From volatility to visibility: Tackling economic uncertainty and margin pressure in lumber & building materials

The lumber and building materials industry is heading into 2026 with more questions than answers. Distributors need to rethink how they operate and where they invest for the future. At the same time, many leaders say they are torn between cautious optimism and concern; 2026 could be one of the best years yet, or one of the most challenging, depending on how key variables play out.

Economic uncertainty and margin pressure

In 2026, economic uncertainty is the backdrop for almost every decision in the lumber and building materials market. Many distributors are wrestling with declining or varying demand, aggressive competition, margin erosion driven by tariffs, housing affordability issues, and constant price changes from suppliers. Macro-economic uncertainty makes it extremely difficult to forecast, buy, and maintain healthy stock levels without overextending working capital. At the same time, the cost of doing business, from labor and logistics to technology and compliance, continues to rise, leaving little room for error on pricing and discount strategies.

This environment makes margin management more complicated and even more critical. Volatile commodity pricing means that yesterday’s pricing strategy can quickly become outdated, while traditional “rule of thumb” discounting often leaves money on the table or prices jobs uncompetitively. When teams are forced to juggle spreadsheets, gut feel, and outdated reports, it becomes almost impossible to consistently quote with confidence at the speed customers expect. The result is a dangerous combination of squeezed margins, missed opportunities, and inventory positions that do not match real market demand.

Infor helps distributors tackle this head on by embedding intelligence directly into pricing and decision making. Dynamic pricing and discount guidance can analyze current costs, historical performance, and customer behaviors to provide optimized pricing and discount recommendations in real time, helping sales teams protect margin without slowing down the quoting process. Instead of blanket discounts or reactive price changes, distributors can align pricing with true market conditions, customer segments, and product strategies on a daily, or even hourly, basis.

At the same time, Infor‘s embedded Machine Learning capabilities give leaders deeper regional and segment level insight into demand and pricing patterns. By aggregating and analyzing data across branches, markets, and product lines, distributors can spot trends earlier, adjust pricing and promotions more precisely, and refine stocking strategies to reduce risk. These insights support better decisions about when to lean into growth, when to pull back, and how to balance inventory and working capital in an uncertain environment. Together, these capabilities help distributors move from reacting to volatility to actively managing it, improving win rates, increasing average order sizes, and protecting gross profit even when the market refuses to sit still.

Stay tuned for Part 2 of this blog series as we dig into how persistent labor shortages, aging workforces, and rising expectations are squeezing productivity for lumber and building materials businesses. It will explore how distributors can use modern tools like process automation and AI assisted training to do more with lean teams while setting up newer employees to succeed.

To learn more about how Infor helps distributors tackle margin pressures and their most pressing challenges, visit www.infor.com/distribution.