The Times They May Be A’Changing
Much has occurred over the past couple of months and many manufacturers and distributors have cut to the bone in an effort to preserve profitability. These cuts have focused on people, programs (in the case of manufacturers) and products (in the case of distributors.
We’ve noticed:
- Distributors cutting people, branches and inventory.
- As distributors lean their inventories, their commitment to C & D items are waning.
More distributors are “waiting” for the order, with some being more aggressive and sensing opportunities to take share from more complacent competitors. - Margins are being squeezed as distributors respond to those who are struggling to maintain cash flow through capturing any sales.
- Manufacturers cut personnel, change sales strategies and edit marketing strategies to be more end-user focused while changing their co-op marketing funds and questioning their rebate strategies.
- Some manufacturers have spoken about reviewing their distribution portfolios and better understanding their selling propositions. At the same time they are questioning distribution’s commitment to helping create demand for products.
- And everyone anticipates accelerated consolidation as well as possible distribution closings.
As a distributor, what are you positioned for? As a manufacturer, how could this affect you?
In the words of one executive “this is the time to make bold moves”. Additionally, research from prior recessions has shown that sales and marketing investments made during downturns enable companies to grow at faster rates than competition and accelerate growth during recoveries. A recent Wall Street Journal article on R&D shows that investing for the future does payoff.
So what does this mean?
We see opportunities for companies to:
- Better understand their unique selling proposition and its perception within the marketplace to enable them to better position themselves to take share.
- Gain end-user / customer insight.
- Re-evaluate their distribution strategies to strengthen themselves within their marketplace.
- Identify and develop opportunities within niche markets.
- Look forward and develop their plan for growth today and tomorrow.
Or, if you are challenged with looking forward to growing the business, and have been challenged in stemming the bleeding, perhaps a third party perspective could help?
Yes, this requires resources. Time and cash is needed, however, if you plan to prosper in the coming years (and are able to look 3-5 years out), now is the time to position yourself to take advantage of opportunities.
We will be at the NAED meeting in May, and yes, this is a solicitation! If you, or your company, is going to be at the conference, perhaps we should talk?
Give us a call or email David or Allen.