As interest rates remain elevated in 2025, distributors across the construction materials industry are seeing customer behavior evolve rapidly. Contractors, developers, and procurement teams are rethinking how they buy — not just what they buy — in response to tighter financing, budget constraints, and greater scrutiny over every dollar spent.
This financial environment presents new challenges but also new opportunities for distributors who understand the changing priorities of their customers and are ready to respond.
Here’s how distributors can prepare for — and thrive in — a rising interest rate environment by aligning with shifting customer preferences.
1. Focus on Value, Not Just Price
With borrowing costs higher, customers are more price-conscious. But that doesn’t always mean they’re chasing the lowest-cost option — they’re looking for better value per dollar spent.
How to Prepare:
Train your team to communicate total cost of ownership (durability, efficiency, reduced labor)
Highlight value-engineered alternatives that balance performance and price
Provide clear cost-benefit comparisons during the quoting process
Why It Matters:
Helping customers make smarter decisions builds trust and positions you as a strategic partner — not just a supplier.
2. Support Phase-Based Purchasing and Flexible Fulfillment
Builders are increasingly ordering materials in phases to match cash flow and minimize financial exposure. This means they expect flexibility in fulfillment and more agile coordination.
How to Prepare:
Offer smaller, just-in-time delivery options tied to jobsite progress
Build workflows for phase-specific quoting and scheduling
Provide clear visibility into availability and lead times
Why It Matters:
Supporting smaller, timely orders helps customers control costs — and strengthens your role in their project planning.
3. Reevaluate Your Payment Terms Strategy
Tighter access to capital means customers are more sensitive to payment terms, especially on large or delayed projects.
How to Prepare:
Review your credit policy and financing options
Consider offering staggered billing, early-pay discounts, or loyalty-linked terms
Work closely with accounting to manage credit risk while remaining competitive
Why It Matters:
Offering financial flexibility — even in limited cases — can make you the preferred vendor in a competitive bidding environment.
4. Strengthen Your Position as a Reliable, Predictable Partner
When interest costs are high, every delay costs money. Customers now expect predictability and consistency in both communication and performance.
How to Prepare:
Ensure on-time delivery with realistic scheduling and accurate ETAs
Keep your quotes and availability information up to date
Communicate delays or substitutions proactively
Why It Matters:
Reliability is a revenue driver in this environment — even more than speed or price.
5. Promote Alternatives and Product Flexibility
Material substitutions that meet code and performance requirements are more attractive when costs or timelines are tight. Contractors want help navigating these choices.
How to Prepare:
Build a list of qualified substitutions for top-selling SKUs
Train inside sales and counter teams to offer options at multiple price points
Work with manufacturers to identify promotable value lines or overstocks
Why It Matters:
Guidance on smart alternatives builds customer loyalty and improves order conversions.
6. Enhance Your Digital Experience for Frictionless Transactions
Customers managing tight timelines and budgets want to place orders, track shipments, and view pricing without jumping through hoops.
How to Prepare:
Improve your self-service portal or mobile ordering experience
Provide real-time pricing, quote history, and inventory visibility
Enable contractors to save, share, and reorder quotes quickly
Why It Matters:
Removing friction from the buying process saves time — which, in today’s economy, translates to customer retention.
7. Align Promotions With Project Needs and Timing
In a high-interest rate environment, customers are more likely to respond to timely, relevant promotions — especially if they help ease budget pressure on upcoming jobs.
How to Prepare:
Use customer and market data to create targeted, job-specific promotions
Offer incentives for bulk orders on long-lead or high-margin materials
Coordinate with sales teams to align promotions with contractor schedules
Why It Matters:
Promotions that fit real-world needs generate action, not just attention.
8. Revisit Forecasting Models to Reflect New Buying Patterns
Customer ordering behavior is changing — and that affects how distributors forecast demand and manage inventory.
How to Prepare:
Shorten your forecasting horizon for more responsive planning
Incorporate project timing and housing start data into regional forecasts
Watch for changing reorder cycles or shifting product categories
Why It Matters:
Forecasting with outdated assumptions can lead to overstocking slow-moving items — or running short on high-demand SKUs.
Conclusion
As interest rates stay elevated, contractors and builders are prioritizing cost control, speed, flexibility, and service reliability — and they expect their suppliers to do the same.
Distributors who understand these changing preferences and adapt their pricing, fulfillment, digital tools, and support strategies will not only survive — they’ll strengthen customer loyalty and expand market share in an increasingly competitive construction economy.
