Produced by GCS Associates in partnership with Builders’ Merchant News, the 2025 Construction Supplies Market Insight Survey draws on responses from nearly 200 business leaders across the UK’s merchant, manufacturing, distribution, and hire sectors.
In an industry where pressure is constant, yet opportunity abounds, this year’s report paints a nuanced picture. Skills shortages, margin erosion, and the rising cost of labour continue to challenge employers — but strategic investment in people, sustainability, and digital adoption is gaining momentum.
While the challenges are real, the mood isn’t bleak. Over 70% of businesses surveyed expect to grow their workforce in the next 12 to 24 months — signalling confidence in long-term prospects.
Labour Market: Demand Strong, Supply Strained
At the core of the report lies one truth: workforce remains the most pressing issue across the construction supplies sector.
64% of respondents cited “skills shortages” as their number one recruitment challenge. The most in-demand roles include sales representatives, drivers, warehouse operatives, and technical positions in IT and procurement. Companies also reported difficulty attracting and retaining skilled trade professionals — especially in regional and rural areas.
Recruitment activity remains high:
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68% of merchant businesses said they recruit “monthly” or “constantly”
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Hire companies showed the most volatility, with 25% reporting reduced recruitment
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Distributors and generalists indicated steady growth, especially in logistics and warehouse roles
The issue is not simply hiring — it’s retaining and upskilling. Turnover, especially among junior and entry-level staff, was cited as a growing concern. Salary expectations, cultural fit, and limited training pathways were named as top reasons for attrition.
Margin Erosion & Cost Pressures
Beyond people challenges, 57% of businesses identified margin erosion as a serious threat to operations.
This was most acutely felt by manufacturers, many of whom are facing rising raw material and energy costs, regulatory complexity, and slower payment terms from buyers. Across sectors, firms also flagged increasing pressure on wage bills, recruitment agency costs, and overheads associated with compliance.
Economic uncertainty, while still relevant, was cited less frequently this year — indicating that for many, the more immediate concern is how to deliver current business efficiently with the right team.
Training, Apprenticeships & Skills Investment
In response to hiring challenges, 75% of respondents said they invest in training, either formally or informally. However, 52% still reported “some skills gaps” within their workforce.
The appetite for apprenticeships and structured career pathways is there — but execution varies significantly across sectors. Merchants and distributors showed the highest commitment to onboarding and development programmes. Meanwhile, smaller generalist firms often lack internal HR capacity and rely on external providers or informal training.
The opportunity is clear: companies that build structured training routes and upskilling programmes will be best placed to weather the workforce crunch.
Sector Snapshots
Merchants
Merchants are in growth mode, but feeling the pain of high staff turnover and driver shortages. Sales roles, warehouse operatives and yard staff remain in highest demand.
Many are responding by investing in retention strategies: apprenticeships, flexible working, and bonuses were all cited as tools being used to attract and keep staff.
Manufacturers
Manufacturers report being in efficiency mode. Faced with high operational costs and lower hiring intent, many are leaning into automation and process improvement. Still, they face challenges in attracting skilled technicians and maintaining productivity with leaner teams.
Distributors
Distributors are optimistic, citing increased demand and a push to digitalise operations. The challenge lies in retention — particularly in warehouse and logistics roles — where salary expectations and working conditions are highly competitive.
Hire Companies
Hire businesses are leading the sector on ESG, with 61% saying sustainability is a key driver of their strategy. They also report the highest levels of internal diversity. However, a quarter of respondents in this sector said they had scaled back recruitment due to cost concerns.
Generalists
Mixed-focus businesses, many of them smaller or regional independents, face the broadest challenges. Skills gaps, lack of formal training and difficulty accessing qualified candidates were common themes. Still, many are showing agility and a willingness to partner with external recruitment and training providers.
Industry Trends: Digital & Green on the Rise
When asked about key business trends shaping the next two years, the top responses were:
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Digitalisation (55%)
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Margin pressures (53%)
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Sustainability (46%)
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Remote work and flexibility (32%)
The rise of digital tools — from CRM and logistics platforms to digital hiring processes — is shifting operational models. At the same time, ESG compliance and net-zero targets are driving new thinking around fleet management, supplier selection, and inclusion policies.
But businesses acknowledge they need talent who can help drive those transitions. This adds to the urgency of workforce development.
Leadership Perspective
“Recruitment is no longer a back-office function — it’s a strategic priority,” says Michael Parry, Managing Director at GCS Associates. “The companies thriving in 2025 are those investing in training, creating pathways for younger workers, and aligning their people strategy with business growth.”
Optimism Amid Pressure
Despite the challenges, most businesses surveyed express optimism. 70% say they expect their hiring needs to grow, and 60% describe their outlook for the next 12 months as “confident” or “hopeful.”
One encouraging sign is the sector’s commitment to progress: for every survey completed, GCS Associates planted a tree in the National Forest — a small but meaningful nod to the industry’s growing environmental focus.
Click here to register to receive the full report in January.
