig Webb, President of Webb Analytics and a longtime observer of the construction supply industry, to discuss what is happening across lumberyards and building material dealers and what could separate the winners in 2027.

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From consolidation and changing contractor expectations to AI, productivity, and customer service, the conversation points toward a future where technology matters, but relationships and execution matter just as much.

Is Consolidation Changing the Building Materials Supply Channel?

Mergers and acquisitions have become one of the most visible changes across the building materials supply landscape.

But Craig sees two different trends happening simultaneously.

The past several years have brought large acquisition transactions involving companies such as Home Depot, Lowe’s, and QXO. At the same time, traditional local acquisitions continue, with one lumberyard acquiring another operation nearby.

Those mega deals have attracted attention because of their sheer scale, but they may not represent the future of every acquisition.

The number of very large companies available to acquire is shrinking, and recent activity suggests the pace and scale of transactions may already be changing.

During the first quarter of 2026, Craig tracked approximately 25 transactions involving 265 lumberyard locations. The second quarter brought roughly 35 transactions involving 505 locations. By the third quarter, activity had fallen to just 14 deals involving 50 locations.

That does not mean consolidation is over. It suggests the next phase could look different from the mega deals that have recently dominated industry headlines.

Are Independent Lumberyards Going Away?

Consolidation can make it seem as though independent lumberyards are inevitably disappearing, but Craig sees more nuance.

New independent locations continue to open, sometimes led by experienced industry professionals who leave an existing business and use their knowledge of a local market to establish something new.

Leadership transitions could also influence the number of independents that remain in business.

Craig pointed to a growing number of women moving into leadership and ownership positions at family-owned lumberyards. A new generation taking control may be more interested in growing and evolving those businesses than selling them.

Why Are Contractors Trying More Suppliers?

The supplier landscape is not the only thing changing. Contractor behavior is shifting, too.

The forthcoming 2027 Building Products Customer Guide from The Farnsworth Group found that 31% of the generalist contractors surveyed had tried a new supplier within the previous 12 months.

That does not necessarily mean contractors are abandoning existing supplier relationships, but rather, that many are expanding their networks.

The 2027 version of the guide will become available in Q1 of 2027. You can also access the 2026 survey results in the meantime.

Product Availability Drives Supplier Selection

Product availability remains one of the biggest drivers of supplier and product selection. If a preferred supplier does not have the product a contractor needs, that contractor has become increasingly comfortable looking elsewhere. Further, Pros are more likely to switch suppliers before switching brands.

Pricing and assortment matter as well. Pros may maintain relationships with additional suppliers to gain access to different products and price points that can accommodate the varying budgets of their customers.

The expectations contractors bring from the rest of their lives are influencing this behavior, too. As Craig and Grant noted during the conversation, consumers have become accustomed to extraordinarily reliable fulfillment from companies like Amazon. Those experiences inevitably influence what contractors expect from their business suppliers.

What Are Successful Building Material Dealers Doing Differently?

In a market where growth may move only a few percentage points in either direction, dramatic changes are not always necessary to create an advantage.

Craig describes the companies best positioned for this environment as “raging incrementalists” which he defines as companies that, rather than searching for a single transformational solution, continually identify small opportunities to operate more effectively. They ask questions like:

• Can a four-hour task become a two-hour task?
• Can software replace a manual process?
• Can employees spend less time on repetitive work and more time serving customers or pursuing new business?

AI is increasingly part of that conversation.

AI and Technology Use by Lumberyards and Building Materials Dealers

Building material dealers are exploring tools such as automated takeoff software and technology that can help evaluate building plans and code requirements. The goal is not necessarily to reduce headcount, but to optimize their existing systems and team processes to make existing teams more productive.

The Farnsworth Group's 2027 Building Products Customer research points toward a similar shift on the customer side, with nearly 40% of generalists surveyed reporting that most of their projects utilize AI in some capacity.

That creates an important dynamic for the supply channel: both the contractor and the supplier are becoming more technologically enabled while still maintaining traditional means of connecting with customers in person and over the phone.

Technology Is Not Replacing the Human Element

Greater technology adoption does not mean contractor relationships become less important. The future may be defined by what Craig describes as a tech-powered human interaction.

Customers increasingly expect businesses to be available when and how they need them. Digital tools can make basic interactions faster, whether that means paying an invoice online, finding information, placing an order, or resolving an issue.

Not every improvement needs to involve sophisticated AI. The simple technological advancements to serve customer needs better will be important.

The opportunity is to use technology to remove friction while preserving the expertise, responsiveness, and personal relationships that have traditionally differentiated strong independent suppliers.

Reliability Is Still the Foundation

For all the discussion around AI, digital transformation, and consolidation, some of the biggest opportunities remain remarkably basic.

Contractors simply need products to arrive when promised, in the quantities ordered, and at a competitive price. Those are the basics of what customers really want.

Craig pointed to on-time and in-full delivery as an area where the industry still has significant room to improve as one example, knowing that a 90% success rate may sound strong until it is reframed as failing one out of every ten times.

For a contractor managing schedules, crews, and customer expectations, that failure has consequences.

The Farnsworth Group's building products customer research similarly shows that speed of response, problem resolution, and support with issues such as warranty claims remain important parts of the supplier relationship.

Technology can help suppliers deliver those experiences more efficiently, but it cannot compensate for unreliable execution.

What Will Define Supplier Success in 2027?

The building materials supply channel will continue to evolve. Consolidation will continue in some form and contractors will continue experimenting with new suppliers. Technologies will create opportunities to improve productivity and customer expectations will continue to rise.

But success starts first with consistently improving on the fundamentals first and foremost, and only then secondarily considering other transformation avenues. This starts with researching what your customers expect and want from suppliers and brands.

For lumberyards and building material dealers, that means using technology where it creates genuine efficiency while continuing to invest in availability, reliability, responsiveness, and truly grounded relationships with customers.

Craig will be speaking at our 2027 Building Products Customer Workshop, happening November 4-5, 2026 in Nashville. At this workshop we will also be hosting a panel discussion with dealer and supplier representatives. Join us if you can!